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A judge in Houston has denied bail for two oil traders indicted in a kickback scheme that includes allegations of wire fraud and money laundering. Clyde Meltzer of Houston and Bernard Langley of the United Kingdom pleaded not guilty. Both have been in federal detention since December 9th. Magistrate Judge Mary Milloy denied bail, saying Meltzer and Langley could be flight risks. The Houston Chronicle reports that the scheme alleged in the indictment involved overcharging chemical company LyondellBasell for the cost of shipping oil via tankers. The 12-count indictment includes charges of conspiracy to commit wire and mail fraud, wire fraud, conspiracy to commit international money laundering and money laundering. A LyondellBasell spokesman had no comment. A LyondellBasell employee is cooperating in the investigation.
Fewer people applied for unemployment benefits last week, the third drop in the past four weeks and a sign that the job market is slowly improving. The Labor Department says weekly claims for jobless aid dipped by 3,000 to a seasonally adjusted 420,000 in the week ending December 11th. The four-week average of claims, a less volatile measure, fell for the sixth straight week to 422,750. That’s the lowest level since August 2008, just before the financial crisis intensified with the collapse of Lehman Brothers. Weekly first-time applications below 425,000 tend to signal modest job growth. But economists say applications would need to dip consistently to 375,000 or below to indicate a significant decline in unemployment. Applications for unemployment benefits peaked during the recession at 651,000 in March 2009.
The House has passed a bill to extend aid to U.S. manufacturers as well as workers who were laid off due to cheap imports and jobs that moved abroad. The House approved the job-protecting and job-creating legislation by voice vote. Now the Senate must consider the bill. It would continue a retraining program for workers who lost their jobs. It also would lower import duties on nearly 300 products used by U.S. manufacturers. Community colleges and other educational institutions would play a key role in the plan by developing retraining programs for workers. The bill also extends expiring trade agreements with Colombia and Ecuador through June 30th, 2012.
There’s new information that people using credit cards are doing a better job handling debt and staying current on their payments. The top six credit card issuers say fewer borrowers were late on payments in November. That’s an indication that fewer loans will have to be written off as uncollectible in the coming months. The credit card division of Citigroup reported the steepest decline in charge-offs. Its charge-off rate fell to 9.4 percent of balances from about ten and a-quarter percent in October. Card companies typically write off loans after they’re 180 days past due, the point at which it’s assumed the balances won’t be able to be collected.
Americans’ stronger appetite for imported goods helped to lift the broadest measure of the U.S. trade deficit in the July-September quarter to its highest point since late 2008. The government says the current account trade deficit grew to $127.2 billion in the third quarter, a 3.3 percent increase from the second quarter. It was the fifth straight quarterly increase. That could be viewed as a healing sign for the U.S. economy as Americans regain their appetite to spend. Imports grew to $494.2 billion, up 1.7 percent from the April-June quarter. Exports rose to $323.1 billion, posting a solid 2.2 percent gain. The falling dollar has made U.S. goods less expensive and more attractive to foreign buyers.
Home construction nudged up in November after two months of declines. The Commerce Department says builders broke ground last month on a seasonally adjusted 555,000 units, a 3.9 percent rise from October. Even with the gain, housing starts are just 16 percent above the 477,000 unit pace from April 2009–the lowest point on records dating back to 1959. And they are down 76 percent from their peak in January 2006, and 45 percent below the one million annual rate that analysts say is consistent with a healthy housing market. All the activity last month came from building single-family homes, which rose 6.9 percent. Apartment construction fell 9.1 percent. Housing permits, a barometer of future demand, fell four percent, reflecting weakness in apartment construction.
The number of U.S. homes taken back by lenders dropped to the lowest level in 18 months in November. It’s the result of foreclosure freezes enacted by several banks following allegations that evictions were handled improperly. The foreclosure listing firm RealtyTrac says home repossessions dropped 28 percent from October and 12 percent from November of last year. The 67,428 homes lenders took back last month were the fewest since May 2009. But even with the decline, it was enough to push the total number of repossessions so far this year to more than 980,000–the highest annual tally of properties lost to foreclosure on RealtyTrac’s records dating back to 2005.
