Federal regulators say they will launch a revamped program to shore up the nation’s troubled banks that includes the option of increasing government ownership in financial institutions. The new plans are the Obama administration’s latest attempt to bolster the strength of the banking system without nationalizing any institutions, which the White House has said it does not intend to do. The Treasury Department, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Office of Thrift Supervision and the Federal Reserve jointly issued the statement amid growing concern that some of the country’s biggest banks may need additional assistance to survive the fallout from the worst financial crisis since the 1930s.
President Barack Obama is telling the nation’s governors they can expect money to begin arriving Wednesday to help them with Medicaid payments to the poor. The recession has left many states struggling to meet the costs of Medicaid, which they underwrite jointly with the federal government. At a White House meeting this morning, Obama said his administration would begin distributing $15 billion from the economic stimulus program.
President Obama has vowed to cut the country’s budget deficit in half by the end of his first term. Obama laid out the guiding principle of his budget policy at a White House conference. He said he believes the time has come for “a frank conversation” about the problem and said the deficit, projected to total $1.3 trillion this year, must be brought under control. He also said that he wants to reinstate a pay-as-you-go policy on federal spending programs, get rid of programs that do not work and end tax breaks for companies that ship jobs overseas.
The executive director of the upcoming La Baule World Investment Conference is meeting with Houston corporate leaders and government officials this evening to discuss the attractiveness and competitiveness of Europe to international investors. Patrice Lefeu invited Governor Rick Perry to France for last year’s conference.
“After, you know, the conference, he told me ‘hi, Patrice, why you shouldn’t come to Texas, and mobilize, you know, Houston key players in green technology and create this high delegation, you know, for proving, demonstrating to your key players that Texas is very, very, very pro-active in green technology and renewable energy.’ I think the stimulus program, in addition, you know, plus, you know, the taxes, you know, initiative could be great to mobilize Texas players.”
At the upcoming World Investment conference, Ernst & Young will announce the results of its annual survey of the attractiveness of Europe and its regions.
Antigua’s prime minister says he’ll reconvene parliament to deal with fallout from fraud allegations against R. Allen Stanford. The Texas billionaire financier is the Caribbean island’s largest private employer. Prime Minister Baldwin Spencer told reporters last night that he’s concerned about the potential loss of hundreds of jobs. He says the government “has decided on a course of action” that requires parliamentary action, and that Parliament would reconvene this week. He gave no details on the plan. The two-island nation of Antigua and Barbuda had dissolved Parliament ahead of general elections scheduled for March 12th. But the law allows the prime minister to call a special session to address matters of urgent national interest. The U.S. Securities and Exchange Commission filed a civil lawsuit last week accusing Stanford of a “massive” fraud through Antigua-based Stanford International Bank. Stanford was served legal papers by FBI agents last week and ordered to surrender his passport, but he hasn’t been charged with a crime.
The National Association for Business Economics is painting a glum picture for this year. Its forecasters say the country stands to lose a sizable chunk of economic activity in 2009 as consumers at home and abroad retrench in the face of persistent economic troubles. And the NABE says America’s jobless rate–now at 7.6 per cent, the highest in more than 16 years–is expected hit a peak of nine per cent this year. The new estimates are roughly in line with other recent projections, including those released last week by the Federal Reserve. All told, NABE forecasters now expect the economy to shrink by 1.9 per cent this year, much more than the 0.2 per cent dip projected last fall. If the new forecast is correct, it would mark the first time since 1991 the economy actually contracted over a full year and would be the worst showing since 1982, when the country had suffered through a severe recession.
Homebuyers are increasingly encountering a problem in their new homes that they never expected. That’s methamphetamine contamination, and it may lead to changes in state law. Experts say meth contamination of apartments, hotel rooms, houses, storage sheds and even cars is more common than people may imagine. Meth-making or heavy use can leave chemicals in carpets, air ducts and attics. And without proper cleanup, experts say the chemicals linger and expose people to health risks. Although Texas home sellers are required by law to disclose knowledge of a house being used as a meth lab, experts say the law isn’t strong enough to protect buyers. House Bill 23 introduced by Democratic State Representative David Leibowitz of San Antonio would require landlords to disclose previous use of leased premises for manufacture of methamphetamine.
