The chief investment officer of Texas billionaire R. Allen Stanford’s companies has pleaded not guilty to blocking a federal investigation. Laura Pendergest-Holt will remain free on bond after being indicted this week on two charges of blocking a Securities and Exchange Commission probe of the Stanford Financial Group. She’ll go to trial July 20th. Pendergest-Holt, the first person indicted in the federal investigation of the troubled firm, had been arrested and charged in February and was freed on a $300,000 bond. If convicted, she could be sentenced up to five years in prison for each count. Federal investigators accuse Stanford and his finance chief, James M. Davis, of conducting a “massive ponzi scheme.”
Chrysler is planning to shut down more dealerships in Texas than in any other state. Chrysler said in a bankruptcy court filing in New York that 50 of the 789 dealerships it wants to eliminate are in Texas. Six Houston dealerships will be affected: Archer Chrysler Jeep West, Archer Chrysler Plymouth Jeep, Archer Dodge, Archer Northwest, Rogers Dodge of Alvin and Baytown Chrysler Jeep Dodge. The Detroit automaker says many of the targeted dealers’ sales are too low, and that its network is outdated and has too many stores competing with each other. Chrysler wants to close them by June 9th. Chrysler told all dealers by United Parcel Service letter whether they will stay or close. Dealers can appeal. There are 3,200 U.S. Chrysler dealerships.
Autonation announced it will close seven Chrysler dealerships as part of a consolidation plan filed by the automaker in bankruptcy court. Fort Lauderdale, Florida-based Autonation said the dealerships it plans to close represented just one per cent of the company’s 2008 operating income. The company, which owns and operates 289 new vehicle franchises in 15 states, plans to close one dealership each in Colorado and Texas, four in Florida and one in Georgia. About 400 employees are involved and Autonation said it would work to find positions for as many as possible.
The decision by Continental Airlines to trim 500 jobs in its reservations department will mean about 270 jobs lost in the Houston area. The Houston call center currently employs about 1,100 and another 600 remote agents who handle calls from their Houston-area homes. Reserving flights online is free to consumers, but it costs $15 to book a ticket by phone.
New jobless claims rose more than expected last week due partly to an increase in layoffs by the automobile industry, while the number of people continuing to receive unemployment benefits set a record for the 15th straight week. The Labor Department says the number of people requesting rose to a seasonally adjusted 637,000, from a revised 605,000 in the previous week. That’s above analysts’ expectations of 610,000. A department analyst says most of the increase was due to auto layoffs. Economists estimate Chrysler has laid off 27,000 workers in the wake of its April 30th bankruptcy filing. Continuing jobless claims jumped to 6.56 million from 6.36 million, also higher than analysts expected.
The Texas oil and gas industry may not recover economically until well into next year, according to the Texas Alliance of Energy Producers. Petroleum economist Karr Ingham says the depth and rapidity of the slowdown means this recession won’t be shorter than the past two, from November 1997 to June 1999, and from August 2001 to August 2002. He says declining production could possibly curtail energy supplies just as demand begins to pick up once again.
Wholesale prices have risen more than expected in April as the biggest jump in food costs in more than a year offset a second monthly decline in the price of energy products. The Labor Department said that wholesale prices climbed 0.3 per cent last month–a larger increase than the 0.1 per cent that economists had expected. Even with the larger-than-expected April gain, wholesale prices over the past 12 months have fallen by 3.7 per cent, the biggest 12-month decline since Harry Truman was president in 1950. While falling prices can raise fears about deflation, economists believe the efforts by the Federal Reserve to combat the recession will keep that from occurring.
President Barack Obama says changing the way credit card companies bill customers is critical to fixing the nation’s ailing economy. Obama addressed a town-hall meeting in New Mexico where he heard Americans’ stories about credit card abuses. He says the economy can’t recover while people are putting basic needs such as food and shelter on credit cards from companies that don’t play fair. The president is pressing for legislation that would end some credit card industry practices deemed abusive, such as sudden interest rate hikes and late fees. He says the economic crisis is the result of people living beyond their means and credit companies’ poor behavior.
President Obama says if the government hadn’t stepped in to help, the economy would have gone into a tailspin. Obama said consumers had stopped spending, forcing retailers to cut jobs and creating a vicious economic cycle that only the government could stop. He says both conservative and liberal economists agreed a stimulus package was needed to pull the economy out of its nosedive. And he criticized Republicans who were “philosophically opposed” to the package, saying they didn’t seem as worried about his predecessor’s administration running up debt.
The Obama administration has announced more steps to help homeowners avoid foreclosure if they don’t qualify for other assistance. The new initiatives are expected to streamline the process of selling a home that is worth less than the mortgage, or transfer ownership of a home to the lender. Both options will still ding the homeowner’s credit score, but less than a foreclosure. Since the launching a $50 billion mortgage aid program in March, mortgage companies have made more than 55,000 offers to modify borrowers’ loans. Treasury Secretary Timothy Geithner says there are signs that homeowners are using the program to lower their monthly payments. But housing counselors across the country have complained that mortgage companies often are unaware of the plan or steer borrowers away from it.
