alabama

Huffington Post…

GOP presidential hopeful Mitt Romney’s position on payroll tax cuts took another turn on Monday. The New York Times reports that Romney came out in favor of a one-year extension, lending support to a policy that has been a President Obama staple. “I would like to see the payroll tax cut extended just because I know that working families are really feeling the pinch right now,” he said on a conservative radio talk show. The former Massachusetts governor’s ideas on this issue have lacked consistency at times . Back in October, he dismissed the notion of an extension as a “temporary little Band-Aid”, saying that he wanted to “fundamentally restructure America’s foundation economically.” In November, Romney’s stance started to waver . When asked during a GOP debate if he would extend the payroll tax cuts, he had a more positive lean, telling viewers “I want to keep our taxes down. I don’t want to raise any taxes anywhere. I’m not looking to raise taxes. What I’m looking to do is to cut spending.” Monday marked a new segment in the payroll tax talks , as Democrats offered a second plan for an extension. This version included a smaller tax on the wealthy to help pay for the middle-class tax cut. On the other side of partisan lines, a prominent GOP face gave some clues as to what it might take for the payroll tax break to go through. Sen. Jon Kyl (R-Ariz.), the No. 2 Republican in the Senate, hinted on Monday toward an extension of wealthy tax breaks to offset the middle-class initiative. Kyl pointed to last year’s scenario when Democrats extended the Bush-era and estate tax cuts to ensure that the payroll tax cuts went through. “As I said a year ago, I was willing to support the extension of it because we extended the other tax rates as well,” Kyl said. “[If] we do that again, obviously it’s something that I would be supportive of.”

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Romney’s Payroll Tax Cut Position Takes Another Turn

