Arguments are set for April 2nd at the 5th U.S. Court of Appeals in New Orleans, as former Enron CEO Jeff Skilling tries to erase his convictions. The appeal comes nearly two years after a Houston federal jury convicted Skilling of Enron-related fraud. Skilling’s attorney Daniel Petrocelli says all of his convictions should be thrown out because they are tainted by a prosecution strategy the appeals court considered flawed in another Enron case. The panel ruled the prosecution theory that Enron was deprived of “honest services” didn’t apply because those defendants didn’t take bribes, embezzle or steal money or property. U.S. District Judge Sim Lake had instructed the jury that linked a single conspiracy charge to 13 other counts of securities fraud and insider trading. Skilling says those counts and five other counts of lying to auditors should be tossed out because the theory taints them. He’s seeking release from prison pending the outcome of his appeal. Skilling began serving a 24-year prison term about 15 months ago.
A closely watched study shows U.S. home prices falling 8.9 percent in the fourth quarter of 2007. That marks the largest drop in the index’s 20-year history and a full year of declining values. The Standard & Poor’s/Case Shiller Home Price Indices reflect year-over-year declines in 17 metropolitan areas with double-digit declines in eight of them. Index architect Robert J. Shiller said “wherever you look things look bleak.” The quarterly index tracks prices of existing-family homes nationwide compared with a year earlier.
The number of U.S. homes facing foreclosure is up more than 50 percent over what it was a year ago. Mortgage research firm RealtyTrac says the foreclosure rate jumped 57 percent in January. Nationwide last month, 233,000 homes got at least one notice from the lender related to overdue payments from the homeowner. Nearly half involved first-time default notices. And RealtyTrac says more and more lenders are taking possession of homes which they are not able to sell at auction. The figures come despite the fact that some lenders have been trying to help homeowners by modifying loan terms or working out long-term repayment plans. Across the U.S. this past month, there was one foreclosure filing for every 534 homes.
The Federal Reserve has auctioned another $30 billion in funds to commercial banks to fight the effects of a serious credit crisis. The Fed said the money carried an interest rate of just over three percent. It was the sixth in a series of auctions that so far have pumped $160 billion into the nation’s banking system in an effort to provide cash-strapped banks with extra reserves. The Fed’s hope is that the increased resources will keep banks lending and prevent a severe credit squeeze from making the current economic slowdown worse.
Profits at federally insured banks and thrifts plunged to a 16-year low in the fourth quarter of last year. The financial firms set aside a record-high amount to cover losses from bad mortgages. The quarterly banking industry statistics, compiled by the Federal Deposit Insurance Corporation, highlight a dramatic deterioration in the fourth quarter as major Wall Street banks like Citigroup took large write-downs in the value of their assets to reflect losses on mortgage-related investments. FDIC Chairman Sheila Bair says weakness in the housing market, combined with the credit squeeze “made it a very challenging time.” Bair says the agency is planning to beef up its staff–including temporarily hiring up to 25 retired FDIC employees who worked in the agency’s more than 200-person division that handles failed banks–to handle an anticipated increase in bank failures. She stopped short of predicting the extent of bank failures this year. Profits at the 8,544 FDIC-insured institutions between October and December dropped by 83.5 percent to $5.8 billion, hampered by soaring loan defaults and provisions for loan losses, the FDIC said. A year ago, these banks recorded $29.4 billion in profits.
The federal government is projecting that by 2017, total health care spending will double to more than $4 trillion a year, accounting for one of every $5 the nation spends. According to the Centers for Medicare and Medicaid Services, the 6.7 percent annual increase in spending–nearly three times the rate of inflation–will be largely driven by higher prices and an increased demand for care. Other factors in the mix include a growing and aging population. The first wave of baby boomers become eligible for Medicare beginning in 2011. With the aging population, the federal government will be picking up the tab for a growing share of the nation’s medical expenses. Overall, federal and state governments accounted for about 46 percent of health expenditures in 2006. That percentage will increase to 49 percent over the next decade. Overall health care spending in 2017 is estimated to increase to $4.3 trillion dollars. That would be about 20 percent of U.S. Gross Domestic Product, or GDP, the total monetary value of all finished goods and services produced in a country. In 2006, people and the government spent $2.1 trillion on health care, an average of $7,026 a person. In 2017, health spending will cost an estimated $13,101 a person.