The troubled Stanford Financial Group’s chief investment officer appeared in federal court after she was charged with obstructing a federal investigation. Laura Pendergest-Holt looked pale and solemn in a black pantsuit when she appeared in court in Houston. She allegedly obstructed the investigation of an alleged $8 billion investment fraud by Texas billionaire financier Robert Allen Stanford. The Securities and Exchange Commission says she lied about her knowledge of the firm’s activities and omitted key details. Pendergest-Holt agreed to allow her case to be moved to a Dallas federal court. That’s where the SEC filed a lawsuit accusing Stanford of fraud. Pendergest-Holt was arrested Thursday in Houston, where Stanford Financial Group is based. FBI agents served Stanford with legal papers last week, and he was ordered to surrender his passport. But he hasn’t been charged with a crime. Meanwhile, new details are emerging that show Stanford borrowed $1.6 billion from his troubled company’s assets.
Antigua isn’t waiting for the U.S. to resolve fraud allegations against Robert Allen Stanford before seizing the billionaire’s assets. The Senate voted to confiscate Stanford’s property in the Caribbean country. The lower House of Parliament already approved the move. Antigua wants to seize Stanford’s assets before a U.S. receiver claims them to pay investors who bought his allegedly fraudulent bank certificates. Stanford’s holdings include a development company, newspaper and two restaurants, which have a combined work force of about 800. U.S. authorities have filed civil charges claiming Stanford defrauded investors by misleading them about their investments. He’s the focus of a U.S. criminal probe as well.
JPMorgan Chase is eliminating 2,800 more jobs through attrition at its Washington Mutual operations. That’s on top of the 9,200 layoffs announced in December. The company says most of the reductions will be at WaMu’s call centers, mortgage processing centers and other back offices, made by leaving vacant positions unfilled. JPMorgan acquired WaMu’s banking business from the FDIC in September after Washington Mutual collapsed from billions in bad mortgages. The distinction between WaMu and Chase will blur as Washington Mutual branches are rebranded with the Chase logo. Chase says 36 of 111 WaMu branches in the Houston area will close, leaving 75 remaining offices. Statewide, Chase plans to close 88 of 169 Washington Mutual branches, giving Chase 663 branches in Texas. Chase now has more than 5,400 branches with WaMu’s 2,207 branches. The company says 300 are to close in the current quarter and 92 more by the end of the year.
Energy holding company NiSource says its business segment, NiSource Gas Transmission & Storage, will slash 370 to 380 jobs, across its 16-state operating territory over the course of 2009. The Houston-based business unit says the cuts, representing about 25 per cent of its workforce, will improve operational efficiencies as the company positions to weather challenging economic conditions. The move follows job cuts announced tHis week by Chesapeake Energy. NGT&S President Christopher Helms says eligible employees will be offered a competitive severance package and outplacement assistance. Certain employee groups will be eligible for voluntary severance.
Pilgrim’s Pride said it will cut 3,000 jobs as it shuts down operations at three of its 32 chicken processing plants. The closures will reduce the company’s chicken production by roughly ten per cent. They are designed to save the company $110 million a year as part of an ongoing restructuring. The Pittsburg, Texas-based company filed for Chapter 11 bankruptcy protection in December under a heavy debt load. The plants are expected to close by mid-May. They are in Douglas, Georgia; El Dorado, Arkansas; and Farmerville, Louisiana. The company expects the closures to cost $35 million, not including asset write-downs it may take in the second quarter. The company also said it would combine its protein salad production operation in Franconia, Pennsylvania, with its Moorefield, West Virginia, facility. The company says the move also affects 430 independent chicken farmers.
A deal has been made for a third rescue attempt in the past five months for struggling Citigroup. The U.S. government will exchange up to $25 billion in emergency bailout money for as much as a 36 per cent equity stake. The deal is contingent on private investors also agreeing to a similar swap. The conversion will help provide Citi the mix of capital needed to withstand further weakening in the economy. The stock-conversion option gives the government greater flexibility in dealing with ailing banks. It also gives the government voting shares, and therefore more say in a bank’s operations. Citi will also reshape its board of directors.
The government says the economy shrank at a staggering 6.2 per cent pace at the end of 2008, the worst showing in a quarter-century. Consumers and businesses ratcheted back spending, plunging the country deeper into recession. The Commerce Department figure shows the economy sinking much faster than the 3.8 per cent annualized drop for the October-December quarter first estimated by the government last month. It also was a considerably weaker performance than the 5.4 per cent annualized decline economists expected.
Federal regulators are raising the fees paid by U.S. banks and thrifts, and levying an emergency premium to rebuild a deposit insurance fund depleted by a cascade of bank failures. The Federal Insurance Deposit Corporation says it now expects bank failures will cost the insurance fund around $65 billion through 2013, up from an earlier estimate of $40 billion. The FDIC says the economic crisis, which has caused dozens of recent bank failures and the insurance fund to drop to its lowest level in a quarter-century, warranted extending the plan to rebuild the insurance fund from five years to seven.