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Huffington Post…

ONEONTA, Ala. — Potato farmer Keith Smith saw most of his immigrant workers leave after Alabama’s tough immigration law took effect, so he hired Americans. It hasn’t worked out: Most show up late, work slower than seasoned farm hands and are ready to call it a day after lunch or by midafternoon. Some quit after a single day. In Alabama and other parts of the country, farmers must look beyond the nation’s borders for labor because many Americans simply don’t want the backbreaking, low-paying jobs immigrants are willing to take. Politicians who support the law say over time more unemployed Americans will fill these jobs. They insist it’s too early to consider the law a failure, yet numbers from the governor’s office show only nominal interest. “I’ve had people calling me wanting to work,” Smith said. “I haven’t turned any of them down, but they’re not any good. It’s hard work, they just don’t work like the Hispanics with experience.” Alabama passed its law in June and it was immediately challenged by the Obama administration as it has been in other states. Unlike those states’ measures, Alabama’s law was left largely in place while challenges played out in court, frightening Hispanics and driving many of them away. The agriculture industry suffered the most immediate impact. Farmers said they will have to downsize or let crops die on the vine. As the season’s harvest winds down, many are worried about next year. In south Georgia, Connie Horner has heard just about every reason unemployed Americans don’t want to work on her blueberry farm. It’s hot, the hours are long, the pay isn’t enough and it’s just plain hard. “You can’t find legal workers,” Horner said. “Basically they last a day or two, literally.” Horner, who runs an 8 1/2-acre organic blueberry farm, said she tried to use the government’s visa program to hire foreign workers, but it was too costly and time consuming. She plans to stop growing organically and start using a machine to pick the berries. “I did everything I possibly could to be legal and honest and not part of the problem,” Horner said. “Morally, I can’t knowingly hire illegal workers.” Gov. Robert Bentley, a Republican who signed the law, started a program last week to help businesses, particularly farmers, make up for the lost labor. So far, about 260 people interested in temporary agricultural jobs have signed up. About three dozen job openings have been posted, said Tara Hutchison, a spokeswoman for the Alabama Department of Industrial Relations. She said the department doesn’t know of anyone who has been hired. Sen. Scott Beason, a Republican, said he has received several emails and phone calls from people thanking him for helping them get jobs. He described one getting promoted from a part-time job with no benefits to a full-time job with benefits because some other immigrant workers left. He said none of the workers who thanked him have wanted to talk to the media. “They are paranoid of publicity. They are like, `I don’t want to get shredded up like y’all are.’ … I really can’t blame them,” he said. Over the past two weeks, The Associated Press has reached out to the governor’s office and other officials to provide the names of Alabama residents who have taken immigrant jobs. Either they were not made available, or didn’t want to speak publicly. Brent Martin, an Alabama resident, started working on a tomato farm in an area northeast of Birmingham after the law was passed. On Thursday, he and two other Americans were clearing about 24,000 tomato stakes off a 4-acre plot. He said few Americans who would stick with it. “There are plenty who could do it, but would they? I don’t know about that. I don’t see why they wouldn’t as bad as the economy is right now,” Martin said. Relatively high unemployment rates – about 9 percent in the U.S. and 9.9 in Alabama – are not likely to push Americans toward farm work, said Demetrios Papademetriou, president and co-founder of the Migration Policy Institute. He suggested the problem may be more deeply rooted. “This is a sector and an industry … that a long time ago, going back to the 1940s and probably before that was abandoned,” Papademetriou said. “It was abandoned to foreign workers.” Stan Eury, executive director of the North Carolina Growers Association, said location matters, too. “Agriculture jobs are primarily in remote, rural areas. We see higher numbers of unemployed people in the big cities,” he said. Tomato farmer Wayne Smith said he has never been able to keep a staff of American workers in his 25 years of farming. “People in Alabama are not going to do this,” said Smith, who grows about 75 acres of tomatoes in the northeast part of the state. “They’d work one day and then just wouldn’t show up again.” At his farm, field workers get $2 for every 25-pound box of tomatoes they fill. Skilled pickers can make anywhere from $200 to $300 a day, he said. Unskilled workers make much less. A crew of four Hispanics can earn about $150 each by picking 250-300 boxes of tomatoes in a day, said Jerry Spencer, of Grow Alabama, which purchases and sells locally owned produce. A crew of 25 Americans recently picked 200 boxes – giving them each $24 for the day. It may make sense for some to sit on the couch. Unemployment benefits provide up to $265 a week while a minimum wage job, at $7.25 an hour for 40 hours, brings in $290. Spencer said the Americans he has linked up with farmers are not physically fit and do not work fast enough. “It’s the harshest work you can imagine doing,” Spencer said. ___ Caldwell reported from Washington. Phillip Rawls in Montgomery also contributed to this report.

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After Tough Alabama Law, Few Americans Taking Immigrants Work

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Tar Balls On Alabama Beaches To Be Tested

September 6, 2011

GULF SHORES, Ala. — Heavy surf churned up by Tropical Storm Lee sent tar balls rolling onto Alabama’s prime tourist beaches, and officials said Tuesday that they plan to test the black and brown globs to find out if they’re related to last year’s oil spill. Brandon Franklin, the coastal plans manager for the city of Gulf Shores, said officials are collecting samples that will be sent to Auburn University for testing. The exact origin of the tar balls is still unclear, and BP isn’t taking responsibility for the tar balls just yet. It has sent survey teams to conduct post-storm assessments along coastal beaches to determine what may have developed on the beaches and barrier islands as a result of Lee. The oil giant is prepared to mobilize response crews to affected areas if necessary, spokesman Tom Mueller said. Orange Beach Mayor Tony Kennon said most of the tar balls there were very small. The tar balls visible at Gulf Shores ranged from the size of a marble to nearly the size of a baseball. Connie Harris of Alabaster, Ala., had stayed at a condominium in Gulf Shores over the Labor Day weekend with three friends. When she returned from a beach walk, she had to scrub her feet with soap and a wash cloth, she said. “When we walked on the beach, we had tar on our feet,” Harris said. Grant Brown, a spokesman for the city of Gulf Shores, said he had been told the situation wasn’t as bad as last year, when oil fouled beaches all along the Gulf Coast because of the BP oil spill. But it was significant, he said. “It confirms our fear that there are tar mats just offshore and that we may have more tar coming in whenever there’s a storm,” he said. Elsewhere, the remnants of Lee have knocked out power to thousands, churned up rough ocean surf and drenched areas with rain that left some rivers and creeks topping their banks. At least four people have died because of the storm, including a swimmer who went missing off the Alabama coast. ___ Associated Press writer Harry Weber contributed to this report from Atlanta.