Illegal drug makers who are hoping to avoid a police bust in their homes are turning to motels. Authorities say meth labs are being set up in motel rooms, where drug-makers can mix the chemicals in a matter of hours and then slip out the next morning. They don’t have to worry about their home or their trailer being seized in a raid. The dangerous contaminants can lurk on countertops, carpets and bathtubs. Even short-term exposure to vapors or residue can cause irritation and vomiting. Cleaning up from a motel meth lab can cost as much as $20,000.
Lawyers hired by the federal mortgage giant Freddie Mac are quietly looking into the firm’s own lobbying campaign, an effort that helped snuff out proposed new regulations before the housing market collapsed. Freddie Mac was placed under direct government control because of its massive investment losses. The inquiry follows stories by the Associated Press that some $2 million were paid to a Washington lobby group which then targeted 17 Republican Senators to defeat a 2005 bill that would have required the firm to sell its then-lucrative mortgage portfolios. Months later, their value had plummeted. Also under review: six-figure payments to more than 50 outside lobbying firms and political consultants, including firms connected to former Senator Al D’amato and former Speaker of the House Newt Gingrich.
Plunging airline stocks suggest investors worry a few carriers may wind up in bankruptcy, victims of the country’s financial crisis. Analysts say there’s no immediate danger of that for any major carriers–although it could be the fate of one or two by this time next year if credit markets stay tight or the economy weakens further. American Airlines also faces some financial headwinds given its debt obligations and how much cash it is currently expected to end the year with heading into winter. Houston-based Continental Airlines is considered by analysts to be in stronger financial positions. American’s parent said in a regulatory filing that it should have sufficient liquidity to fund its operations for the near term. That includes repayment of debt and capital leases, capital expenditures and other contractual obligations–such as delivery of aircraft. But it also noted significant upcoming debt maturities. AMR will be required to make roughly $1.8 billion of principal payments on long-term debt and roughly $110 million in principal payments on capital leases. The company expects to spend roughly $1.6 billion on capital expenditures, including the Boeing aircraft commitments.
Former Vice President Al Gore says lower oil prices shouldn’t stall efforts to put a price on carbon emissions to combat climate change and reduce U.S. dependence on foreign oil. Gore told a clean energy conference that oil prices are like a roller coaster and will go up again. Another participant in the conference, former President Bill Clinton, said energy efficiency should be a major part of reducing the country’s oil dependence. Gore and Clinton headlined the high-profile conference on the need to develop clean energy sources. Among other participants were Senate Majority Leader Harry Reid of Nevada and House Speaker Nancy Pelosi of California as well as the Obama administration’s top energy officials.
Democratic Congressional leaders and the Obama administration say a national power grid is needed to move renewable energy from the remote locations where it can be generated to places where it’s needed most, like the nation’s cities. At the clean energy conference in Washington, Senate Majority Leader Harry Reid said “231 state regulators” can’t be allowed to hold up progress. He plans to introduce legislation that gives federal regulators authority to override states on grid placement decisions. Interior Secretary Ken Salazar says he’s ready to open energy corridors on federal land. But he says until the transmission issue is solved and the grid is capable of moving wind and solar energy the required distances, “we’re simply going to be standing in place.”
Ticketmaster has agreed to change the way it sells tickets over the Internet. New Jersey Attorney General Anne Milgram announced the settlement. She says the changes apply to all Ticketmaster sales nationwide. The case stems from complaints received about ticket purchases for a Bruce Springsteen concert. Ticket seekers were redirected from the main Ticketmaster site to a subsidiary that charged more. Milgram says Ticketmaster has not admitted wrongdoing but has agreed to pay $350,000 to the state. She says the company will also compensate ticket holders who complained and change how it handles secondary sales.
Ritz Camera Centers, the nation’s largest retail photography chain, has filed for Chapter 11 protection from creditors. The Beltsville, Maryland-based company submitted the filing Sunday in Federal Bankruptcy Court in Delaware. The company says revenue from the once-profitable photofinishing business have declined significantly with the shift from film to digital cameras. It also says an increase in gasoline prices, along with other economic factors, led to a sharp drop in sales in its Boater’s World recreational marine business. The company listed assets and liabilities at between $100 million and $500 million. The list of creditors is led by Nikon and Canon USA, which are owed a combined $40 million in trade debt.