Wednesday PM April 30th, 2008
by: Ed Mayberry, April 30, 2008 3:04:00 pm
One of the so-called "NatWest Three" has entered the Federal Correctional Institution in Big Spring. Gary Mulgrew is one of three former British bankers who pleaded guilty to a $20 million Enron-related fraud. Last week, U.S. District Judge Ewing Werlein ordered co-defendant Giles Darby to surrender to Allendale federal prison in White Deer, Pennsylvania on May 7th and David Bermingham to enter a federal facility in Lompoc, California on May 9th. The three received 37-month terms.
The Federal Reserve is cutting a key interest rate by a quarter point. It's a smaller move than the aggressive easing of rates that the policy-makers undertook earlier this year. The action pushes the federal funds rate down to two percent. That's its lowest level since late 2004. It's the seventh consecutive rate cut by the central bank since it started easing credit conditions last September to deal with the growing threat of a recession.
British Airways said that it's looking for new ways to cooperate with Fort Worth-based American Airlines and Houston-based Continental Airlines. U.S. airlines have been scrambling to combine or form new alliances since Delta Air Lines and Northwest Airlines announced plans to join together earlier this month. British Airways adds that further details would be announced "when appropriate" and did not provide any information on the nature of the cooperation. BA and American Airlines are already partners in the OneWorld Global Alliance, but Continental Airlines says it wouldn't pursue a combination with another carrier right away. That's a surprising move after weeks of growing speculation that Continental would join with United Airlines to create the world's biggest airline. United and US Airways are now in advanced talks on joining their businesses to create what could be the world's largest carrier.
General Motors says it will resume production of full-size sport utility vehicles at a factory in Arlington that had been shut down due to a strike at a parts supplier. Spokeswoman Wendi Sabo said the first shift will return to work on Monday. The second shift will come back on May 12th. The plant employs about 2,500 hourly workers who make the Chevrolet Suburban and Tahoe, Cadillac Escalade and GMC Yukon. The Arlington factory had been shut down since April 14t because of a shortage of axles made by American Axle and Manufacturing Holdings. The United Auto Workers Union has been on strike against the Detroit-based parts maker since February 26th in a wage and benefit dispute.
General Motors says it lost $3.3 billion in the first quarter, as strong overseas growth was dragged down by a supplier strike and weak U.S. sales. The loss reported for the January-to-March period also reflected one-time charges. It was much larger than its loss of $42 million in the same quarter a year ago. GM says the two-month strike at American Axle has cost it $800 million and 100,000 vehicles. The strike affected 30 GM plants. GM's loss included a $1.45 billion charge to reflect a change in the value of GM's interest in GMAC Financial Services and $731 million to increase GM's liability in Delphi Corporation's ongoing bankruptcy.
An Urban Land Institute study says Houston is one of 23 cities facing an infrastructure challenge, according to the Houston Business Journal. The report also mentions Dallas, saying the cities "choke on suburban car dependence from disconnected development just as driving becomes increasingly expensive." ULI says cities face expanding road capacity and retrofitting pedestrian-unfriendly subdivisions with mass transit. The report says since 1980, vehicular traffic has almost doubled, but road capacity has grown by only four percent.
Houston-based Bois d'Arc Energy is being purchased by Stone Energy in a $1.8 billion cash-and-stock deal. Stone will remain headquartered in Lafayette, Louisiana.
Members of ExxonMobil's founding family called on the Irving-based oil giant today to split the roles of chairman and CEO. Members of the Rockefeller family also called on the company to give board members more say in how the company is run. The family members describe themselves as the company's longest continuous shareholders. They say they're concerned about the direction of the company's management. ExxonMobil was formed by the combination of two offspring of John D. Rockefeller's Standard Oil Trust and is now the world's largest publicly traded oil company. The calls for reform come a day before it was scheduled to report first-quarter earnings of more than $11 billion. Thanks to soaring oil prices, that is considerably more than the company earned a year earlier, and could even top ExxonMobil's own record for the biggest quarterly profit in U.S. history.
The Cost of Care survey released by Genworth Financial says the cost of nursing home care in Houston is down one percent compared with 2004, according to the Houston Business Journal. As a comparison, costs in San Antonio have gone up 34 percent, Austin costs have increased 20 percent and Dallas costs are up 14 percent. A year in a Houston nursing home averages over $56,000. The average annual household income in the U.S is around $48,000.
A Texas company accused of improperly using SAT and PSAT practice questions to help prepare its customers for testing--will pay $1 million. The payment will settle a lawsuit brought by the test owners--including a donation of $400,000 worth of tutoring for low-income high school students. The College Board, which owns the SAT and PSAT exams, in February sued Dallas area-based Karen Dillard's College Prep for trademark violations. The board also announced it will accept the PSAT or SAT scores of students who worked with the company. The board previously suggested some scores might be canceled because the company had allowed students to practice on "live" test questions that had not been officially retired.