The Federal Reserve says commercial banks and investment firms trimmed borrowing over the past week from its emergency lending program. The Fed says commercial banks averaged $64.4 billion in daily borrowing over the week ending Wednesday. That was down from nearly $66 billion in average daily borrowing logged over the week that ended February 18th. Investment firms drew $25.6 billion over the past week from the Fed program. That was down slightly from an average of $26 billion the previous week. This category includes any loans that were made to the U.S.- and London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley and Bank of America’s Merrill Lynch.
Relatives of a passenger killed when a commuter plane crashed on a house in New York state are suing Continental Airlines and the flight’s operators. The suit claims the plane had inadequate deicing equipment and an improperly trained crew. It appears to be the first lawsuit over the crash. Investigators have not determined why Continental Connection Flight 3407 crashed February 12th near Buffalo. Ice has been mentioned as a possibility. The federal lawsuit seeks unspecified damages for the death of Susan Wehle. She was among 50 people killed. The suit names Continental and Pinnacle Airlines, Colgan Air and aircraft maker Bombardier Aerospace.
Passenger volume at the Houston Airport System fell more than ten per cent below the same month a year ago. The month saw declines of 12.3 per cent in domestic passengers and 1.8 per cent in international passengers. Revenue-producing takeoffs and landings declined 7.4 per cent. Air freight was down 13 per cent.
Government investigators says some companies that defrauded the United States and put American lives at risk still managed to get new federal contracts despite rulings designed to block them. In most cases, the contracts were awarded by mistake. The Government Accountability Office blames some on faulty computer searches, where officials may have left out commas or periods. It also says the search engine often failed to identify any entries on the exclusion list. But in at least one case the award was not a mistake. The army deliberately continued a contract with a Germany company whose president was convicted of trying to sell parts that can be used to develop a nuclear bomb to North Korea. The firm supplied civilians for training exercises for U.S. troops headed for Iraq. An army official says the payments continued because the president was removed from the company and stopping the contract early would have jeopardized the training.
The Governor’s Division of Emergency Management is getting $60 million from the federal government for costs incurred during Hurricane Ike. The grants from the Federal Emergency Management Agency are to help pay for 600 evacuee shelters, ambulance staging areas, the National Guard, equipment, buses, food, water, ice and generators. That’s according to Senator Kay Bailey Hutchison’s office, who announced the FEMA grants. Hutchison is challenging Governor Rick Perry in the 2010 Republican gubernatorial primary. The AP reported this week that the state has $134 million in unpaid bills from Ike to companies and governments that provided services. Perry blamed the delay on FEMA, but lawmakers said the state had the money to pay the bills and seek federal reimbursement.
A law to suspend licenses and tax permits for companies that intentionally hire illegal immigrants would probably withstand constitutional challenge. That’s the finding of Texas Attorney General Greg Abbott. Two such proposals have been filed in the Texas House. Republican Representative Frank Corte of San Antonio asked for the formal opinion to see if Texas could enact a measure similar to an Arizona law passed in 2007. The 9th U.S. Circuit Court of Appeals upheld Arizona’s law soon after Corte filed his request. The Arizona law has the state’s attorney general and county attorneys investigate complaints against businesses allegedly employing illegal immigrants and requires them to notify federal and local authorities if proven true. Two years ago, several bills aimed at illegal immigration were stalled in Texas when the attorney general ruled they were too broad or impinged on the jurisdiction of the federal government. But Republicans have refined those bills.
A special commission on transportation created by Congress is suggesting hiking gasoline taxes and charging motorists by the miles to help pay for road projects. Neither approach appears to have the support of the Obama administration. Transportation Secretary Ray Lahood has said raising the gas tax during a recession is a bad idea. And when Lahood suggested last week that a mileage tax might merit consideration, the White House responded within hours, saying, “it is not and will not be the policy of the Obama administration.” But the National Surface Transportation Infrastructure Financing Commission says current gas and diesel taxes are not raising enough money to keep pace with the cost of highway, bridge and transit projects. It proposes a ten cent increase in the gas tax and 15 cents for diesel and adjusting both for inflation. Otherwise, it says, the nation will face “grim consequences.”
A drive-in screening of industrial and information films about oil will be projected tomorrow night at the site of a former auto junkyard on Buffalo Bayou on Drennan. The Junkyard Drive In Texas Oil on Film event is from the Buffalo Bayou Partnership, Aurora Picture Show and the Center for Land Use Interpretation, in conjunction with the Blaffer Museum exhibition of Texas Oil: Landscape of an Industry. The screening begins at 6:30 p.m. Audio will be broadcast over low-power radio.
The number of rigs actively exploring for oil and natural gas in the united states dropped by 57 this week to 1,243. Houston-based Baker Hughes reports that of the rigs running nationwide, 970 were exploring for natural gas and 260 for oil. A total of 13 were listed as miscellaneous. A year ago, the rig count stood at 1,763. Of the major oil- and gas-producing states, Texas lost 26 rigs. Baker Hughes has tracked rig counts since 1944. The tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted several record lows in 1999, bottoming out at 488.
Dell says its profit dove 48 per cent during the fiscal fourth quarter as the recession forced consumers and businesses to spend less on technology. Dell’s earnings sank to $351 million. Sales dropped 16 per cent to $13.4 billion, missing expectations. Dell, based in Round Rock, is the world’s second-largest computer maker behind Hewlett-Packard.