Gulf Coast officials came to Capitol Hill to plead for fast federal money for hurricane recovery with a minimum of red tape. Mayor Bill White asked that money be sent directly to the city for immediate use, instead of the typical reimbursement processes in place for most of the recovery programs. He asked that the Federal Emergency Management Agency administrator be given the authority to come up with new, flexible recovery programs. Lieutenant Governor David Dewhurst says Texas is looking at a $11.4 billion price tag for Ike's damages, including $16 million in damage to Houston. He says that doesn't include costs for devastated Galveston, which the island city's mayor said suffered more than $2 billion in damage. Louisiana Lieutenant Governor Mitch Landrieu says his state's looking at $1 billion in damage from Hurricanes Ike and Gustav. New Orleans Mayor Ray Nagin's told House members that the $40 million cost of evacuating his city for Hurricane Gustav has led to hiring freezes and a halt of any new expenditures.
The Senate is proposing to provide $6 billion in grants to Texas coastal communities to recover from Hurricane Ike. Senator Kay Bailey Hutchison says that's out $7.5 billion the senate is proposing in community block grants for cities hit by disaster. The House must act first on the money. It is scheduled to take up the legislation tonight.
Some gasoline stations in parts of the southeast are out of fuel and shortages could persist for days. That's as refiners continue to recover from the one-two punch of Hurricanes Ike and Gustav. Industry officials also say a crush of people topping off tanks, and even panic buying in some cases, can worsen the problem. Jeff Lenard of the National Association of Convenience Stores says "the system is not equipped for that. The system is equipped for people to buy gas once or twice a week." Meantime, it's likely that gasoline will get more expensive after the biggest one-day spike ever in the price of oil on Monday. Oil prices briefly climbed by more than $25 a barrel in a surge triggered by investor anxiety that the government's $700 billion bailout of financial institutions will boost inflation. Meanwhile, power's been restored to a dozen Louisiana refineries put out of commission by Hurricane Gustav. But Hurricane Ike's approach closed or disrupted operations at another dozen-plus refineries along the upper Texas Gulf Coast. That area accounts for about 20 per cent of the nation's gas and diesel production. Irving-based ExxonMobil says its Baytown refinery is producing reduced amounts of gasoline as units power back up. That refinery is the nation's largest. San Antonio-based Valero Energy, which is North America's largest refiner, says its plants in Houston and Texas City are in the midst of a multi-day restart. Meanwhile, Valero's Port Arthur refinery is still dealing with utility issues. In particular, the Port Arthur plant is without a fresh water supply needed for cooling and other uses.
At the pump, AAA says the national average for regular unleaded gas has dropped to nearly $3.73 a gallon.
President Bush says he is confident that Congress will pass a $700 billion bailout bill to deal with the financial meltdown that has shaken the global economy. In a speech at the annual U.N. General Assembly, the president said he realizes that other nations are watching how the United States deals with the financial meltdown that is shaking the global economy. He says he has been asked frequently about the U.S. financial problems. Bush says he assured the leaders that the financial package making its way through Congress is "a robust plan to deal with serious problems." He said there are ideas about how to change it, but that there is a desire to get a package done quickly. He said that his administration is working with Congress to come to fast agreement on the bailout bill, in addition to other recent actions he called "bold steps" aimed at stabilizing markets and keeping credit flowing. Bush said he is confident that the U.S. will act "in the urgent timeframe required" to prevent broader problems. He did not ask for any action by other countries.
Federal Reserve Chairman Ben Bernanke is urging Congress to quickly pass the financial bailout, warning that letting problems persist would have dire consequences for the national economy. Bernanke is making the assertion in remarks prepared for his appearance before the Senate Banking Committee. He said, "if financial conditions fail to improve for a protracted period, the implications for the broader economy could be quite adverse." Bernanke bluntly warned Congress that it risks a recession if it fails to act on the administration's plan. He tells the Senate Banking Committee that credit markets would dry up, leaving companies without the capital needed to expand and consumers without access to loans to buy big-ticket items such as cars and homes. That in turn, he says would result in lost jobs, "more houses will be foreclosed upon" and "the economy will just not be able to recover in a normal, healthy way." Still, the plan is being sharply criticized by Congressional Republicans. Kentucky Senator Jim Bunning calls the plan "financial socialism" and "un-American." The Republicans say the sheer size of the plan would take $2,300 from every man, woman and child in the United States.
Treasury Secretary Henry Paulson has told the Senate Banking Committee that Congress has to quickly pass the administration's bailout of the financial industry. He calls the effort "the single most effective thing" that can be done to help "the American people and stimulate the economy." Committee Chairman Christopher Dodd vented his anger at what he called a combination of "private greed and public regulatory neglect" that resulted in an "economic maelstrom." The committee's ranking Republican, Richard Shelby, says he's concerned that he has heard "no credible assurances that this plan will work." Vice President Cheney and White House Budget Director Jim Nussle have been meeting privately with several Republican House members who are not happy with the bill's price tag or with what they see as unwarranted government involvement in private business. The proposal would allow the government to buy up soured mortgage-backed securities held by banks and other financial institutions. Paulson envisions using different methods to price a range of rotten securities that banks would unload to the government. Paulson acknowledged that pricing the bad debts will be tricky. Under the bailout plan being considered by Congress and the Bush administration, the government would buy those dodgy debts, with the goal of putting financial institutions in a better position to raise capital and lend more freely. Unclogging credit problems is critical to helping the faltering economy get back on its feet. "We asked for broad-based authorities to use a series of market-based approaches. We'll be dealing with different approaches in different situations."
