Wholesale prices fall with lower energy and food costs…Federal judge considers motions to dismiss SEC lawsuits against two former Enron lawyers…California attorney who recouped $7.1 billion for defrauded Enron investors to plead guilty in alleged kickback scheme…
Wholesale prices fell in August by the largest amount in ten months. The decline was led by a 6.6 percent plunge in energy costs, the biggest drop in more than four years. And food costs fell for the fourth straight month. The Labor Department says wholesale prices fell by 1.4 percent, the best showing since a 1.5 percent fall last October. It was a much bigger decline than the three-tenths-percent drop that had been expected. Core inflation, which excludes food and energy, was also well under control, rising by just two-tenths of a percent. The report should further ease concerns about inflation and give the Federal Reserve the leeway to cut interest rates to guard Against the possibility of a recession.
E-trade Financial says the tightening in global credit markets will force the discount brokerage to exit businesses that don’t deal directly with retail investors. The move will significantly cut into profit this year. The New York-based brokerage said the restructuring will affect what it says are “non-core businesses that lack a direct and strategic connection with retail customers.” Among the units that will be affected are E-Trade’s wholesale mortgage operations and direct mortgage lending business. There was no immediate word how many jobs might be affected. The company says severance and other restructuring costs are estimated at about $32 million, a majority of which will occur in the fourth quarter. E-Trade, and big Wall Street investment banks, have been squeezed as defaults in sub-prime loans have caused investors to become hesitant about taking risk. This has caused everything from corporate credit to stock trading to suffer.
U.S. District Judge Kenneth Hoyt is considering motions to dismiss Securities and Exchange Commission lawsuits against two former Enron lawyers accused of aiding and abetting fraud. Former Enron General Counsel Jordan Mintz is accused of helping Enron hide its 2001 repurchase of a money-losing Brazilian power plant from a partnership controlled by former finance chief Andy Fastow. Former Associate General Counsel Rex Rogers is accused of failing to properly disclose to investors that former Chairman Ken Lay sold more than $86 million in Enron stock back to the company to repay company loans.
The California attorney who recouped $7.1 billion for defrauded Enron investors and collected billions in legal fees has agreed to plead guilty to one count of conspiracy in an alleged kickback scheme, according to the Los Angeles Times. William Lerach resigned last month from the San Diego law firm that he founded in 2004, and will pay a multi-million dollar fine under a deal made with federal prosecutors. The 61-year-old attorney could serve as long as two years in prison. The indictment claims his firm paid clients kickbacks so it could become the leads in class-action litigation, winning a larger share of legal fees.
The Texas School Land Board has rejected all the bids for the 9,200-acre Christmas Mountains in west Texas. There’s a mistake in the map of the sale area, so the sale is on hold until November. The Land Board says it’s rejecting the standing bids and rebidding the tract near Big Bend National Park. Conservation groups oppose the sale. They argue the land was donated to the state for protection and public use. The six bid proposals ranged in price up to $652,000. Two top bidders said they wouldn’t allow the public on the land or would tightly control public visits. Texas Land Commissioner Jerry Patterson says he wants to protect mountains and allow appropriate public access.
Houston’s office market is making strong progress this year, according to Transwestern’s research facility Delta Associates. Although Houston’s vacancy rate of 11.3 percent is still above the national average of 10.5 percent, it fell from 11.7 percent in 2006. Houston had five million square feet of office space under construction at mid-year, of which 24 percent is pre-leased.
Palladium Equity Partners of New York has purchased Houston-based Castro Cheese, which makes La Vaquita cheeses and dairy products. Palladium plans to expand Castro Cheese’s distribution beyond Texas. Castro Cheese was started after Maria Castro came to Texas in 1971, eventually employing 75 people in Spring Branch.
American Airlines has offered to link pay raises for mechanics and other ground workers to the company’s performance. The Transport Workers Union is studying the idea from the Fort Worth-based airline. Neither side is disclosing details of any proposals. In a letter, union president James Little writes that cooperation between American’s Fort Worth-based parent, AMR Corporation, and the union was eroding. He says workers hadn’t been rewarded for American’s improved financial performance. The union and the company are expected to begin talks soon that will be aimed at a new contract by next April. But little writes that the company should consider immediate and “non-traditional” compensation to improve labor relations. In a written reply to little’s letter, AMR CEO Gerard Arpey shows interest, and the union has appointed a commission to study the idea. The union posted the letters on its Web site. They were first reported by the Fort Worth Star-Telegram.
Contract talks between the United Auto Workers and General Motors have resumed, but a deal could still be days away. Both sides have reported progress, but a person who was briefed on the talks said it’s taking a lot of time to reach an agreement on certain details. Those include changes gm is seeking in work rules and job classifications, as well as financial issues. GM’s four-year contract with the UAW was due to expire last week.
Drivers on average waste nearly 38 hours a year crawling through traffic on their way to work. That’s according to a study at the Texas Transportation Institute. Researchers counted nearly three billion gallons of fuel used while cars idled in congestion. And they say when tallied up, traffic delays cost the nation nearly $80 billion. A transportation expert says there are too many people driving on an inadequate infrastructure. Also, census data shows that nearly three out of four drivers are alone in their cars. The study says commuters in L.A. are wading through the most traffic, spending nearly 72 hours a year frustrated behind the wheel. Next in line in traffic are Atlanta, San Francisco, Washington and Dallas.
Staying healthy costs quite a bit in the U.S., especially in northeast. New government statistics show annual health care spending per person topped $6,400 in New England and more than $6,100 in the rest of the northeast. That’s compared to the national average of nearly $5,300. The report comes from the Centers for Medicare and Medicaid Services reports in the current issue of the journal Health Affairs. The totals include spending on individual health care from all sources, including insurance, personal expenses, Medicare, Medicaid and other sources, in 2004, the most recent figures available. Health care spending was below the national average in the southwest and Rocky Mountain regions. They also tend to have lower-than-average per person Medicare and Medicaid spending because they are more rural, they have less access to physicians and hospitals.
An overwhelming majority of Americans responding to a poll feel better about buying food produced in the U.S. than overseas. The survey also suggests most Americans believe food grown locally is healthier than food shipped from across the country. The Iowa Sate University Agriculture Center finds that 85 percent of Americans have confidence in the safety of their local and regional food systems. Only 12 percent expressed confidence in the safety of food from anywhere else in the world. The center’s deputy director says Americans remain extremely wary of foreign foods. He believes more research needs to be done into local foods regarding their potential health benefits and in how to better distribute them. More than 11,000 Americans were surveyed.
The Conrad Hilton College of Hotel and Restaurant Management at the University of Houston has received the largest gift ever presented to the college from a source other than the Hilton Foundation. Nick and Vicki Massad of Houston-based American Liberty Hospitality have presented the college with a $1.5 million gift for the college’s Library and Hospitality Industry Archives. When completed in 2008, the facility will be named the Massad Family Library and Hospitality Industry Archives. Construction begins in May 2008.