An attorney for the former chief financial officer of indicted Texas financier R. Allen Stanford’s business empire says his client has reached a plea deal with federal prosecutors. Defense attorney David Finn said that James M. Davis, Stanford Financial Group’s former chief financial officer, has reached an agreement in which he will plead guilty to three counts he faces as part of the federal government’s criminal case against the financier. Davis, who has been cooperating with investigators, is set to make his initial court appearance in Houston on July 13th. But Finn said Davis will not enter his guilty plea until a later court hearing. Stanford remains jailed on charges alleging he swindled investors out of $7 billion.
A private group says pending home sales rose in May for the fourth straight month, fresh evidence that the housing sector may be recovering. The National Association of Realtors says that its seasonally adjusted index of pending sales increased by 0.1 per cent to 90.7. Analysts expected no change, according to Thomson Reuters. The NAR attributes the increase to lower home prices and the $8,000 first-time homebuyer tax credit that was included in the Obama administration’s stimulus package. The pending home sales index, which tracks signed contracts to purchase previously occupied homes, is now 6.7 per cent higher than in May 2008, when it was 85.
Construction spending fell more than expected in May, a sign the problems facing the nation’s builders are far from over. The Commerce Department says construction spending dropped 0.9 per cent in May, nearly double the 0.5 per cent drop that economists expected. Adding to the signs of weakness, activity in the past two months was revised lower. Construction rose 0.6 per cent in April, lower than the 0.8 per cent originally reported. A March increase of 0.4 per cent was replaced with a decline of the same amount. That left the April gain as the only increase in the past eight months.
A report on manufacturing activity shows the sector contracted less than expected in June, and at the slowest pace since last August. The Institute for Supply Management, a trade group of purchasing executives, says its manufacturing index read 44.8 in June. That’s up from 42.8 in May. A reading below 50 indicates contraction. June’s reading marks the 17th straight month of deterioration in manufacturing. Still, last month’s tally was better than expected as analysts polled by Thomson Reuters expected the index to rise to 44.5. The manufacturing index includes new orders, production, employment, inventories, prices, and export and import orders. It’s based on a survey of the Tempe, Arizona-based ISM’s members.
Congressional Republicans from Texas reiterate their opposition to cap and trade legislation that narrowly passed the House last week. The bill would set caps on greenhouse emissions. Entities would have to buy allowances to exceed it or pay penalties. Congressman Joe Barton told attendees at an energy summit at the University of Houston at Clear Lake that the legislation would force the reduction of man-made CO2 by 83 per cent in the next 41 years.
“On a per-capita basis, we’re going to go from about 20 tons of CO² per person per year, which is where we are today—your carbon footprint, as they say—to about two and a half tons. Now remember, if you’re an adult male, you’re using 7/10ths of a ton just to breathe. So that gives you about 1.8 tons to do everything else. That per-capita CO² is where we were in 1875.”
Proponents say H.R. 2454 will create jobs, decrease dependence on foreign oil and combat global warming. But Republicans argue that the legislation would end up causing Americans to pay more for energy and almost everything else. Representative Barton spoke at an energy summit at the University of Houston at Clear Lake hosted by 22nd District Congressman Pete Olson. The American Clean Energy and Security Act now faces Senate debate.
A Texas House committee has approved a measure to keep important state agencies operating. The House Committee on State Affairs unanimously approved the bill–a cornerstone of the special legislative session–about an hour after the legislature convened Wednesday. The bill by Republican Representative Carl Isset of Lubbock will keep five state agencies, including the Texas Department of Transportation, operating until the next regularly scheduled session in 2011. Failure to pass the agency reauthorizations or a “safety net” during the regular session forced the need for the special session. Under Texas Sunset Law, the legislature is required to regularly review and reauthorize state agencies. The bill can now be scheduled for consideration by the full House.
The Obama administration is expanding a program to stave off foreclosure for borrowers who owe more than their homes are worth. Housing Secretary Shaun Donovan says borrowers who owe up 25 per cent more than their home’s market value will qualify for government help refinancing their mortgages. The program currently is limited to borrowers who owe five per cent more than their homes are worth. The change addresses concerns that the initial terms excluded too many so-called “underwater” borrowers. The program is part of a broader effort to help at-risk homeowners. Another key component pays incentives for mortgage companies to lower borrowers’ payments.
