Wednesday PM October 10th, 2007
by: Ed Mayberry, October 10, 2007 5:10:00 am
The Bush administration has announced a new effort to help homeowners avoid being trapped in a rising tide of foreclosures. Treasury Secretary Henry Paulson says the initiative will bring together 11 of the country's largest mortgage service companies. Other members will include mortgage counseling agencies, investors and large trade organizations. Paulson says the initiative will coordinate efforts to help the estimated two million homeowners whose introductory mortgages with low rates are now be reset at much higher rates. The initiative has been dubbed Hope Now and it follows an August announcement by President Bush that the administration is making changes in the Federal Home Loan Administration insured-loan program so that more people could qualify for FHA-insured loans. Democrats have criticized the administration, saying the actions so far have been too little and too late.
The National Association of Realtors is cutting its forecast for home sales this year and next. NAR says sales of previously-owned homes will be down 10.8 percent this year compared to last. That would be the lowest level of sales since 2002. Sale prices for so-called existing homes are forecast to drop 1.3 percent to a median of just over $210,000 this year. Next year, the group looks for sales to rise, but it is cutting the forecast offered just a month ago. New home sales are projected to be down 23 percent this year compared to last.
Now that the strike is on, the talks are off. According to a person who's been briefed on the negotiations, Chrysler and the United Auto Workers union stopped talking after thousands of Chrysler workers walked off the job. The negotiators had been working all night in hopes of reaching an agreement before a late-morning strike deadline, but they failed to do so. Chrysler has 24 manufacturing facilities in the U.S., including ten assembly plants. But according to one person familiar with the walkout, not all of those plants are affected by the strike. The UAW is apparently staying on the job at five plants that the automaker had shut down earlier this week, because of sagging sales. There's mixed reaction, though, among the rank and file. A toolmaker in Detroit says he'd ''rather be working,'' but that ''we do what we have to do.'' But an employee at an engine plant in Wisconsin says he has little hope that a strike will lead to a better contract. At least one worker says he thinks the strike is justified. Brett Ward, a forklift driver at an suburban Detroit assembly plan, says he hopes the union can get a better deal than the one it reached with GM. The issues that have slowed the bargaining include health care concessions. Chrysler wants the same ones that the union gave to GM and Ford. A new tentative contract with GM includes job security pledges that the union is likely to seek from Chrysler as well. Also at issue is how much Chrysler will pay into a UAW-run trust that would take on retiree health care costs. It's the first UAW strike against Chrysler since 1997.
Weatherford International's participation in the United Nations Oil-for-Food program is under federal investigation, according to a filing with the Securities and Exchange Commission. The Houston-based oilfield services company says both the SEC and the Justice Department are investigating. Weatherford has hired legal counsel to conduct an internal investigation. Weatherford also says the Justice Department, the Department of Commerce and Bureau of Industry & Security are investigating alleged improper sales by its overseas units operating as non-U.S. persons in sanctioned countries, according to the Houston Business Journal. Weatherford last month began discontinuing doing business in Cuba, Iran, Sudan, Syria and other countries that are subject to economic and trade sanctions.
Rowans Cos. and nine employees have pleaded guilty to discharging pollutants and garbage into the Gulf of Mexico from its drilling rig Rowan-Midland between 2002 and 2004. Rowan agreed to pay a $7 million criminal fine to settle three felony charges, and another $2 million to support state and community environmental programs. Nine current and former employees who had supervisory roles face maximum fines of between $2,500 and $250,000, according to the Justice Department. Rowan says it will create an environmental division within the company and also introduce new industry standards for sandblasting.
Texas accountants closed the books on the 2007 budget period--and had an unexpected $1.5 billion in unspent money. State Comptroller Susan Combs is telling lawmakers that the final balance for the 2007 fiscal year--ending August 31st--was $8.5 billion. That's up from the $7 billion expected when Combs earlier this year set her biennial revenue estimate. Most of the money can't be spent until lawmakers meet again and adopt spending legislation. The next regular legislative session is in 2009. Combs says the increase was brought about by greater revenues, attributable to strong state economic growth, and lower expenditures, due to legislative and agency spending restraint.
The U.S. Department of Labor's Wage and Hour Division has filed a lawsuit alleging the Hong Kong Group and three individuals failed to properly pay 391 employees more than $2 million in back wages. Civil penalties of $268,812 have also been assessed against the Houston firm for not paying the appropriate minimum and overtime wages. The investigation covers the period from March 1st, 2003 through February 28th, 2006. A previous investigation covering the period between October 2002 and October 2004 found that 119 employees were due $161,509 in back wages, but the current investigation found employees alleging the employer required them to return those back wages.
The president of the pilots' union at American Airlines ripped the company's chief executive in a letter that ended with a threat to "see you in court, in the newspapers, and on the picket line.'' Lloyd Hill repeated union complaints about executive stock bonuses and accused management of cutting sick pay for pilots. The letter was sent to Chief Executive Gerard Arpey last month. It was first reported on the Web site of the Fort Worth Star-Telegram. American and the Allied Pilots Association are in the early stages of talks on a new contract to replace wage and benefit cuts approved in 2003, when American was nearly bankrupt. Airline spokeswoman Sue Gordon says the company views the union letter as part of the group's strategy for bargaining on a new contract.