Treasury Secretary Timothy Geithner says the government is trying to keep as many struggling borrowers as possible in their homes in several programs. Geithner told a Congressional oversight panel that although the Treasury Department’s ability to spend new bailout funds for the central foreclosure-prevention effort expired in October, it is running other programs for borrowers in certain situations such as being unemployed. Geithner says in testimony prepared for a hearing of the panel that the housing market remains weak. He says the government is putting downward pressure on mortgage rates through agreements with finance companies Fannie Mae and Freddie Mac.
Rates on fixed mortgages surged for the fifth straight week, reflecting higher yields on long-term Treasurys. Freddie Mac says the average rate on a 30-year fixed mortgage rose to 4.83 percent from 4.61 percent in the previous week. Last month, the rate hit a 40-year low of 4.17 percent. The average rate on the 15-year loan also increased to 4.17 percent from 3.96 percent. It reached 3.57 percent in November, the lowest level on records dating back to 1991. Investors are shifting money out of Treasurys and into stocks. That’s largely on the expectation that the tax-cut plan that Congress is set to approve will spur growth and potentially higher inflation. Yields tend to rise on fears of higher inflation. Mortgage rates track the yields on the ten-year Treasury note.
The White House is pressing for passage of a $1.27 trillion year-end spending bill despite the inclusion of thousands of Congressional pet projects that President Barack Obama had vowed to oppose. White House spokesman Robert Gibbs told reporters that Obama would prefer a bill without earmarks. But he said that Defense Secretary Robert Gates had told Obama that the legislation is necessary because it contains key financing for national security–including $158 billion for Iraq and Afghanistan. Gates said he didn’t like the earmarks either–particularly a new fighter jet engine that the Pentagon says it doesn’t need. But Gates said that the alternative–keeping funding at current levels–is worse. The massive bill covers federal spending until September 30th, 2011.
Russia’s prime minister says the crimes of former oil tycoon Mikhail Khodorkovsky’s have been proven, and a “thief should sit in jail.” Khodorkovsky is serving an eight-year sentence after being convicted of tax fraud and is awaiting the verdict in a second trial that could keep him in prison for many more years. Prime Minister Vladimir Putin’s comments during a call-in show will likely be seen as additional pressure on the judge to find Khodorkovsky guilty. Putin said Khodorkovsky’s present punishment is more “liberal” than the 150-year prison sentence handed down in the U.S. to disgraced financier Bernard Madoff. Madoff admitted cheating thousands of people, charities, and institutional investors. losses are estimated at around $20 billion.
Shares in BP are down after the U.S. Justice Department announced it was suing the oil company and several other firms involved in the Gulf of Mexico oil spill. The U.S. government accuses the companies of disregarding federal safety regulations in drilling the well that blew out April 20th, triggering a deadly explosion on the Deepwater Horizon rig and sending millions of gallons of oil pouring into the Gulf. BP said it would respond to the claims at a later date. It said the lawsuit did not constitute “any finding of liability or any judicial finding that the allegations have merit.”
Leaked U.S. embassy cables have revealed that BP was “fortunate” to have evacuated workers from a platform in Azerbaijan after a gas leak similar to the Gulf of Mexico disaster. In a cable published by the Guardian newspaper, BP Azerbaijan President Bill Schrader is reported as saying the “red button” was pressed after detection of a gas leak on the Central Azeri platform in September 2008. The subsequent evacuation of 211 workers was BP’s largest emergency evacuation at the time. The cable says that given the explosive potential the company was quite fortunate to have been able to evacuate everyone safely and prevent any gas ignition. The cable was released by the Wikileaks site.
Iraq’s prime minister says in a leaked diplomatic cable that Chevron expressed interest in developing an oil field straddling the Iran-Iraq border, potentially putting the American oil giant at risk of violating U.S. sanctions. According to a March 2009 cable, Iraqi Prime Minister Nouri al-Maliki told a U.S. embassy official he was in talks with Chevron about the cross-border field, adding Chevron had also approached Iran about the project. The cable was obtained by Wikileaks. The U.S. prohibits American oil companies from doing business with Iran as part of sanctions over its disputed nuclear program. Iraqi officials and a Chevron spokesman in the Middle East could not immediately be reached for comment.