While Congress is looking for an immediate solution to the nation's financial crisis, Securities and Exchange Commission Chairman Christopher Cox is asking lawmakers to also regulate a kind of corporate debt insurance that plays a role in today's problems. Prices for the insurance soared after the bankruptcy of Lehman Brothers and helped to pushed American International Group to the brink. In testimony prepared for the Senate Banking Committee, Cox urges regulation of so-called credit default swaps to protect investors and to ensure the operation of fair and orderly markets. Cox says such regulation should be part of a regulatory overhaul of the nation's financial system--something Congress is not likely to tackle until next year.
AIG says it is suspending dividends on its common stock. American International Group, one of the world's largest insurers, was bailed out by the government last week. The government provided an $85 billion loan to AIG, which has been hit hard by liquidity issues amid the ongoing credit crisis. In return for the loan, the government received options to purchase a nearly 80 per cent stake in the company.
Iran's president says U.S. military interventions around the world have played a part in the collapse of global financial markets. In an interview with the Los Angeles Times ahead of his address to the UN General Assembly, Mahmoud Ahmadinejad has said that the global economy "can no longer tolerate" the U.S. government's budgetary deficit caused by what he calls "years of heavy military engagement and involvement around the world." The Iranian president claims the campaign against his country's nuclear program is the work of the bush administration "and a couple of their European friends." There are estimates that Iran could have enough nuclear material to make a bomb within a year or two. Ahmadinejad has told National Public Radio that he doesn't want a confrontation with the United States. He adds that the U.S. "interferes"--and the Iranians defend themselves.
Seven western states and four Canadian provinces are proposing a comprehensive program to cut greenhouse gas emissions from power plants, manufacturers and vehicles. The Western Climate Initiative would establish a regional market to trade carbon emissions and is designed to keep costs down for those affected. The plan is aimed at cutting the region's carbon emissions below 2005 levels by 2020. The plan affects Arizona, California, Montana, New Mexico, Oregon, Utah, Washington and the four Canadian provinces of British Columbia, Manitoba, Ontario and Quebec. Each state and province must approve the plan.
The wave of immigrants entering the United States slowed dramatically last year as the economy faltered and the government stepped up immigration enforcement. Estimates released by the Census Bureau show the nation added about a half million immigrants in 2007. That's down from more than 1.8 million the year before. The United States has added an average of about a million immigrants a year since 1990, including those in the country legally and illegally. At more than 38 million, the number of immigrants in the U.S. is now at an all-time high. Immigrants made up 12.6 per cent of the population in 2007. That's the largest share since 1920, when the United States was nearing the end of its last immigration boom. That boom brought millions of people from Europe to the United States and ended with the Great Depression and the onset of World War II. A little more than half of U.S. immigrants are from Latin America.
The retail industry is forecasting the weakest gain for the holiday shopping season since 2002. The National Retail Federation says it looks for a 2.2 per cent increase in sales. The group says a lack of confidence in the economy and financial pressures will weigh on the consumer this year. The retailers group cites the struggling housing market, rising unemployment along with meager gains in income and rising food and energy costs. It says an economic turnaround is not expected until the second half of next year.
The Justice Department says it is investigating potential price-fixing practices into two major U.S. food industries--tomato processing and egg products. Federal prosecutors also have been looking at anticompetitive practices in the citrus industry for at least a year. Justice spokeswoman Gina Talamona confirmed the probes into the tomato and egg products industries. She said prosecutors are looking at the possibility of anticompetitive practices in both cases.
More of bankrupt investment bank Lehman Brothers is being sold to Japan's largest brokerage, Nomura Holdings. There's word that Nomura is buying Lehman's European and Middle Eastern operations, marking a major step in the liquidation of what had been the nation's fourth-largest investment bank. The announcement comes a day after news that Nomura was buying Lehman's Asian businesses for $225 million. Britain's Barclays Bank has purchased Lehman's North American investment banking operations. Parent Lehman Brothers holdings sought bankruptcy protection eight days ago in the biggest Chapter 11 filing in U.S. history.
Chrysler says it will have an electric car for sale in North America in 2010. The automaker put on display three electric prototypes. They are a Dodge sports car, a Jeep and a Chrysler minivan. Chrysler is still deciding which vehicle will drive into showrooms in two years. While the dodge sports car is completely electric, the Jeep Wrangler and Chrysler minivan models would rely on a recharging system similar to GM's Chevrolet Volt. Toyota is rushing to bring a plug-in electric vehicle to market in 2010. Ford says it is five years away from producing them in significant numbers.
A top Ford executive says market research shows the company's coming line of global small cars will be well received in the U.S. Derrick Kuzak is Ford's group vice president of Global Product Development. And he says the European-designed Fiesta subcompact and Focus compact surpass competitors in acceptance of design as well as features and fuel economy. Kuzak told reporters Monday night that research shows people will pay more for Ford's new well-designed small cars. Making money on small cars is key to Ford's plan to make up revenue lost when the U.S. market shifted away from high profit trucks and sport utility vehicles.