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Nelson Davis: Helped by The Help

September 1, 2011

A motion picture titled The Help is proving to be a surprise late summer box office hit and after watching it recently, I wanted to know more about the author of the book on which the film was based. Among the things I found in the book, the film and the author’s personal story was a set of the most important lessons any business owner can ever learn. A Canadian friend strongly recommended that I read The Help because she knew that a small Alabama town was my birthplace and the stories of a group of black maids in the 1960s segregated south might interest me. The book was the uplifting first novel from Kathryn Stockett who was born in a small Mississippi city. It took her five years to complete and earned her about sixty rejection letters before finding a publishing home. The book was set in Jackson, Mississippi, during the early days of the civil rights movement when a tectonic social shift was beginning. Like my hometown, Andalusia, Alabama, it was a place where black women were trusted to raise white children but not necessarily allowed to handle and polish the household silver. The first small business lesson I gleaned from all this comes from the author’s journey and is simply about flat out, immovable-object persistence. In an article that Ms. Stockett wrote for More.com, she said that she was elated by the first rejection letter for her book which said the “Story did not sustain my interest.” I think she was elated because that letter probably gave her hope for being taken seriously as a writer. After the next fifteen rejections, Kathryn says that she was no longer feeling bubbly about the process. And by the time she had enough rejection letters to paper a wall, I’m sure that Ms. Stockett began to question the whole idea. Whether you are taking the first tentative steps toward starting your dream business or you are dealing with business threatening challenges, persistence determines the difference between success and failure. Winston Churchill’s advice to “never, never, never give up” comes to mind. Author Stockett had a lot more rejection headed her way before any tangible glimmer of success became obvious. With her best friends questioning what she was doing she had more than a few depressing days. The Help became such an obsession that according to her she became secretive about it even with her husband. How would you feel if sixty different people “didn’t get it” regarding your business idea and in fact rejected it as unworthy of success? From watching the film I saw the two main maid characters Aibileen (Viola Davis) and Minny (Octavia Spencer) demonstrate the second attribute needed for business and person success. Whether they were born with it or developed it over time, they had courage. No matter what happened to Aibileen, she wasn’t stopped. Slowed sometimes, hurt at other times, but she continued to be true to her personal sense of pride and values. Minny had a bit of a free spirited self destructive streak but in the end saw courage in others which helped uncover her own strength. Courage is what the civil rights movement demanded or what Steve Jobs demonstrated by returning to run Apple, the company he’d founded and been thrown out of. There is a bonus lesson in how The Help finally got to the marketplace and that is you have to take calculated risks. Amy Einhorn, whose imprint at Penguin Group USA published the book, took a calculated risk. Her boutique publishing operation was founded in 2007 and launched in February of 2009. The Help was the very first title published by Amy Einhorn Books. Kathryn Stockett had found a person willing to roll the dice with her and bring an end to the marathon of rejections. There is a real relationship between risk and reward. Perhaps like your business category, publishing has many reasons to doubt a healthy economic future. Kathryn Stockett braved a Everest of rejections and an ocean of self doubt on her way to seeing her idea achieve literary and movie success. Being based in Hollywood, I’m confident that there’s a long line of studio executives who passed on the notion that The Help could help their bottom lines. The movie is quickly closing in on $100 million in gross business. The book has since been published in 35 countries and three languages. As of August 2011, it has sold five million copies and has spent more than 100 weeks on the New York Times Best Seller list. It is so easy to give up on your dream if you allow the chorus of no to be the only music you hear. The Help lesson for me is that with persistence and courage seasoned by a shot of risk, you are a lot closer to the success you dreamed your business would be.

