Gasoline prices up again in Texas…Private shareholder lawsuit against BP’s former head to move forward…Bank of America exiting wholesale mortgage business, eliminating about 700 jobs…
Retail gasoline prices are up this week across Texas for the second week in a row. The weekly AAA Texas Gas Price Survey says regular self-serve is averaging $2.71 per gallon in the 11 Texas cities covered by the survey. That’s up three cents from last week. Nationally, prices rose three cents to an average of $2.82 per gallon. Auto club spokeswoman Rose Rougeau says gas pump prices are starting to reflect skyrocketing crude oil prices. She says that with crude prices topping $90 per barrel, the upward price trend should continue. Amarillo has the state’s most expensive gas, averaging $2.84 per gallon of regular, self-serve. That’s four cents more than last week. Houston has the state’s cheapest gas at $2.62 per gallon, despite a four cent increase.
An attorney plans to go forward with a private shareholder lawsuit in the United States against BP’s former head and other executives. The case was filed in Anchorage, Alaska, last year by two BP shareholders, the London Pensions Fund Authority, and the U.S. Retirement Fund of Unite Here. It alleges mismanagement by CEO John Browne and other BP executives damaged the company. Patrick Daniels, a lawyer with Coughlin Stoia Geller Rudman & Robbins, also criticized new U.S. government settlements as insufficient. U.S. law enforcement agencies settled charges with the British oil company and fined it $373 million. The agreement largely resolves long-running probes into a deadly 2005 explosion at BP’s refinery in Texas, 2006 oil spills from pipelines in Alaska and the manipulation of propane prices in 2004. BP declined to comment on the matter.
Look for more pain for the housing market. That’s the reaction coming from analysts who’ve seen the latest government report on home sales. The Commerce Department says new home sales rose nearly five percent last month. All of the gain came in the west. Economist Dave Seiders of the National Association of Home Builders also cautions, along with other analysts, that the government report doesn’t cover sales contracts that are canceled. Reports from builders have indicated cancellations continue to be quite high. In addition, the National Association of Realtors reported Wednesday that sales of existing homes fell by a record eight percent in September, a bigger drop than expected.
In addition to scaling back its investment banking operations, Bank of America is exiting the wholesale mortgage business and eliminating about 700 jobs, according to bank officials. The nation’s second-largest bank will stop offering home mortgages through brokers at the end of the year to focus on direct-to-consumer lending through its banking centers and loan officers. The move also eliminates the jobs in the bank’s consumer real estate unit. The bank shared details of the decision with the Associated Press. The cuts are part of a 3,000-job reduction engineered by Chief Executive Ken Lewis after the nation’s second-largest bank reported a huge decline in third-quarter earnings.
Countrywide Financial says it lost more than $1 billion in the third quarter, as it was forced to set aside millions of dollars for loan losses and writedowns. It was Countrywide’s first loss in 25 years. But investors are more interested in the outlook, and Countrywide was upbeat in that regard. They’ve reacted by sending Countrywide shares up more than 20 percent. It predicts a profit for the current quarter and in 2008. CEO Angelo Mozilo says the loss was caused by ”unprecedented disruptions” in the mortgage market and the ongoing housing slump. But he notes that company has worked to secure financing, tighten underwriting standards and shift its mortgage lending business into its banking subsidiary.
Internet phone service provider Vonage has settled a patent lawsuit brought by Verizon Communications for a maximum of $120 million. That suit, along with those mounted by other phone companies, has cast a shadow over Vonage’s future. After setbacks in the Verizon litigation, Vonage put $88 million in escrow. The settlement caps any additional payout at $32 million. If Vonage wins a rehearing on two patents, its total payout will be $80 million.
U.S. Treasury Secretary Henry Paulson admits the continued rise in oil prices is “not a positive” for the economy. But he’s downplaying the impact, noting both employment and the economy were still growing. In his words, “the employment situation is very strong in this country, there’s no doubt about it. We’re creating new jobs—49 straight months.” Paulson was talking on New York Mayor Michael Bloomberg’s weekly radio program on WABC. Paulson said the financial market conditions have continued to improve after being roiled over the summer by a crisis in the subprime mortgage sector, although a recovery will “take some time.”
The Senate on Thursday night approved a seven-year extension of a moratorium on state and local taxes on Internet access. The Senate voice vote came a little over a week after the House passed a bill calling for a four-year moratorium. The tax ban, first approved in 1998, is set to expire November 1st. The two chambers will have to reach a compromise on the length of the ban and other differences before the bill can be sent to the White House for President Bush’s signature.
Waste Management says its third-quarter earnings fell seven percent, missing Wall Street’s expectations. The nation’s largest garbage hauler blames the impact of a labor stoppage and rising crude oil prices. The Houston-based company also lowered its outlook for full-year earnings. Waste Management earned $278 million. That includes a charge of 16 million dollars related to a labor dispute in Oakland, California. Revenue fell one percent to $3.4 billion.