Texas billionaire Robert Allen Stanford has been found in Virginia and served with civil legal papers from the Securities and Exchange Commission. FBI spokesman Richard Kolko says FBI agents, acting at the request of the SEC, served Stanford papers in Fredericksburg, Virginia. Stanford is not under arrest and is not in custody. The SEC charged Stanford and three of his companies on Tuesday with committing in an $8 billion fraud that lured investors with promises of improbable and unsubstantiated high returns on certificates of deposit and other investments. He has not been charged with any crime.
Depositors from the Caribbean to South America tried and failed to withdraw money from Stanford International Bank and its affiliates. That’s as the effects of U.S. fraud charges against Robert Allen Stanford spread around the globe only to be told their accounts were frozen and no money could be released. Depositors walked away empty-handed from the bank’s headquarters in the Caribbean island nation of Antigua. Venezuelan software businessman Reinaldo Pinto Ramos flew in by chartered plane from Caracas with other investors to check on their accounts. He says he has his life savings in the Stanford International Bank and is scared. Banking regulators throughout Latin America are scrambling to contain the damage after the U.S. Securities and Exchange Commission filed civil fraud charges against Stanford. Regional Director Rose Romero of the SEC’s Fort Worth office called it a “fraud of shocking magnitude that has spread its tentacles throughout the world.” Federal law enforcement officials raided Stanford’s Houston offices Tuesday, seizing assets and shutting down operations.
Stanford is a larger-than-life figure in the Caribbean. The 58-year-old Mexia native has used his personal fortune estimated at $2.2 billion by Forbes magazine to bankroll public works and sports teams. He’s also become a major figure in U.S. politics, personally donating nearly a million dollars mostly to Democrats. He owns a home in the U.S. Virgin Islands, and operates businesses from Houston to Miami and Switzerland to Antigua. He holds citizenship in the island nation, and its government knighted him in 2006 in recognition of his economic influence and charity work.
BP has agreed to pay almost $180 million to settle a pollution case with the government. BP Products North America, a unit of British oil company BP, agreed to spend $161 million on pollution controls, pay another $12 million in penalties, and spend another $6 million on a project to reduce air pollution near its Texas City refinery. The settlement with the Department of Justice and the Environmental Protection Agency follows a deadly explosion and fire in March 2005 that killed 15 people and injured more than 170 others. In that incident, the company has already pleaded guilty to violating the clean air act and agreed to pay a separate fine of $50 million.
Houston’s housing market continues suffering from stiffer mortgage underwriting standards and tight credit availability, according to the Houston Association of Realtors. The HAR Multiple Listing Service shows 3,240 closings in January—down 26.4 per cent from January 2008. Some 34 per cent of January’s sales were foreclosed properties—more than 25 per cent higher than a year ago. Harris County saw 2,594 properties posted for foreclosure in February—down 24.1 per cent from the same month last year.
A private sector measure of economic activity jumped unexpectedly in January, the second straight monthly increase. The New York-based Conference Board says its January Index of Leading Economic Indicators rose 0.4 per cent. Economists surveyed by Thomson Reuters expected no change in the index, which forecasts economic activity for the next three to six months based on ten economic components, including stock prices, building permits and initial claims for unemployment benefits. Last month’s gain compares to a 0.2 per cent increase in December and a drop of 0.7 per cent in November. Those measures were revised down from prior estimates. Conference Board economist Ken Goldstein says the “intensity” of the recession could begin to ease in the next few months.
The government says inflation at the wholesale level surged unexpectedly in January, reflecting sharply higher prices for gasoline and other energy products. The Labor Department said that wholesale prices increased by 0.8 per cent last month, the biggest gain since last July and sharply above the 0.2 per cent increase that economists had expected. The acceleration was led by a 3.7 per cent surge in energy prices with gasoline prices jumping by 15 per cent, the biggest gain in 14 months.
The number of unemployed workers receiving unemployment benefits jumped to an all-time high near five million, while new jobless claims remain well above 600,000. The Labor Department says new applications for benefits totaled 627,000 last week, the same as the previous week. But that was still more than the 620,000 claims economists expected. The number of people receiving regular unemployment benefits edged up to 4.99 million, marking the fourth straight week those receiving benefits have been at a record level. The continuing claims figure also was higher than analysts expected.
The potential for political capital, or fallout, from the $787 billion economic stimulus bill hasn’t been lost on Republicans or Democrats. Experts say the two parties will reap different political rewards if they find waste or abuse, which is virtually inevitable at this level of spending. Republicans are preparing to pounce on any wasteful spending as they refocus their criticisms of a measure whose success could hurt their 2010 election prospects. President Barack Obama and Congressional Democrats also promise rigorous oversight, including a new web site to help people track various projects funded by the massive bill. Congressional Republicans will be ready to say “I told you so” any time there are shortcomings or embarrassing examples of misused funds.