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Tornadoes, Floods Don’t Pose Threat To Larger Economy, Experts Say

May 27, 2011

WASHINGTON — The tornadoes and floods that have devastated parts of the South and Midwest have also hammered the local economies – flooding farmlands, suspending factory work and disrupting energy production. Yet for the U.S. economy overall, the damage will likely be scant. At most, the disasters might knock one-tenth of 1 percentage point off national economic growth in the April-June quarter, Wells Fargo economist Mark Vitner estimates. “It’s so small, you aren’t going to notice it,” said Patrick Newport, an economist at IHS Global Insight. Others caution, though, that the tornado season hasn’t ended yet, and the hurricane season has yet to arrive. Further major disasters could begin to weigh on the U.S. economy. Early forecasts estimate that the economy will have grown at a 2.5 percent to 3 percent annual rate in the current April-June quarter. That’s a relatively weak pace that wouldn’t spur robust job growth. Still, it’s above the 1.8 percent growth the government reported Thursday for the January-March period. The natural disasters haven’t led economists to reduce their estimates for April-June quarter. “This is a very extreme year,” said Tom Larsen, a senior vice president at Eqecat, a firm that estimates the impact of catastrophes for insurance companies and government agencies. “If it were to stop right now, it would be a once every 25 years’ or every 50 years’ occurrence.” But Larsen doesn’t expect it to stop. “There will be more tornadoes and more property damage,” he said. Typically, damage caused by tornadoes is more concentrated than damage from powerful hurricanes, such as Katrina, economists say. The tornado that devastated Joplin, Mo., on Sunday probably won’t slow the overall state’s economy very much, said Ben Kanigel, an associate economist at Moody’s Analytics. That’s because Joplin accounts for only about 2 percent of Missouri’s economic output. Larsen estimates that the Joplin twister, the deadliest in the United States in more than six decades, and the tornadoes in late April that damaged parts of Alabama and six other Southern states could cause more than $8 billion in losses. His firm hasn’t yet made a similar estimate for the Mississippi flood. Though a blow to the local areas, $8 billion in losses would hardly make a dent in a national economy that produces about $15 trillion in goods and services every year. The United States is the world’s largest economy. The economy is measured by the gross domestic product. The GDP tracks only what the economy produces; it doesn’t account for wealth or property. So if a tornado destroys a factory, the value of the lost factory isn’t counted in GDP. Only its lost output is. Likewise, the loss of a house and other personal property isn’t reflected in GDP. Yet rebuilding from a disaster can add to GDP, because reconstruction would boost output. Construction firms rebuild homes and factories. And consumers replace lost cars and appliances. That’s why analysts predict that any loss of economic output in the April-June period would be reversed in the July-September quarter. “Despite the fact that Joplin and Missouri are clearly worse off, we don’t subtract this destruction from GDP,” said David Mitchell, an economist at Missouri State University. “But we do add people’s work to recreate the infrastructure, homes and buildings that were destroyed. In this sense, GDP can be a poor measure of a country’s economic well-being.” The disasters have had devastating consequences for many communities. The American Farm Bureau Federation estimates that nearly 3.6 million acres of farmland are either under water or have been damaged by the Mississippi River flood. The river, swollen by spring rains and a large snow melt, has forced evacuations of thousands of homes from Tennessee to Mississippi. John Michael Riley, an agricultural economist at Mississippi State University, estimates that the flood has destroyed up to $1.5 billion of corn, wheat and other crops. Livestock pastures and fish farms have also been hurt, he said. Still, some industries haven’t been hit as hard as analysts had feared. Many had economists worried that several major oil refineries near New Orleans might be flooded and have to shut down. That would have crimped supplies and potentially driven up the price of oil. But that didn’t happen. “The worst fears have not been realized as of yet,” said Andy Lipow, president of Lipow Oil Associates, a Houston-based firm.

