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Wednesday PM September 8th, 2010

BP sharing blame with Transocean, Halliburton and others for Gulf oil spill…Consumers continue cutting back on credit card use…Study says two-thirds of Texas Enterprise Fund companies fail to meet job-creation goals…


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The lead BP investigator is saying that eight separate failures had to occur for the company’s deepwater well to unleash the largest offshore oil spill in history. At a briefing in Washington on BP’s internal investigation, Mark Bly, the chief investigator, told a room of reporters that all eight things needed to happen to cause the accident. The failures included cement that did not prevent oil and gas from entering the well and a blowout preventer that did not seal off the well. Bly also said that while the company’s report was clinical and fact-based, the investigative team had “a very strong emotional feeling about the accident.”

Legal analysts say the report is a signal that BP intends to spread blame to rig operator Transocean and cement contractor Halliburton. BP faces hundreds of lawsuits and possible criminal charges. But Transocean calls the report “self-serving” and Halliburton says it contains “omissions and inaccuracies.” Others are much more blunt with their reaction. Massachusetts Congressman Ed Markey says BP is attempting to slice up the blame and take “the smallest piece.” Plaintiff’s lawyer Robert Gordon, who represents coastal victims, says “BP blaming others for the Gulf oil disaster is like Bernie Madoff blaming his accountant.” Several divisions of the government, including the Justice Department, are still investigating the disaster.

The Obama administration says it will reinforce and expand reforms being carried out by the beleaguered agency that oversees offshore drilling, formerly known as the Minerals Management Service. The report recommends that the agency–now known as the Bureau of Ocean Energy Management, Regulation, and Enforcement—should increase the number and training of inspectors; conduct more surprise inspections; and stiffen fines and civil penalties on companies found to violate federal rules. Michael Bromwich, the drilling agency’s new director, says the report builds on efforts already under way–including ethics and structural changes they said will transform the agency.

Job openings rose in July after two months of declines, a positive sign that companies could step up hiring in the coming months. The Labor Department says the number of jobs advertised rose by 6.2 percent to 3.04 million. That’s the highest total since April, when temporary census hiring inflated that month’s figure. Even with the increase, openings remain far below the 4.4 million that existed in December 2007, when the recession began. The report, the job openings and labor turnover survey, indicates heavy competition for jobs. In July, 4.8 unemployed people, on average, were vying for each opening. That’s an improvement from the peak of 6.3 in November 2009. But it’s far more than the 1.8 unemployed people competing for each opening when the recession began.

More regions of the country report slower growth as the U.S. economy lost momentum in the late summer. A new survey by the Federal Reserve finds the weakness spreading. Of the 12 regions tracked by the Fed, economic activity was mixed or slowed in five–New York, Philadelphia, Richmond, Atlanta and Chicago. Activity elsewhere was described as modest or pointed to positive developments. In the Fed’s previous survey in late July, only two regions–Atlanta and Chicago–had reported slower growth. Although the economy was still growing in late summer, there were “widespread signs of deceleration,” the Fed says.

Consumer borrowing fell again in July as households cut back on their credit card use for a 23rd consecutive month, adding more drag on an economy struggling to mount a sustained rebound. The Federal Reserve says that borrowing dropped at an annual rate of $3.6 billion in July. That marked the 17th drop in credit in the past 18 months. Americans did boost borrowing for auto loans in July but this slight gain was offset by further reductions in the category that includes credit cards.

President Barack Obama says it’s time to extend Bush-era tax cuts for the middle class–but the nation can’t afford the Republican approach of extending tax cuts for the wealthy as well. In a speech in Ohio, Obama directly addressed House Minority Leader John Boehner (bay’-nur), who would become speaker if Republicans take over the House in November, as many analysts are predicting. Boehner recently appeared in Cleveland himself to discuss the GOP’s economic proposals. In the speech, Obama says: “Let me be clear to Mr. Boehner and everyone else. We should not hold middle class tax cuts hostage any longer.” The president says his administration “is ready this week to give tax cuts to every American making $250,000 or less.”

A new study says two-thirds of Texas Enterprise Fund companies that had to meet job-creation goals in 2009 to get taxpayer money failed to bring in promised jobs. Texans for Public Justice reports that the percentage is up from the previous year. Governor Rick Perry points to the fund as an effective tool to help lure businesses to the state. The fund is a deal-closing account created by the legislature at Perry’s urging. The study looked at compliance reports filed by 50 Enterprise Fund companies. It found that 33 of those projects failed to deliver on their job promises for 2009. Some companies had their state contracts amended to reduce their job-creation requirements.

Buses will be made at plants in Texas, Oklahoma and Mississippi that will be used to carry U.S. troops in Afghanistan as part of the U.S. military’s war effort. Navistar International will manufacture 66 buses at its IC assembly plant in Tulsa. The order is part of a $66 million contract Navistar has with the Army’s Tacom Life Cycle Management Command. The Tulsa World reported the contract calls for Warrenville, Illinois-based Navistar to make 426 other vehicles at its plants in Garland and West Point, Mississippi. The company is to begin delivering the vehicles in December. The Tulsa plant opened in 2000 and as of last November had about 1,000 employees. Navistar declined to reveal current staffing–but spokeswoman Elissa Koc said there is no expectation that staffing will be increased.

A federal commission is taking testimony in Las Vegas as part of its national effort to examine causes for the financial meltdown that led to the Great Recession. The ten-member Financial Crisis Inquiry Commission met with banking executives, analysts and public officials at the University of Nevada, Las Vegas. The expert panels include U.S. Attorney Daniel Bogden and local economists. The commission is also expected to hear from the public at the meeting. The group was created by Congress and has a formal report due to lawmakers and President Barack Obama by December 15th.

Applications for home loans dipped last week as mortgage rates ticked up slightly from the lowest level in decades. The Mortgage Bankers Association says overall applications fell 1.5 percent from a week earlier. Applications to refinance home loans fell 3.1 percent, the first drop in six weeks. Those taken out to purchase homes, however, rose 6.3 percent to the highest level since May. The numbers are adjusted for seasonal factors. Rates have been at or near the lowest level in decades since spring as investors have shifted money into safer Treasury bonds. That has lowered their yields, which mortgage rates tend to track. The average rate for a 30-year fixed loan rose to 4.5 percent from 4.43 percent a week earlier.

A newspaper report says 30 percent of Texas school districts have asked their voters for tax rate increases since state lawmakers adopted the requirement four years ago. The Dallas Morning News, citing figures from a Website that tracks tax rate elections in Texas, reports that about a fifth of the state’s 1,025 districts won voter approval for increases. Another 78 districts have been turned down by voters, including 17 that have lost twice. That’s according to figures from More than 800 districts are at or below the maximum tax rate that can be levied without going to voters–$1.04 per $100 valuation. The maximum equals an annual tax of $2,080 on a home valued at $200,000, not including local taxes.

Oracle plans to pay newly appointed president Mark Hurd $950,000 a year. The company also says the former Hewlett-Packard CEO, who was ousted by that company last month, is eligible for a fiscal 2011 bonus of $5 million. Meanwhile, HP says that it is suing Hurd to keep him from taking the Oracle job.

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