BP settles four lawsuits stemming from March 2005 explosion…Feds cut short-term interest rates by one-half of one percent…Foreclosure filings more than double from year before…
A settlement has been reached in the first trial stemming from a deadly explosion at a BP refinery in Texas. The suit just was one of hundreds, but it was the only case to make it into a courtroom. Fifteen people were killed and another 170 injured in the explosion at the refinery in 2005. Details of the settlement have not been released, but the blast has cost the company at least $2 billion in compensation payouts, repairs and lost profit. A U.S. safety agency found that BP fostered bad management at the plant and that cost-cutting moves were factors in the explosion. BP itself released an internal report that said the plant’s culture seemed to ignore risk, tolerate noncompliance and accept incompetence.
Plaintiff reaction varies widely after the settlement of four lawsuits against BP. The plaintiffs’ attorney, Brent Coon, says he’s “happy to get closure” for his clients without leaving the verdict to the Galveston County jury. He also says he hopes the London-based oil giant learned a lesson from the case. Plaintiff Scott Kilbert says he’s glad the trial is over. But a tearful plaintiff, David Wilson, says he’s disappointed he didn’t get to look jurors in the eye and tell them what he feels. The instrumentation supervisor for construction company J.E. Merit says he suffered back problems, hearing loss and post-traumatic stress disorder in the accident. Plaintiff Rolando Bocardo, who’s an instrument fitter, wept and said he was too emotional to talk. BP spokesman Neil Chapman says the deal was reached overnight, and the company doesn’t don’t talk about the settlements.
The Federal Reserve has cut short-term interest rates by one-half of one percent. The first rate reduction in four years is in response to the housing market slump and is aimed at providing some stability to financial markets. The Fed announced it is cutting its target for the federal funds rate, the interest that banks charge each other, to 4.75 percent. The action is intended to boost economic growth by lowering borrowing costs for consumers and businesses. Commercial banks are expected to quickly cut their prime lending rates. The prime rate has been at 8.25 percent for the past 15 months. The Fed reduced its discount rate, the interest it charges in making direct loans to banks, by a half-point as well. It earlier had cut the discount rate in August in response to the credit crunch.
Alan Greenspan says the economy is “not doing badly,” but he believes the odds of a recession have grown this year. In an interview with the Associated Press, the former Federal Reserve chairman puts those odds at greater than one in three. Earlier this year, Wall Street went into a tailspin when Greenspan put one-in-three odds on a recession. On other issues, Greenspan voiced concerns about gasoline consumption and expanding social programs. Greenspan says he favors a gasoline tax to help curb demand, though he suggests a rebate or some other sort of help might be needed to offset what he calls the “undue burden” a gas tax would put on poor people. Greenspan also describes proposals from presidential candidates to expand Medicare benefits and other social programs as “irresponsible.” He says the proposals don’t offer ways to cover the costs that will come as baby boomers start to retire.
Signaling deepening trouble for homeowners, the number of foreclosure filings reported in the U.S. last month more than doubled from the year before and jumped 36 percent from July. Experts say the trend suggests many homeowners are increasingly unable to make timely payments on their mortgages or sell their homes amid a national housing slump and credit crunch. The California-based company, RealtyTrac, says August’s total represents the highest number of foreclosure filings reported in a single month since the company began tracking monthly filings two years ago. The national foreclosure rate last month was one filing for every 510 households.
State regulators have cut a proposed fine against Dallas-based electric utility TXU from $210 million to $171 million. The Public Utility Commission staff had initially proposed the fine against TXU for allegedly manipulating the wholesale electric market. Now, the PUC staff says it’s recalculated the proposed penalty after considering additional information about the price of fuel used to generate power. A TXU spokeswoman says the company denies any wrongdoing. TXU allegedly sold power to the market at inflated prices and caused electricity prices to rise 15.5 percent during the stretch. TXU is the largest power generator in Texas. It’s agreed to be bought for $32 billion by a group of investors led by the private equity firms Kohlberg Kravis Roberts of New York and TPG of Fort Worth. The investors also would assume more than $12 billion in TXU debt. TXU shareholders voted this month to approve the sale, which is expected to close in the fourth quarter.
Houston-based Dynegy has reached a $9.9 million settlement with more than 1,900 employees of Illinois Power, a former Dynegy subsidiary, relating to their retirement plan. U.S District Judge Ewing Werlein approved the settlement of the class-action suit. The employees said continued investments in Dynegy stock by the benefits committee violated the Employee Retirement Income Securities Act. The agreement was agreed to and funded by Dynegy’s insurers last January.