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Arbor Closes 10 Fannie Mae Loans Totaling $27.7M Across Pacific NW, AL and CO

May 23, 2011

Uniondale, NY (May 23, 2011) – Arbor Commercial Funding, LLC (“Arbor”), a wholly-owned subsidiary of Arbor Commercial Mortgage, LLC, announced the recent funding of 10 loans totaling $27,730,400 under the Fannie Mae DUS® Loan and Fannie Mae DUS® Small Loan product lines across the Pacific Northwest, Alabama and Colorado:   Pacific Northwest   Cascade Meadow Apartments, Woodburn, OR (top left photo) – The 200-unit complex received $11,775,000 funded under the Fannie Mae DUS® Loan product line. The 10-year refinance loan amortizes on a 30-year schedule. Four Seasons Apartments, SeaTac, WA (top right photo) – The 61-unit complex received $2,490,000 funded under the Fannie Mae DUS® Small Loan product line. The 10-year refinance loan amortizes on a 30-year schedule. Glenn Apartments, Portland, OR (middle left photo)  – The 23-unit complex received $2,312,500 funded under the Fannie Mae DUS® Small Loan product line. The 10-year refinance loan amortizes on a 30-year schedule. Carriage Estates, Wilsonville, OR – The 37-unit complex received $1,992,000 funded under the Fannie Mae DUS® Small Loan product line. The 10-year refinance loan amortizes on a 30-year schedule. Sunview Apartments, Seattle, WA – The 37-unit complex received $1,693,200 funded under the Fannie Mae DUS® Small Loan product line. The 10-year refinance loan amortizes on a 30-year schedule. Inverness Apartments, Portland, OR – The 12-unit complex received $837,700 funded under the Fannie Mae DUS® Small Loan product line. The 10-year refinance loan amortizes on a 30-year schedule. Regis Arms Apartments, Hillsboro, OR – The 20-unit complex received $800,000 funded under the Fannie Mae DUS® Small Loan product line. The 10-year acquisition loan amortizes on a 30-year schedule.   Alabama   Edgewood Villas, Mobile, AL (middle right photo)  – The 103-unit complex received $1,530,000 funded under the Fannie Mae DUS® Small Loan product line. The 10-year refinance loan amortizes on a 30-year schedule. The Birches Apartments, Scottsboro, AL – The 88-unit complex received $1,300,000 funded under the Fannie Mae DUS® Small Loan product line. The 10-year refinance loan amortizes on a 25-year schedule. Colorado Park Athmar Apartments, Denver, CO (lower left photo)  – The 84-unit complex received $3,000,000 funded under the Fannie Mae DUS® Loan product line. The 10-year refinance loan amortizes on a 30-year schedule. All of the loans were originated by Brian Scharf (bottom right photo) , Director, in Arbor’s full-service Uniondale, NY, lending office.   “The package of recently close DUS® loans covered a broad diversity of loan sizes as well as geographies, from the Pacific Northwest to the Southeast and in between,” Scharf said.   “This varied array, based on both size and location, is a testament to Arbor’s ability to offer everything Fannie Mae does. Our familiarity with all markets and loan sizes continues to strengthen our competitive advantage at a time when many of our competitors are limiting their focus.” Contact :   Christopher Ostrowski, costrowski@arbor.com

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Cost Of Natural Disasters: ‘Ten Billion Dollars Would Be Conservative’

