The Obama administration says it hopes a new bank rescue initiative will generate $500 billion in purchasing power to buy up toxic assets and get them off the books of the nation’s banks. The administration also said that the initial effort could grow to $1 trillion in purchases eventually, as the program proves successful in attacking the bad-books problem that has been at the heart of the worst banking crisis the United States has seen in seven decades. In a lengthy fact sheet, the administration said it plans to use $75 billion to $100 billion from the government’s existing bailout program and that it expects participation from a broad array of institutions, ranging from pension funds to insurance companies and other long-term investors.
The White House says President Barack Obama’s energy program will devote nearly $60 billion of economic stimulus funds to developing clean energy technologies and reducing climate change. A fact sheet on the program also points to nearly $75 billion in Obama’s ten-year budget proposal to make permanent the existing tax cuts for energy research and experimentation. Aides say while the president is prepared to negotiate over the budget’s details, his priorities remain “very firm” and the push for energy independence will not be subject to wheeling and dealing. Obama and his aides plan an aggressive push to deliver a $3.6 trillion budget that contains many of his campaign promises. Other top priorities along with energy include health care reform and education.
The U.S. Supreme Court appears inclined to bar prosecutors from retrying a former Enron executive for alleged fraud at the one-time energy giant. Justice Stephen Breyer remarked during arguments in F. Scott Yeager’s appeal that he “can’t think of any reason to allow the government to have a second bite at this apple.” The sentiment seemed to be echoed by a majority of the court. Yeager’s a former executive at the Houston-based company’s failed broadband venture. He sold Enron stock for more than $54 million before the company began a downward spiral that ended in bankruptcy in 2001. In his first trial in 2005, Yeager faced 125 counts and was acquitted of five. At issue is whether the constitution’s guarantee against double jeopardy applies when a jury votes to acquit on some charges but fails to reach a verdict on others are based upon the same essential facts. A decision is expected by late June. The case is Yeager v. U.S., 08-67.
Leaders of several energy-related companies avoided talk about a rebound in oil prices and suggested it could be a long, slow recovery even as the search in deep waters goes on. Companies in all aspects of energy production likely will be dealing with tighter budgets well into 2010 as supplies of oil and natural gas exceed demand. During a presentation to investment analysts at the Howard Weil Energy Conference, ConocoPhillips CEO Jim Mulva said “we think recovery is going to be modest over a long period of time.” The number of fringe projects are in decline as producers and service companies focus their attention and money on deepwater drilling, which requires hundreds of millions of dollars to develop–and are based upon long-term projections of where supply and demand are going.
Schlumberger expects further workforce reductions, following cuts of five per cent made in January. CEO Andrew Gould is giving no specific timetable in his speech at the 2009 Howard Weil Energy Conference in New Orleans. The company is also reducing its capital spending budget and negotiating lower prices from suppliers. The oil field services company has seen lesser spending by oil companies, affecting its contract work in well discovery and production. About 100 of the 5,000 Schlumberger jobs in Houston were affected by the first round of layoffs.
Reduced demand for helicopter services in oil and gas exploration and development is resulting in a planned ten per cent cut in the work force at Bristow Group. The Houston-based company employs about 3,600. Some staff reductions have already been made at its Gulf of Mexico, West Africa and Australia operations.
Union workers at AT&T are giving their leaders the authority to call a strike as part of negotiations for a new contract covering 112,500 employees. Several contracts covering workers at the phone company’s landline division expire on April 4th. AT&T is trying to make the employees pay more for their health care, among other concessions. The Communications Workers of America says 88 per cent of members covered by the contracts voted in favor of a possible strike. AT&T spokesman Walt Sharp says the strike authorization is “expected and routine at this stage in the negotiations.” AT&T is the nation’s largest employer of union labor.
The Houston Livestock Show & Rodeo broke attendance records, despite the economy and colder weather. General attendance reached 1.89 million people—beating its 2004 record by 158 admissions. Rodeo paid attendance reached 1.18 million—the third highest-paid rodeo attendance in the show’s history. The rodeo’s all time attendance record was broken on March 15th—Go Tejano Day—with an audience of 74,147—beating Hannah Montana’s 73,459 tickets sold last year. The rodeo paid out more than $1.4 million in prize money to 258 contestants.
A key Texas Senate committee has approved spending $14.2 billion in federal stimulus funds in the next state budget. The budget-writing Senate Finance Committee, which has not yet adopted the 2010-2011 budget, voted 13-1 in favor of the stimulus spending. A vote on the full budget is expected next week. The stimulus money, part of a federal economic rescue plan signed by President Barack Obama in February, has enabled lawmakers to balance the budget without a shortfall.
Gubernatorial candidate Senator Kay Bailey Hutchison says Governor Rick Perry should be looking for ways to accept $550 million in unemployment fund stimulus money but without committing the state to future federal mandates. She told reporters at a Texas Daily Newspaper Association meeting there may be a way to do that. She said Perry should be looking at every avenue to keep employers from facing higher unemployment taxes next year. Perry faces Hutchison in the 2010 Republican primary. He recently rejected the federal money that would rescue the struggling unemployment insurance fund. He said it would commit the state to expanding jobless benefits. Lawmakers call the move politically motivated. Perry’s aides did not immediately respond to Hutchison’s remarks.
A real estate group says sales of existing homes rose from January to February in an unexpected boost for the slumping U.S. housing market as buyers took advantage of deep discounts on foreclosures. The National Association of Realtors said that sales of existing homes grew 5.1 per cent to an annual rate of 4.72 million last month, from 4.49 million units in January. It was the largest sales jump since July 2003. Sales had been expected to fall to an annual pace of 4.45 million units, according to Thomson Reuters. The median sales price plunged to $165,400, down 15.5 per cent from $195,800 a year earlier. That was the second-lowest drop on record. Prices are down about 28 per cent from their peak in July 2006.
Saudi Arabia’s information minister says the OPEC powerhouse is committed to continuing with its long-term oil sector investment plans, despite the current global economic crisis. Abdel-Aziz al-Khoga said the cabinet renewed the kingdom’s “commitment to realize its long-range investment path to increase its oil and gas production capacity…despite the current economic situation and the challenges confronting the industry.” Al-Khoga’s comments come days after a contractor working with Saudi Aramco was quoted by a Saudi newspaper as saying the state-run oil company said it would spend about $60 billion through 2014 on oil and gas projects. That number was about $10 billion less than projections released last year.
A court-appointed receiver says he’s working as fast as he can to sort through the financial mess left from the alleged $8 billion fraud by Robert Allen Stanford. Since his appointment by a federal judge in February, Dallas attorney Ralph Janvey hasn’t been a favorite of investors with money in the Texas billionaire financier’s various financial institutions. Some investors have bounced checks for mortgages and other personal expenses as they’ve waited for Janvey to release their money, which was frozen right after the financial scandal broke. Janvey also fired 1,000 workers with no severance or grace period for benefits. That’s 85 per cent of Stanford’s U.S. work force. The Securities and Exchange Commission filed a civil complaint against Stanford alleging fraud, mostly involving certificates of deposit at Stanford International Bank on the Caribbean island of Antigua.
Continental Airlines has received tentative approval from the Department of Transportation to operate daily service between Houston and Rio de Janeiro, Brazil beginning this summer. It will schedule through-flight service in New Orleans.