A breakdown of some of the $17 billion that will be available to Texas in the federal stimulus package, according to a state analysis: Education: $6.2 billion, including grants to local school districts for technology, special education and other programs. Health and human services: $5.8 billion, including funds to help pay for Medicaid, food stamps, foster care, adoption and other services. Transportation: $2.7 billion, with most of it going to highway and bridge construction. Labor: $1 billion to aid job search assistance and training for adults and youth and to help low-income families with child care. Criminal justice: $161 million with help for local law enforcement, crime victim assistance and aid for programs to fight sexual exploitation of children on the Internet. Housing: $1 billion, including money to help build affordable housing and rental assistance for low-income families.
President Barack Obama says he’s assured Canadian Prime Minister Stephen Harper that his administration wants to “grow” trade with Canada, and not contract it. Obama says he told the Canadian leader during talks in Ottawa that there is nothing in the stimulus package that would run counter to that goal. Obama had caused some nervousness in Canada by pledging during the presidential campaign to renegotiate NAFTA, the trade agreement linking the U.S., Canada and Mexico, to get better labor and environmental standards. Both leaders said that as economies around the world face challenges, it’s important for the U.S. and others to resist calls for protectionism.
The rules that some people blame for worsening the nation’s financial crisis are about to get a fresh review. The board that decides U.S. accounting rules will conduct two new studies on the issue of mark-to-market accounting. Financial Accounting Standards Board Chairman Robert Herz says the new studies followed recommendations from the Securities and Exchange Commission in its recent report on the rules. One of the studies will review the guidelines used for applying mark-to-market accounting, including addressing such issues as when the market for a particular asset is not active. The other study will make recommendations aimed at improving disclosures. Mark-to-market, or fair value, accounting requires banks to carry assets, such as mortgage-backed securities, on their books at their current values. Critics contend that’s made the current financial crisis worse by forcing banks to slash the value of assets that have been severely depressed by market conditions.
President Barack Obama has rolled out his plan for stabilizing the housing markets, the troubled source of the continuing recession. In Mesa, Arizona, Obama announced a $75-billion package that aims to prevent as many as nine million foreclosures. In addition, the government is doubling support for Fannie Mae and Freddie Mac to $400 billion. The intent is to get them to refinance loans in cases where the value has sunk below what the owner owes. The president says everybody is paying a price for the home mortgage crisis, adding, “all of us will pay an even steeper price if we allow this crisis to continue to deepen.”
Housing Secretary Shaun Donovan says it’s important that lending institutions “step up to the plate” to help make certain the Obama administration’s new home foreclosure initiative succeeds. Speaking a day after President Barack Obama announced the $75 billion program, Donovan said it’s critically important for banks to buy into the spirit of the program. He said that “what started as a housing crisis has become a jobs crisis.” In addition to the new mortgage lifeline for millions of Americans on the brink of foreclosure, the administration announced $200 billion in new government assistance to Fannie Mae and Freddie Mac. It’s part of an effort to encourage them to refinance homes for people “under water” — those whose mortgage payments exceed the value of their homes. Donovan, interviewed on NBC’s Today show, said the administration feels certain there are sufficient requirements to ensure heavy bank refinancing, saying that could “tip the balance for millions of homeowners.”
General Motors and Chrysler are working to resolve issues that could help them get the billions of federal dollars they say they need in order to become profitable again. The United Auto Workers union has tentatively agreed to help GM, Chrysler and Ford reduce labor costs, but it still hasn’t agreed to accept payments to the union-run health-care trust funds in stock instead of cash. The trusts would pay health-care bills for about 800,000 UAW retirees, spouses and dependents and move billions in liabilities off the companies’ books. And the government wants the union to take up to half of what it’s owed as an equity position in the companies. At the same time, GM’s bondholders are holding out on a deal to exchange two-thirds of the company’s debt for equity until there’s more clarity from the union.
ConocoPhillips CEO James Mulva says the poor public image of oil companies puts producers at risk of harmful policies on issues such as carbon emissions and access to new production areas. He said in London that oil companies are losing their ability to influence public opinion and government policies as nations seek to increase use of renewable energy. Mulva says fossil fuels will be essential for decades.
The Port Commission of the Port of Houston Authority has approved $33.8 million for electric cranes at Bayport Container Terminal. Acting Executive director Wade Battles reports that PHA realized its ninth consecutive year of record-breaking revenue in 2008.
This summer, the Enron story reaches all the way to Chichester, England, southwest of London on the UK’s south coast. Rupert Goold stars in the world premiere of Lucy Prebble’s new play called “Enron” in Chichester’s Minerva Theatre beginning on July 22nd. Based on real life, Prebble’s play uses music, movement and video to follow the story of greed and loss, according to Whatsonstage.com. Following its Chichester dates, “Enron” will transfer to London’s Royal Court on September 17th.
Natural grocer Whole Foods Market’s profit dipped in the first quarter on slowed sales but the earnings beat expectations. The Austin-based grocer said Wednesday that its profit slipped to $27.8 million, compared with $39.1 million last year. The results included $11 million in legal costs. Whole Foods also lowered its guidance for 2009 for the second time.