May 19, 2011

This year’s record-breaking tornadoes, floods, droughts and wildfires will cost the country tens of billions of dollars in economic losses — and these estimates are expected to climb as the Mississippi flooding and severe drought in Texas continue into the summer. Economists disagree about the precise figures — with the estimates varying by billions — but most agree that $10-15 billion in losses are conservative calculations. Severe weather in April alone — the month when record-breaking tornadoes tore through much of the Southeast and killed more than 300 people — cost the country $12 billion in economic losses, according to Steven Bowen, a meteorologist with the Impact Forecasting team of Aon Benfield, one of the world’s largest insurance brokers. The cost estimates for the flooding in Louisiana and Mississippi range from $3-9 billion, and the ongoing Texas drought, which began in November and has caused more than 10,000 wildfires across the state, has so far cost between $1.5 billion and $3 billion in crop and cattle losses. As the flooding and drought continue, government agencies say that it’s impossible to predict the long-term economic impact of the losses, which include thousands of homes and buildings destroyed by the tornadoes, casinos and ports along the Mississippi temporarily closed, millions of acres of grazing land scorched by the fires and 1 percent of the country’s cropland currently submerged in water. “It’s too early to say what effect this [the flooding] would have on the national economy,” the Department of Agriculture stated in a report on May 11. “Regardless, it probably will not be extensive given the estimated percentage of land affected.” But even as the long-term effect remains unknown, the short-term impact is clear: Individuals and small businesses are absorbing the bulk of these losses, as states, government agencies and insurance companies help foot nature’s bill. April’s tornadoes are expected to wipe thousands of mom-and-pop shops off the map. This region already had a high rate of small business failure, and before April’s disasters between 6,000 and 8,000 small businesses in Alabama, Tennessee, Mississippi and Georgia were expected to go under within the year, according to a report by Dun & Bradstreet, a research company that tracks small businesses. After the tornadoes, the number jumped to at least 10,000 shops. “Small businesses are definitely going to bear the brunt of this,” Byron Vielehr, President of Global Risk and Analytics division at Dun & Bradstreet told HuffPost in a telephone interview. The businesses won’t fail immediately, said Vielehr, but when they do it could produce a spike in unemployment and a loss of about a billion dollars in sales, just from these tornado-stricken small businesses alone. The situation of small farmers and ranchers in Texas is similar. After enduring the driest seven months on record, farmers and ranchers are being forced to abandon a cycle of wheat crop and sell off herds. Texas produces 20 percent of the country’s beef, and cattle ranchers are being slammed by the combination of scorched land unable to support grazing, and high feed and hay prices, both of which were driven up by the drought and the fires. “For a rancher, at this point he’s going to be losing about 30 percent of the income he would have averaged in the past,” said Bill Hymen, executive director of the Independent Cattlemen’s Association, the second-largest coalition of ranchers in the state. “And that’s not just this year but going forward because of dwindling seed stock,” he added, referring to the process of fewer cows leading to the birth of fewer calves in the future. As is the case in all industries, when a rancher has less pocket money, that creates a ripple effect in the local economy — with Hymen noting that ranchers, who know it’s likely that the drought will continue through the summer, are buying less and will ultimately pay less in taxes next year. Along the Mississippi and Atchafalaya rivers, a portion of small businesses and farms will likely follow the same course as the businesses that fell in the tornadoes path. Closed ports and casinos, too, are losing millions of dollars each day in lost river traffic, trade and gambling. Closing the Mississippi river itself causes even more economic damage. On Tuesday, the Coast Guard closed a 15-mile stretch of the Mississippi upriver of New Orleans by Natchez Port, a decision which could lead to losses of hundreds of millions of dollars each day, said Eric M. Holthaus, researcher at the International Research Institute for Climate and Society. The Coast Guard said that this closure is expected to last only a few days, but Holthaus also imagines a nightmare scenario in which the Port of New Orleans — the seat of our country’s agricultural exports and a handful of oil refineries — has to be closed. “I would be talking about trillions of dollars at that point,” he said. As long as the Port of New Orleans stays open, which it likely will, the Federal Emergency Management Agency, commonly known as FEMA, said that right now there is plenty of money in the $2 billion emergency fund to aid the states hit hardest by the natural disasters. FEMA has already approved about $38 million in future storm and tornado rebuilding assistance, including $9.4 million to Mississippi, $80 million to Alabama, $6.6 million to Georgia, $5.9 million for Tennessee and $16 million for Arkansas. For the flooding, FEMA has so far approved more than $11 million, including $1.4 million for Tennessee, $9 million for Missouri and $785,000 for Mississippi. As the flooding continues, the FEMA contribution is expected to rise, and these figures don’t include other public assistance that the regions will receive, either from the federal or state level. Insurance companies, too, are paying out, and April alone produced hundreds of thousands of insurance claims. Still, insurance companies and federal agencies aren’t feeling the hit of $10-15 billion in losses as acutely as individuals, towns and small businesses. “If you’re a small town in western Texas that’s lost anything, that town is going to suffer regardless of how much insurance money they get in the end. Less money in the community will mean that all unrelated jobs will take a hit,” said Holthaus, who said that the same holds true for communities affected by the tornadoes or the floods. “During a recession is a bad time for a disaster to hit,” he said.

