Tuesday PM July 28th, 2009
Gallery Furniture employee in wake of the massive fire at Gallery's warehouse on May 21st. Fire officials say Robert Gillham has been charged with first-degree felony arson for allegedly setting a four-alarm blaze that destroyed the warehouse. They say it was one of the largest fires in Houston history, causing close to $20 million in damage. Fire investigator Rob Elder said Gillham had been fired a few years ago from the store. Gallery Furniture's 100,000-square-foot warehouse burned to the ground, but firefighters were able to save the showroom. The store reopened Fourth of Fuly weekend and the warehouse will be back in operation by Thanksgiving, said owner Jim McIngvale.
A private research group says Americans' mood darkened further in July as worries about job security offset any enthusiasm about the resumed stock-market rally that has helped bolster retirement accounts. The Conference Board said that its consumer confidence index, which retreated last month, fell to 46.6, down from 49.3 in June. Economists were expecting a reading of 49. It would take a reading above 90 to signal that the economy is on solid footing. The two-month consecutive decline follows an upswing in confidence this past spring fueled by a stock-market rally. Economists closely monitor confidence because consumer spending accounts for more than 70 percent of economic activity.
A widely watched index shows home prices posted their first monthly increase since the summer of 2006, indicating prices are finally stabilizing. The Standard & Poor's/Case-Shiller home price index of 20 major cities rose 0.5 percent from April, but was still 17.1 percent below May a year ago. The ten-city index rose 0.4 percent from April, but was off 16.8 percent from May last year. It was the fourth consecutive month both indexes didn't post record annual decline. Home prices are now at levels not seen since mid-2003.
The head of Saudi Aramco says the kingdom's national oil company has succeeded in boosting its crude production capacity to 12 million barrels a day. The state-owned company's chief executive Khalid al-Falih told the Pan-Arab daily al-Hayat in an interview the company achieved the gains last month through exploration projects at three of its oil fields. Saudi Arabia doesn't need the added capacity now. It has led OPEC in slashing more than 4 million barrels of daily output from world markets over the past year because of the global downturn. But the added capacity will give the world's largest oil producer a greater cushion to ramp up production once the world economy rebounds.
About 1,000 state and local law enforcement agencies around the country are divvying up $1 billion in grants to help keep police officers on the beat. But that leaves about 6,000 others getting nothing. The Obama administration announced the list of recipients under the Community Oriented Policing Services Grant program. A couple of big cities like Philadelphia and Los Angeles did well, as did Kalamazoo, Michigan and the Seminole tribe of Florida. But New York, Houston, Seattle and Pittsburgh were among those whose requests went unanswered. Attorney General Eric Holder says the money will add officers to communities "where they are needed most," based on crime rates and financial need and other factors. But the administration is trying to assure cities not getting aid that they won't be stiffed. The Justice Department says New York Ccity, for example, will be getting $7 million from another grant program.
Federal regulators have made permanent an emergency rule aimed at reducing abusive short-selling. The rule had been put in place at the height of last fall's market meltdown. The Securities and Exchange Commission announced the action on the rule targeting so-called "naked" short-selling, which was due to expire Friday. Short-sellers bet against a stock. They generally borrow a company's shares, sell them, and then buy them when the stock falls and return them to the lender—pocketing the difference in price. "Naked" short-selling occurs when sellers don't even borrow the shares before selling them, and then look to cover positions sometime after the sale. The SEC rule includes a requirement that brokers must promptly buy or borrow securities to deliver on a short sale.
A newspaper report says Bank of America's CEO Ken Lewis is planning to shrink the bank's 6,100-branch network by about ten percent. The Wall Street Journal reported that Lewis disclosed the plans to close some 600 branches last week to investors at a meeting in Charlotte, North Carolina, the bank's headquarters. The paper is citing unidentified people familiar with the matter. The move would be a pullback from the bank's two-decade expansion under Lewis' watch, which expanded the bank from coast to coast. A Bank of America spokesman could not be reached for immediate comment.
The three British bankers convicted of conspiring with former Enron CFO Andy Fastow to dupe NatWest Greenwich out of $7.3 million are being released in October. The British national newspaper The Observer notes that they'll have served just half of their sentences, and they're failing to meet a pledge to repay the stolen money. Gary Mulgrew, Giles Darby and David Bermingham were handed 37-month sentences by District Judge Ewing Werlein in February 2008. The paper explains that had they not been transferred to the UK last January, it's likely they would have been forced to serve at least 85 percent of the sentences behind bars. The so-called "NatWest Three" say they have little or no assets after waging a battle against extradition to Texas before their trial.
Texas financier R. Allen Stanford wants to be moved from a private prison because he's been without air conditioning and shares a cell with up to ten other inmates. Stanford is jailed on charges of operating a $7 billion ponzi scheme. He's been held at Joe Corley Detention Facility since being arrested and brought to Texas from Virginia last month. Stanford's attorney Dick DeGuerin says in court filings that conditions are "intolerable." He says Stanford's cell was without power for part of last week and didn't have air conditioning for at least a week. The facility is run by Boca Raton, Florida-based Geo Group. Spokesman Pablo Paez declined to comment on the prison's conditions. The Houston Chronicle reports DeGuerin is requesting Stanford be moved to the federal detention center in downtown Houston.
Earnings Valero Energy, the nation's largest independent oil refiner, says it lost $254 million in the second quarter as lower margins and weak demand for gasoline and other refined products hammered results. San Antonio-based Valero, in the second quarter a year ago, earned $734 million. Revenue fell 51 percent to $17.9 billion from a year ago. On average, analysts surveyed by Thomson Reuters were expecting revenue of $15.2 billion.
The British oil giant BP says lower world oil prices drove its second-quarter profit down by 53 percent, compared with a year earlier. It says it saw little sign of growing demand in the months ahead. Daily oil production was up four percent compared to the second quarter last year, with production ramping up in the Thunder Horse and Dorado fields in the Gulf of Mexico. Thunder Horse is operated by BP and partly owned by Irving-based ExxonMobil. It began producing oil and gas last year, nine years after the field's discovery. It's designed to produce 250,000 barrels of oil and 200 million cubic feet of natural gas each day, which would make it the Gulf's largest producer. Meanwhile, CEO Tony Hayward says the Texas City refinery near Houston "is restored to full capability" after a March 2005 blast that killed 15 people.
Houston police have arrested a former