Wednesday PM June 25th, 2008

The Supreme Court cut the $2.5 billion punitive damages award in the 1989 Exxon Valdez disaster to $500 million. The court ruled that victims of the worst oil spill in U.S. history may collect punitive damages from ExxonMobil, but not as much as a federal appeals court determined. Justice David Souter wrote for the court that punitive damages may not exceed what the company already paid to compensate victims for economic losses, about $500 million compensation. Irving-based Exxon asked the high court to reject the punitive damages judgment, saying it already has spent $3.4 billion in response to the accident that fouled 1,200 miles of Alaska coastline. A jury decided Exxon should pay $5 billion in punitive damages. A federal appeals court cut that verdict in half.

Alaska Republican Senators Lisa Murkowski and Ted Stevens and Representative Don Young issued a joint statement saying the decision "adds insult to injury to the fishermen, communities and Alaska natives who have been waiting nearly 20 years for proper compensation following the worst environmental disaster in our nation's history." Greenpeace USA Executive Director John Passacantando says "for the court to require a company that recorded a 2007 profit of $40.6 billion and that posted the highest quarterly results in U.S. corporate history in February to pay just $500 million in punitive damages makes a mockery of justice." He says crude oil still can be found under rocks along the sound's shores, and fishery scientists estimate that only ten percent of the oil was ever cleaned up.

Billionaire Warren Buffett has already said he thinks the U.S. economy is in a recession, and now he says the economy is getting worse. Buffett told CNBC in a live interview that all the data he sees from Berkshire Hathaway Subsidiaries shows the economy weakening. He says businesses that depend on construction or consumer spending are faring the worst. Buffett also says he thinks inflation is picking up and should be a concern for the Federal Reserve.

The Federal Reserve has left its benchmark interest rate unchanged. As result, the federal funds rate, the rate that banks charge each other, remains at two percent. In a statement, the Fed cited both high uncertainty about the inflation outlook, and downside risks to growth. It is the first time in ten months that the central bank has not reduced interest rates at one of its regular meetings. The Fed vote was 9-1, with the president of the Dallas Fed casting a dissenting vote. He wanted an immediate rate hike. The next policy meeting is set for early August.

The Port Commission of the Port of Houston Authority has approved $2.3 million in construction projects. But commissioners delayed construction of an additional $74 million wharf at the Bayport Terminal because only one bid has been received. Port officials say additional wharf space is needed to accommodate a growing market. A special meeting will be held Friday to consider bids.

The House is set to vote on extending relief to more than 20 million taxpayers in danger of getting hit by the alternative minimum tax this year. Confronting this issue sets up a war of wills with the Senate on how to deal with this unpopular levy, one that many believe must be stopped in its tracks. The House, insisting that fixing the AMT must not add to the federal deficit, includes $61.5 billion in new revenues, mostly by increasing taxes coming from corporations. Senate Republicans, using their filibuster powers to block unwanted legislation, say it is wrong to increase taxes to extend current tax law.


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