House Democrats are looking at big health care changes, including federal aid to help families making up to $88,000 pay for insurance. Documents obtained by the Associated Press show the plan being developed by the House Energy and Commerce Committee would also require individuals and employers to contribute toward the cost of their health coverage. The subsidies would be offered on a sliding scale to those making up to four times the federal poverty level, or $88,200 for a family of four. The plan would set up a new insurance purchasing pool called an “exchange” to make coverage more affordable for individuals and small businesses. It would also create a new government insurance plan to compete with private companies.
Michelin North America has agreed to pay 17 states–including Texas–a total of $375,000 to settle an investigation into advertising claims. The dispute involves 2008 ads that its tires could save drivers money because they were fuel efficient. The settlement also requires the Greenville, South Carolina-based company to have reliable scientific evidence to support any future marketing claims. Michelin officials said they provided test data demonstrating that its tires were the most fuel efficient in most of 37 categories of tires. The company agreed to make minor changes to its advertising claims. The investigation started when Michelin advertised fuel savings associated with its tires. The attorneys general alleged that the claims of savings were based solely on fuel costs, not on the comparative costs of competing tires.
Pfizer is unveiling a new program that will let people who have lost their jobs and health insurance keep taking some widely prescribed Pfizer medications–for free, and for up to a year. Pfizer will provide more than 70 prescription drugs—from Lipitor to Viagra–at no cost to unemployed, uninsured Americans. People who lost jobs since January 1st and have been on Pfizer drugs for three months or more are eligible. The announcement comes amid massive job losses caused by the recession and should bring a Pfizer some goodwill, good publicity and brand loyalty. The program requested by a committee of employees concerned about newly uninsured patients struggling to buy their medicines.
The official Petra news agency says Jordan and Royal Dutch Shell will sign a deal Sunday to explore for oil in the country’s extensive oil shale deposits. Natural Resources Authority Director Maher Hijazin told the Jordanian news agency that shell will spend $540 million in the project’s initial exploration, assessment and design before commercial operation. Hijazin says the concession agreement will be concluded on the sidelines of the Mideast World Economic Forum this weekend at the Dead Sea. Jordan, which sits atop an estimated 40 billion tons of oil shale deposits, imports 95 per cent of its energy needs.
A Texas company that helps consumers resolve debt is barred from doing business in West Virginia–at least temporarily. In issuing the decision, Kanawha County Circuit Judge Irene Berger also ordered Able Debt Settlement. To post a notice to that effect on its Web site. It also must individually notify its West Virginia clients. Attorney General Darrell McGraw is suing able debt, accusing it of ruining the credit of at least 21 state residents instead of helping them resolve their debt. Able Debt Settlement of Irving has denied wrongdoing. Assistant Attorney General Douglas Davis says Berger’s ruling remains in effect until the case is fully resolved. McGraw is seeking restitution and penalties. A trial date has not yet been set.
Texas Comptroller Susan Combs reminds businesses that their annual franchise tax is due on Friday. It’s the second franchise tax filing deadline since the legislature’s revisions that changed the tax calculation.
Wal-Mart is reporting a flat first-quarter profit as revenue was hurt by the stronger dollar. The world’s largest retailer said that it earned $3.02 billion for the period ended April 30th. That was flat from a year earlier. Revenue fell 0.6 per cent to $93.47 billion, from $94.04 billion a year earlier. Wal-Mart said earnings were hurt because of currency exchange rates. Without the that impact, the company said sales would have increased 4.5 per cent. Analysts were expecting revenues of $96.37 billion. Wal-Mart has been doing better in the recession than many other retailers as its focus on low prices and the shift in merchandise it offers came together as the economy soured.
Kohl’s says its fiscal first-quarter profit fell 11 per cent as same-store sales dropped, but results still topped analysts’ estimates. The Menomonee Falls, Wisconsin-based company also lifted its profit outlook for the full year. Kohl’s earned $137 million—down from $153 million in the same period last year. Sales edged up 0.4 per cent to $3.64 billion. Sales at stores open at least a year slipped 4.2 per cent. Analysts expected revenue of $3.62 billion.
Nordstrom says its first-quarter profit fell 32 per cent, but the company’s results beat Wall Street forecasts. The Seattle-based retailer says it earned $81 million in the quarter that ended May 2nd. That compares with a profit of $119 million a year earlier. Excluding a one-time tax-related gain, Nordstrom earned $69 million. Analysts surveyed by Thomson Reuters estimated revenue of $1.69 billion. Sales at Nordstrom fell nine per cent to $1.71 billion from $1.88 billion for the quarter.