Immigration officers are investigating workplaces in every state in the U.S. to check whether they are hiring illegal workers. Immigration and Customs Enforcement told members of Congress in an e-mail that it is beginning audits of documents that employees fill out when they are hired. The documents are known as I-9’s. President Barack Obama has said his administration’s strategy for stemming illegal immigration is focusing on employers who hire illegal workers. The Bush administration was criticized for raiding businesses and arresting workers but not doing enough to go after the employers who hire them.
The Securities and Exchange Commission is debating proposed rules that would require firms that have received government bailouts to let shareholders vote on executive pay. Congress mandated the rule for participants in the Troubled Asset Relief Program, the $700 billion financial bailout. Known as “Say-on-Pay,” it would give shareholders the opportunity to vote on companies’ compensation practices, although the votes can be nonbinding. Another proposed rule would increase the disclosure of compensation policies for all public companies. That proposal includes a range of requirements: companies would have to describe how compensation policies relate to risk; explain the qualifications of directors, executives and nominees; and state whether compensation consultants might have conflicts of interest.
The Environmental Protection Agency is proposing tougher rules to reduce air pollution from large oceangoing ships, including oil tankers and cargo vessels. The agency announced it is beginning work on a regulation that would cut harmful chemicals releases from smokestacks of ships within 200 miles of the U.S. coast. The proposal would set tougher engine requirements and fuel standards for the large U.S.-flagged ocean going vessels. The United States also is negotiating with Canada over establishing coastal emission control zones. The EPA said the new proposed regulations and measures being worked out with Canada together are expected to cut nitrogen dioxide releases and soot pollution from large ships by 80 to 85 per cent.
The Iraqi government has approved an offer submitted by a consortium led by BP to develop the 17.8 billion barrel Rumaila oil field in the south. Government spokesman Ali al-Dabbagh said the cabinet approved the deal reached a day earlier with the oil ministry, BP and China’s CNPC during Iraq’s first international licensing round in over 30 years. A total of eight oil and gas fields had been on offer, and Iraqi officials had hoped for a better showing at the auction. Sharp differences over the terms of the contract meant that only one deal was struck. The BP-led consortium’s only rival was a consortium led by Irving-based ExxonMobil. The ExxonMobil-led group refused to amend its offer of $4.80 per barrel on target production of 3.1 million barrels per day.
Freddie Mac has received $6.1 billion in new funds from the Treasury Department to help offset its mounting liabilities. The Federal Housing Finance Agency, which has been operating Freddie Mac since last fall, requested the funds for Freddie Mac after the mortgage firm’s liabilities exceeded its assets by more than $6 billion. After drawing the funds, Freddie Mac has now received $51.7 billion from the Treasury Department and still has access to an additional $149.3 billion to help it finance operations. McLean, Virginia-based Freddie Mac nearly collapsed last fall amid the growing credit crisis, weighed down by rising mortgage defaults and deterioration in the housing market.
The economic downturn appears to be bringing out the worst in some people. The Federal Trade Commission has announced a major crackdown on those trying to take advantage of people worried about the tough economy by promising jobs that don’t exist, get-rich-quick schemes and other phony services. One of the 15 cases announced by the FTC–as part of “operation short change”–involved a company that marketed infomercials for “John Beck’s Free & Clear Real Estate System” and other alleged get-rich schemes. The FTC said the defendants made bogus claims about the ability to raise cash fast. The agency said that more than 600,000 people were duped out of about $300 million. The sweep also included dozens of additional cases filed by the Justice Department and at least 13 states.
It will be a less festive Fourth of July this year for many cash-starved communities. Small and midsize cities are either scaling back or altogether canceling fireworks shows because of budget crunches. Corporate dollars for the events are also drying up because of the lackluster economy. In San Jose, California, a half-million-dollar display and festival were nixed. Hialeah, Florida, near Miami, had to cancel its display because sponsorship money fell tens of thousands of dollars short. Other cities canceling shows include Mesa, Arizona; Colorado Springs, Colorado; Niceville, Florida; and Garland, Texas. While some citizens are resigned to the budget constraints, others like Dave Richmond of Ohio are disenchanted. He’s attended Parma, Ohio’s fireworks show since 1972 but there won’t be one this year. Richmond says he’s disappointed that, as he puts it, “a celebration of what our founding fathers worked so hard to give us is squandered by those who collect and spend our tax dollars.” But even amid the gloomy economy, there will be an estimated 14,000 fireworks displays this year.