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Tuesday PM March 30th, 2010

Consumer confidence rebounds amidst job wariness…NASA to help determine Toyota's sudden acceleration problems…R. Allen Stanford again asking for new attorneys…



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A private research group says consumers’ confidence in the economy rebounded in March. But Americans are still wary as they deal with a weak job market. The Conference Board’s consumer confidence index rose to 52.5 in March, recovering about half of the nearly 11 points it lost in February. Analysts were expecting a reading of 50 for March. February’s 46.4 marked the lowest level since April 2009. A reading of 90 would indicate a healthy economy. Economists watch the number closely because consumer spending, including health care and other major items, accounts for about 70 percent of U.S. economic activity.

Home prices showed the smallest annual decline in almost three years in January, indicating there are surprising areas of strength in the housing market. The Standard & Poor’s/Case-Shiller 20-city home price index fell just 0.7 percent from last year on a seasonally adjusted basis. The index reading of 146.32 was almost in line with analysts expectations, according to a survey by Thomson Reuters. Better still, prices rose 0.3 percent from December to January, the eighth consecutive monthly gain. Among the 20 cities in the index, 12 rose. The index is up nearly four percent from its bottom in May 2009, but still almost 30 percent below its May 2006 peak.

The student loan system is joining the health care system for a remake. When President Barack Obama signed the final piece of his health care overhaul plan, he made the government the primary lender to college students–removing that role from banks. And with banks no longer getting fees for acting as middleman, the government will put more money toward Pell grants to students. Obama has already signed the bulk of the health care measure, but a final set of tweaks provided a route for the education package, which is the largest rewrite of federal college assistance programs in four decades. The legislation has a wide reach. About half of undergraduates receive federal student aid and about 8.5 million students are going to college with the help of Pell grants.

NASA and the National Academy of Sciences are joining the government’s effort to figure out what caused the sudden acceleration problems that led to Toyota’s massive recalls. NASA scientists with expertise in electronics will help the National Highway Traffic Safety Administration study potential electronic ties to unintended acceleration in Toyotas. In a separate study, Transportation Secretary Ray LaHood says the National Academy of Sciences will examine unwanted acceleration and electronic vehicle controls in cars from around the auto industry. The National Academy is an independent organization chartered by Congress. Toyota has recalled more than eight million vehicles worldwide, including six million in the United States.

Stanford Financial Group founder R. Allen Stanford is asking for new attorneys. Stanford–who remains in custody without bail as a flight risk–has pleaded not guilty to charges of conspiracy, fraud and obstruction of justice, as prosecutors accuse him of running a $7 billion Ponzi scheme. A motion was filed in Houston federal court asking that Stanford’s current two attorneys be replaced by two others. The motion, if granted by U.S. District Judge David Hittner, would give Stanford his fourth set of lawyers in less than a year. Kent Schaffer is one of the two attorneys Stanford wants replaced. He says he’s happy to step aside because there was conflict with Stanford over how to try the case. Stanford wants representation from criminal defense lawyer Michael Essmeyer and Houston-based consumer lawyer Robert S. Bennett. He also plans to ask that the trial be moved because the Houston jury pool may be tainted by publicity.

A new state auditor’s report says the food stamp program in Texas is inefficient and outdated and suffers from a growing number of inaccuracies. The state auditor’s office said inexperienced staff and inefficient office setups mean the program run by the Health and Human Services Commission has not been able to keep up with the increased number of applications spurred by the recession. The auditor says 80 percent of food stamp applications are still kept as paper files. Applicants are often forced to wait in long lines for answers to basic questions and can’t get answers over the phone or Internet. The state report follows a warning to Texas by federal officials concerned last year about growing delays. Food stamps are primarily funded by federal money.

Top diplomats from the world’s leading economies are ramping up pressure on Iran to prove its nuclear ambitions are peaceful or face tough new sanctions. Opening a conference of foreign ministers from the Group of Eight Main Industrialized Nations, Canadian Prime Minister Stephen Harper said Iran must halt its nuclear enrichment activities and comply with international demands to come clean about its atomic program. On behalf of the ministers, Harper urged the world to adopt a heightened focus on the Iranian nuclear issue and take “stronger coordinated action” against Iran.

The federal courts will resolve the question of whether mutual funds are charging too much in fees, the Supreme Court says. The high court in an opinion sent a lawsuit brought by investors against a mutual fund company for charging excessive fees back to a lower court for resolution. Jerry N. Jones, Mary F. Jones and Arline Winerman own shares in the Oakmark Complex of Mutual Funds. They sued Harris Associates, which advises Oakmark. The plaintiffs say that Harris’ fees are so high they violate the Federal Investment Company Act, which is supposed to combat excessive investment adviser fees. Lower courts had thrown the lawsuit out, saying that such suits cannot be brought unless shareholders can prove that the adviser misled the fund directors who approved the fee.

Houston-based solar installer Arco Energy Technologies is expanding into Tempe, Arizona. Arizona customers will be able to enter into power purchase agreements with SunRun for solar systems installed by Acro Energy. Acro installs solar module products from SunPower, Suntech and Sharp and residential solar plans from SunRun.