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Mighty Mississippi Moves Oil Prices

May 12, 2011

Fears that flooding along the lower Mississippi would disrupt gasoline production at the region’s refineries were eased Wednesday, but highlighted the key role the river plays in shaping the nation’s energy and commodity prices. Gasoline futures closed at just over $97 last friday, a low unseen since February, and, as a result, analysts predicted that pump prices would fall in June. Then, cable news networks filled the airwaves with images of the swollen Mississippi River and frightened people who live and work nearby. Some of the river’s major tributaries had begun flowing backwards. The Army Corps of Engineers were imploding dams and talking about opening certain spillways to distribute the water volume. Those decisions produced some flooding but also threatened to swamp refineries in the lower Mississippi River region. Crude oil costs and gasoline futures contracts are closely watched in part because both inform the price of gas at the pump. When consumers have to pay more for gas, they have less to spend on other goods and services, a scenario that could dampen the economic recovery. But what refiners have to pay for the crude oil they transform into gasoline and consumers pay at the pump is not just a function of what traders buy and sell. It is also a function of how much oil moves down the Mississippi. “I think that there were a lot of us who thought you had this perfect storm of sorts to bring prices down until we realized the magnitude of what might happen along the Mississippi,” said Phil Flynn, a PFGBest Research senior market analyst based in Chicago. A cluster of 11 lower Mississippi River region refineries have the combined capacity to process about 13 percent of the nation’s petroleum products, said Flynn. The process begins when barges and tankers stop and unload crude oil at river facilities known as docking terminals. When a river swells, it can become impossible for a barge to dock at a terminal. Tanker ships require extra tugboat assistance to remain at terminal. And, a swollen river can render a ship unable to pass beneath bridges to reach certain terminals. On Wednesday the amount of water flowing in the Ohio River, the Mississippi’s largest tributary, forced the U.S. Coast Guard to close 20 percent of its terminals, according to a Reuters report. At least one ship was also unable to clear the Interstate-10 bridge near Baton Rouge, La., because of the Mississippi’s volume. If those sorts of problems continue or spread, the volume of crude oil available to refineries will shrink and refineries will, in turn, slow down gasoline production, Flynn said. This could tighten the gasoline supply and contribute to rising prices at the pump. Wednesday’s events did mark a new twist in May’s already dramatic crude oil and gasoline futures price fluctuations. “This month has been, if you like, bipolar,” said Tom Kloza, chief oil analyst at the Oil Price Information Service. The service tracks petroleum prices and is based in Maryland. “To call this May simply volatile is a little like calling Trump a little bit pompous or the Atlantic a little bit wet…But I do not believe that this is the apocalypse.” Crude oil prices rose in January amid political protests in Middle East. In February and March, the spread of unrest in additional oil-producing nations and a joint U.S. Nato bombing operation in Libya pushed crude oil prices even higher. But, in the last two weeks, the value of the U.S. dollar rose, an event that typically pushes crude oil prices down. Then, a combination of power outages and tornado damage in Texas and Alabama dampened refinery production. That is the type of event that might typically push gasoline futures prices up. Instead, futures prices fell Friday in what’s generally been explained as a bubble burst. This week’s logistical problems on the Mississippi are happening at a time of year when refining activity is already curtailed for scheduled maintenance and a production switch from winter to summertime gasoline, said Flynn. But so far this year, high gas prices at the pump have kept demand for gasoline low. “That’s the beauty of