Mortgage applications climb despite problems in U.S. subprime mortgage market…U.S. contractor deaths in Iraq surpass 1,000 since war started…Kay Bailey Hutchison Desalination Plant opens in El Paso…
Mortgage applications climbed after a three-week decline, according to the Mortgage Bankers Association. The index rose 8.1 percent for the weekend ending August 3rd.
Long-term mortgage rates are lower this week. Freddie Mac says the average for the 30-year fixed-rate mortgage dropped to 6.59 percent from 6.68 percent the week before. It averaged 6.55 percent a year ago. The 15-year loan is averaging 6.25 percent this week–a drop of seven basis points. The average a year ago was 6.20 percent. Freddie Mac Vice President and Chief Economist Frank Nothaft cites a July job-creation number that fell short of market expectations and an uptick in the unemployment rate.
President Bush is ruling out any direct assistance to bail out homeowners hit with foreclosures. But he told a White House news conference that he is open to some federal help for people to refinance and keep their homes. New home foreclosures have climbed to record highs. Homeowners with poor credit have been hardest hit, as higher interest rates and weak home prices have made it impossible or difficult for them to keep up with their home loans. The president also said that he’s interested in exploring the possibility of providing tax relief to U.S. corporations, but says such a move would face challenges in the Democratic-controlled Congress.
The Federal Home Loan Banks of Dallas and Chicago are considering merging their operations. The banks are cooperatives owned by member financial institutions in their areas. They’re part of a national system of 12 banks that help provide funding for residential mortgages and community development. The Federal Home Loan Bank of Dallas has assets of $53.3 billion and more than 900 member institutions in Texas, Arkansas, Louisiana, Mississippi and New Mexico. The Federal Home Loan Bank of Chicago includes more than 850 institutions in Illinois and Wisconsin. It has assets of $87 billion.
According to Labor Department statistics released to the Houston Chronicle, in the four years since the war started, as of June 30th, 1,001 civilian contractors working for U.S. firms have died in Iraq. About 137,000 Defense Department contractors are on the job in Iraq, supporting 162,000 U.S. troops there, according to the Pentagon. About half of the contractors working there are Iraqis, and the government records do not provide the nationalities of the casualties. But Houston-based KBR has acknowledged 110 fatalities in the Middle East. KBR has more than 50,000 employees and subcontractors building bases, serving meals, delivering mail and other services for troops. The Defense Department says as of Wednesday, there have been 3,672 U.S. military deaths in Iraq since the start of the war in March 2003.
The number of newly laid-off people signing up for jobless benefits rose last week. The Labor Department says new applications for unemployment insurance increased by a seasonally adjusted 7,000 to 316,000. The number is higher than expected and leaves claims at their highest point since late June. The four-week moving average, which smoothes out week-to-week volatility, rose last week to more than 307,000, an increase of 1,750 from the prior week. Still, claims are lower now than they were a year ago, when they stood at 319,000. The report suggests that employment conditions, while softening a bit, remain good.
A new report finds the fiscal health of states again in decline. The report by the National Conference of State Legislatures says end-of-year balances are down in the 2007 fiscal year and are expected to drop again. In all, the year-end balances of 28 states dropped from the 2006 to 2007 fiscal years, while just 17 rose. There were some bright spots in the report. Although year-end balances fell overall after a recovery in 2005, the portion of money contributed to rainy day funds was up. That means states will have more savings. And despite the downward trend, the fiscal condition of most states is still solid–in part because many states brought their unspent reserves into the new fiscal year. But revenues are still projected to lag behind spending. The biggest jump in fiscal 2008 spending was to Medicaid. It grew overall by 8.1 percent, followed by spending on higher education, K-12 education and prisons. Ten states budgeted double-digit growth in spending for K-12 education. Texas topped the list with a 32 percent jump.
The top man at Ford says federal regulations to improve fuel economy will come with a price—for the industry. Alan Mulally says the regs will push automakers to build more small cars than the public wants–and that will cut into profits. During a panel discussion at the Center for Automotive Research Management, Mulally said he’s “never seen a market-distorting policy like CAFE,” the Corporate Average Fuel Economy standards. He said some of the standards now being discussed are not achievable under present technology.
General Motors has signed an agreement with a battery maker that it says could push it ahead of Toyota in the race to bring plug-in hybrid and electric cars to market. A123 Systems, which already produces millions of nanophosphate lithium-ion batteries for use in cordless power tools, plans to apply the technology to automobiles. The Wall Street Journal is reporting that problems with lithium-ion technology have forced Toyota to back away from plans to roll out the vehicles between 2008 and 2010. GM Vice Chairman Bob Lutz says that development, coupled with the deal with A123 systems, could give his company the lead in bringing the new clean technology to market.
