Friday AM September 14th, 2007
by: Ed Mayberry, September 14, 2007 5:09:00 am
Texas Petrochemicals is conducting an internal investigation after uncovering financial inaccuracies in an audit, according to the Houston Business Journal. Payments from the company appear to have been improperly authorized. Texas Petrochemicals has terminated one employee, who was taken into custody by federal authorities. The firm will delay the release of its audited financial statements for the fiscal year ending June 30th until after the internal investigation is complete.
ExxonMobil has filed for arbitration in its dispute over assets seized by Venezuela. ExxonMobil requested arbitration with the International Centre for Settlement of Investment Disputes. The Irving-based company says the net assets have a book value of about $750 million. ExxonMobil has been in talks with Venezuelan authorities since walking away from its operations on June 26th.
The federal deficit is running sharply lower than last year's. The Treasury Department says the deficit through the first 11 months of this budget year is down nearly ten percent from the same period a year ago. Analysts believe the deficit for all of 2007 actually will be even lower. They're forecasting a sizable surplus in the final month. The Congressional Budget Office predicts that when this budget year wraps up on September 30th, the deficit will drop by more than 36 percent from last year's total. Record flows of tax receipts have helped the government's books, despite the housing slump that has reduced economic growth. Republicans contend Bush's tax cuts are a major reason government receipts are so strong now. But Democrats disagree, saying revenues are simply rebounding after sinking earlier in the decade.
The number of laid off workers filing claims for unemployment benefits rose last week in another worrisome sign the labor market is weakening. The Labor Department reports that new claims for unemployment benefits are up by 4,000 to 319,000. It marks the sixth increase in the past seven weeks. It's a further sign the economy is feeling the impact of a steep slump in housing and a spreading credit crisis. The government reported last week that employers cut 4,000 jobs from payrolls in August, the first monthly job decline in four years. The net decline in payroll jobs in August came as a surprise. Analysts had been expecting an increase of 110,000 jobs, in line with growth this year. The number of jobs created in June and July was trimmed by 81,000, indicating the labor market was not performing as well as had been thought.
Former Federal Reserve Chairman Alan Greenspan acknowledges he failed to quickly appreciate the risks posed by the boom in lending to people with bad credit, linked to both the rise and fall in housing. In an interview to be aired on 60 Minutes, Greenspan says he was aware of sub-prime lending practices where homebuyers got very low initial rates only to see them later spike. But he says he didn't initially realize the harm they could do. Greenspan says he "really didn't get it until very late in 2005 and 2006.'' The meltdown in the sub-prime mortgage market has rocked financial markets. Foreclosures and late payments have soared and dozens of lenders have gone out of business. The interview is to be shown Sunday on CBS.
Private buyout firm Lone Star Fund has extended its offer to buy troubled sub-prime mortgage lender Accredited Home Lenders holding company for two days, until midnight Friday. It's the latest twist in a dispute that appeared headed to court. Lone Star agreed in June to pay $400 million for Accredited but said last month it was cutting the offer nearly in half. It said Accredited's financial health had suffered "drastic deterioration'' and the mortgage lender could no longer meet closing conditions. Dallas-based Lone Star said Accredited still can't meet closing terms but it was bound to extend the offer. Lone Star said that as of Tuesday, 73.4 percent of Accredited's shares had been tendered in support of the sale. Accredited has said it met terms of the original deal and Lone Star can't back out due to deterioration in the broader mortgage industry.
Harris County ranks second in the nation for housing units, according to the U.S. Census Bureau. The county added 39,000 housing units in the past twelve months. Harris County grew at a rate of 2.7 percent. Orleans Parish, Louisiana, lost the highest number of units after shrinking by 107,000—slightly more than half—after Hurricane Katrina.
If you aren't a customer of Bank of America, it may cost you more to use its ATMs. The North Carolina-based bank, which has more than 17,000 cash machines across the country, says it has raised the fee for non-customers by $1 to $3 across much of its network. Bank of America boasts the largest ATM network in the U.S., so the higher fees could affect millions of people. A spokeswoman says the fee and the amount are disclosed on the ATMs, suggesting if someone doesn't want to pay the fee, they don't have to use it. The higher fees affect about 10,700 machines, or about two-thirds of the bank's network. It is not making the change at so-called offsite ATMs in shopping malls, airports, universities and other locations.