Thursday PM August 16th, 2007

Bush administration says ruling in favor of Enron shareholders would expose companies to billions in liabilities...Teppco Partners to pay $2.9 million fine for jet fuel discharge...ConocoPhillips to pay $97.5 million fine over royalty dispute...

In a U.S. Supreme Court battle, shareholders trying to sue scheming companies appear to have the support of the Securities and Exchange Commission. But, they don't have the backing of the Bush administration. The White House is throwing its backing behind the companies. The Justice Department filed a brief supporting companies being sued by investors who say they helped a cable TV company commit fraud. At issue is whether shareholders can sue third parties, such as accountants, lawyers or investment banks, who plot with publicly held companies to deceive investors. The Bush administration says ruling in favor of the shareholders would expose those companies to billions of dollars in liabilities. It says the SEC should be the sole prosecutor of companies accused of aiding and abetting corporate fraud. If the court rules against investors in the suit, it could mean that other cases--like the suit brought by shareholders of Enron--would have no chance of survival. The shareholders want to force Enron's former bankers Merrill Lynch, Credit Suisse First Boston and Barclays to help recoup some of their losses.

A federal judge has refused to block a plan by Austin-based Whole Foods Market to buy rival Wild Oats Markets. The government had raised antitrust concerns. An appeal is expected.

Subsidiaries of Houston-based Teppco Partners will pay nearly $2.9 million in fines for discharging jet fuel, gasoline and oil into streams and rivers in Texas and two other states. The Department of Justice says TE Products Pipeline and Teppco Crude Pipeline also agreed to about $2.6 million in equipment upgrades and monitoring.

ConocoPhillips is paying $97.5 million to resolve a lawsuit alleging that its subsidiary Burlington Resources paid less royalties than it should have for natural gas produced on federal land. The Houston-based oil giant will also pay $7.5 million in interest. The lawsuit alleged Burlington understated the value. The settlement covers additional royalties on production from 1998 through 2005.

Construction of new homes fell in July to the lowest level in more than a decade. The Commerce Department says construction of new homes and apartments dropped 6.1 percent last month to a seasonally adjusted annual rate of 1.38 million units. That's down almost 21 percent from the pace of activity a year ago, and represents the slowest pace since January 1997. The July drop follows a 2.1 percent rise in June, which had been driven by a big increase in apartment building. Applications for building permits, considered a good barometer of future activity, fell by 2.8 percent in July. Housing construction fell in all parts of the country except the midwest, which posted a 2.6 percent increase.

In a move that shows just how deep the credit crunch has become, Countrywide Financial is borrowing $11.5 billion from a group of 40 banks to fund loans. The nation's largest mortgage lender says it made the move amid a credit predicament that has driven a number of its smaller peers to bankruptcy. The credit worries have grown as the secondary market for mortgages all but disappeared in recent weeks. Mortgage lenders rely on the secondary markets to borrow money to make more loans. The problems started as subprime mortgages--loans given to customers with poor credit history--started going delinquent and defaulting at faster rates. The problems have spread to the broader mortgage market, with investors now worried about nearly all types of loans that cannot be purchased by Fannie Mae or Freddie Mac.

Long-term mortgage rates are a little higher this week, retracing part of last week's decline. Freddie Mac says the average rate for the 30-year fixed-rate mortgage is 6.62 percent, compared with last week's average of 6.59 percent. The 15-year loan is averaging 6.30 percent--a gain of five basis points from last week. Freddie Mac Vice President and Chief Economist Frank Nothaft says rates ticked up in line with 10-year treasury rate movements. He notes that problems in the non-prime mortgage market where funds are expensive and hard to get have not affected the prime market.

The Houston Dynamo has sold space on the jerseys of its players to Houston-based Amigo Energy in a four-year, $7.5 million sponsorship deal. Dynamo President Oliver Luck says the additional funds may allow the team to sign new talent. Amigo Energy focuses on serving the Hispanic market. About half of its customer base is Hispanic. The new jerseys, with the word "Dynamo" replaced by the Amigo Energy logo on the front, will be worn at Sunday's game against Dallas.

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