The world’s largest inland desalination plant has opened for business–in El Paso. The opening of the Kay Bailey Hutchison Desalination Plant marked the end of a 15-year project to design, fund and build the unit. U.S. Senator Hutchison was on hand to unveil a complex that’s capable of supplying 27.5 million gallons of drinking water daily. The El Paso Water Utilities Public Service Board will run the plant. Hutchison says the project, which includes federal money, will be a model for other cities struggling with water supply questions. The plant will treat brackish, or salty, water pulled from an underground supply. Wells and more than two dozen miles of pipeline will connect the underground aquifer from nearby Fort Bliss.
A one-time customer is suing Fort Worth homebuilder D.R. Horton. A Horton filing with the Securities and Exchange Commission says John R. Yeatman is suing the company for allegedly forcing him to use Horton’s affiliated mortgage service to buy his home. The lawsuit–filed in a Savannah, Georgia, federal court—accuses Horton of violating the Real Estate Settlement Procedures Act. Horton’s one of the nation’s biggest homebuilders. Horton says the suit is baseless and it doesn’t expect it to affect its finances. In the most recent quarter between April and June, D.R. Horton took nearly $1.3 billion in charges–in part to write down the value of unsold homes and deposits on land. That pushed the company to a loss of $823.8 million.
Dynegy swung to a second-quarter profit after recording a loss in last year’s quarter. The Houston-based electricity producer reports net income for the April-June period of $76 million. That’s after a second-quarter loss last year of $211 million. Last year’s second-quarter results were depressed by $190 million in after-tax debt restructuring costs. Revenue for the recent quarter more than doubled to $828 million with the help of increased power sales and higher prices.
Southwestern Electric Power Company officials say a proposed $1.3 billion power plant in southwestern Arkansas could provide the energy needed to promote development in the region. But environmentalists, hunters and others opposing the 600-megawatt coal-fired plant proposed for near Fulton, Arkansas, say it would damage the pristine woods where the plant is to be built in. The Arkansas Public Service Commission opened a hearing in Little Rock, but it’ll delay taking testimony until August 20th to allow a special commissioner to get settled. SWEPCO is a division of Columbus, Ohio-based American Electric Power and has 464,000 customers in Arkansas, Louisiana and northeast Texas. Fulton is about 20 miles from the Texas border. Regulators had intended to hear the case through next week–but the panel changed its schedule after member Sandra Hochstetter resigned to become Vice President of Strategic Affairs for the Arkansas Electric Cooperative Corporation.
A Longview company announced a voluntary recall of more than 4,200 tuna salad sandwiches and egg salad sandwiches. Cloud’s Food Service says nobody has gotten sick–but the sandwiches might be contaminated with listeria monocytogenes. The tuna salad and egg salad sandwiches were sold in east Texas, west Louisiana and southwest Arkansas. The tuna salad sandwiches have the code: 62607-72507. The egg salad sandwiches have the code: 41907-72507. The potential problem was discovered during sampling by the Food and Drug Administration. Customers who have sandwiches covered by the recall should return them to the store where they were purchased for a full return. Company President David Floyd says most of the sandwiches were probably consumed in July. But Floyd says the sandwiches were distributed to a large number of convenience stores and he wants to put the safety of customers–1st.
Wild Oats Markets said its second quarter profit dropped 97 percent. The Boulder, Colorado-based natural and organic grocery chain blames higher costs and charges that offset improved sales. For the quarter ended June 30, net income fell to $127,000. Selling, general and administrative expenses rose 44 percent while restructuring and asset impairment charges climbed 26 percent. Revenue, though, rose five percent to $$311.8 million as same-store sales grew 3.1 percent in the quarter. Wild Oats’ Austin-based rival Whole Foods Markets is planning to buy the chain for $565 million if the deal survives a court challenge from the Federal Trade Commission. The FTC wants to stop the deal on antitrust grounds. A hearing on the case was held July 31 and August 1st, but no decision has been made yet.
The company says lyrics performed by Pearl Jam criticizing President Bush should not have been censored from a live Webcast by AT&T. San Antonio-based AT&T, through its Blue Room Entertainment site, offered a Webcast of the band’s headlining performance Sunday at Lollapalooza in Chicago. But two lines were cut by monitors hired by the company through a vendor. AT&T spokesman Michael Coe says the monitors were only supposed to bleep out excessive profanity or nudity. Coe says the company is working with the vendor that produces the Webcasts to avoid future misunderstandings. The lines cut from a song to the tune of Pink Floyd’s “Another Brick in the Wall” included “George Bush, leave this world alone” the second time it was sung and “George Bush, find yourself another home,” according to the band’s Web site.