The next Energy-Efficient Appliance Rebate Program for Texas begins Monday and advance reservations are not required. About $10 million in unclaimed rebate funds from an April offering, plus $8.5 million from unused public sector energy efficiency funds, are available. The new mail-in rebate program, involving federal stimulus money, is administered through the Office of Texas Comptroller Susan Combs. The initial rebate program earlier this year led to complaints that millions of Texans seeking rebates could not get through by phone or online to register. The Comptroller’s Office said 38 million online hits were recorded before the program filled up, with nearly 39,000 rebate reservations guaranteed. Rebate-eligible appliances are air-source heat pumps, central air conditioners, clothes washers, dishwashers, freezers, refrigerators, room air conditioners and water heaters.
Several U.S. airlines have raised fares by up to $10 per round trip. Rick Seaney, CEO of farecompare.com, says that American Airlines started the increases by boosting prices on flights over 500 miles by $5 each way or $10 roundtrip, and by $3 each way and $6 roundtrip for shorter trips. American airlines spokesman Tim Smith confirmed the fare increases. He says fares are dictated by supply and demand and influenced by recent increases in fuel costs. Seaney said the higher fares were matched by United and Continental, Delta, Southwest, US Airways, Alaska, Frontier and Virgin America, making the increase likely to stick.
The Commerce Department is calling for the creation of a “privacy bill of rights” for internet users. It would set rules of the road for companies that collect consumer data online and use that information for marketing and other purposes. The proposal, outlined in a Commerce Department report, is intended to address growing unease about the vast amounts of personal information that companies are scooping up on the net–from web browsing habits to smart phone locations to Facebook preferences. That data is often mined to target advertising. The new report proposes the creation of a voluntary, but enforceable industry code of conduct to ensure that companies give consumers clear notice about data collection and the opportunity to decline, or “opt out” of it.
The Pennsylvania Department of Environmental Protection has dropped its plan to force a Houston-based drilling company to pay nearly $12 million to extend a public water line to residents whose wells have been contaminated with methane gas. Environmental regulators say Cabot Oil & Gas instead will pay residents a total of $4.1 million under a settlement announced late Wednesday. The company also has agreed to pay to install whole-house gas mitigation systems in each of the 19 affected homes. Environmental Secretary John Hanger says each family will receive an amount equal to twice the value of its home, with a minimum payment of $50,000. Hanger’s plan to connect residents to a public water system several miles away had provoked significant opposition among local officials, who had threatened to sue to block it.
Attorneys for the Obama administration are headed to court in Florida to argue that a judge should throw out a lawsuit by 20 states against the new health care law. One of their arguments in Pensacola is expected to be that Florida and the other 19 states don’t have standing to challenge the law. U.S. District Judge Roger Vinson has said crucial pieces of the lawsuit could go to trial. He wanted to hear more arguments over whether it’s constitutional to force citizens to buy health insurance. A federal judge in Virginia ruled this week against the insurance mandate. Two other federal judges have upheld the health care law, and both sides expect the issue to wind up before the Supreme Court. Vinson says he won’t issue an immediate ruling.
Cash-strapped states are cutting back on a program that provides free medicine to people with HIV and leaving thousands of patients to wonder where their drugs will come from. At least 19 states have taken such steps as capping enrollment, dropping patients, instituting waiting lists, lowering the income ceiling for eligibility, and no longer covering certain drugs or tests. Advocates say more than 4,500 people are on waiting lists and hundreds have been dropped from programs because of lower income limits. Others can’t get drugs for the symptoms of HIV treatment. Many can get medications through drug companies, but advocates say that’s not reliable and are calling for $100 million more in federal money.
California air quality regulators are poised to adopt the nation’s most sweeping regulations to give power plants, refineries and other major polluters a financial incentive to reduce their greenhouse gas emissions. The Air Resources Board is expected to pass this key piece of the California’s 2006 climate law, called AB-32, with the hope that other states and nations will follow the lead of the world’s eighth largest economy. Under the new rules, regulators in 2012 would enforce a new cap that would limit heat-trapping gas emissions, ultimately from 85 percent of California’s worst polluters. The cap expands to include refineries in 2015, and tightens yearly until 2020.