the market at work,” said Flynn. In fact, a weekly U.S. Energy Information Agency report released late Wednesday morning indicated that demand for gas slipped because drivers are facing an average pump bill of almost $4 per gallon. The report also indicated that last week U.S. refineries processed 14.1 million barrels of oil. That pushed gasoline inventories about 2.6 million barrels higher than had been expected. And, information emerged Wednesday that while flooding might force the Army Corps of Engineers to open spillways such as the Morganza in Louisiana, only one small refinery would be certain to close under those circumstances, said Andrew Lipow, president of Lipow Oil Associates, a Houston-based consulting firm. The refinery contributes less than half a percent to in nation’s total refining capacity, Lipow said. “Even if there are some disruptions, other disruptions, we’re talking about oil that might have been processed at a refinery in Baton Rouge, having to go to Houston or Beaumont(,Texas) or Corpus Christi (,Texas),” Lipow said. Commodities markets responded. On Wednesday, Oil prices began at nearly $104 a barrel and ended the day at $98.57. While crude oil prices were dropping, so were gasoline futures contracts. Gasoline futures — agreements with large volume gasoline buyers and investors that deeply influence the price of gas at the pump –- fell from about $3.38 cents a gallon to about $3.12 around noon. The 26-cent drop triggered a five-minute halt on gasoline futures trading on the New York Mercantile exchange, according to the Wall Street Journal. By the day’s end, gasoline futures rebounded to $3.37. “It’s sometimes difficult to tell what’s going to happen,” said Lipow. “As more information gets out there … people are realizing that we are not going to have the worst case scenario — if the levees hold.” Market activity on Wednesday even sparked a new round of complaints about financial speculation — and lawmakers’ hesitancy to control the activity — in Washington, D.C. “What we have now on Wall Street is a crude oil casino, and it has been opened and is now being protected by the Republicans,” said Rep. Ed Markey (D-Mass.) at a press conference. In late April, Attorney General Eric Holder announced that he had created the Oil and Gas Price Fraud Working Group. The task force will explore the possibility of illegal activity in the energy market. People who think that oil prices have been particularly volatile should think back a few years, Lipow said. In July 2008, the price crude oil reached near $145 per barrel. By January 2009, crude oil was selling for about $40 per barrel.

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The U.S. Banking Industry Is Shrinking: Who Benefits?

April 28, 2011

By Knowledge@Wharton Though the U.S. banking sector was in recovery mode in 2010, it still managed to reach some highs and lows. There were 157 bank failures in the country last year, the most since 1992, according to the Federal Deposit Insurance Corporation (FDIC). And the number of new bank charters was at an historic low — 11, compared with 181 three years earlier. With so many banks leaving the sector and so few entering it, a long-anticipated consolidation process is now under way. The U.S. is expected to end up with no less than 6,529 commercial banks and 1,128 savings institutions by the end of this year. That is a 4.4% decline from the previous year, and it leaves the country with nearly half as many institutions as it had 20 years ago, according to the FDIC. What does this consolidation mean for the banking sector’s next 20 years? Should consumers be concerned about the shrinking number of banks? Many experts expect consolidation to continue, and predict that the trend will leave the banking system better off in the long run. “We don’t really need as many banks as we used to,” says Jack Guttentag , a finance emeritus professor at Wharton and former economist at the Federal Reserve Bank of New York. “Banks now have the power to [set up branches] wherever they want to, so what really matters is how many options a customer has in a certain market.” Therein lies the challenge, according to Kenneth H. Thomas, a Wharton lecturer of finance. As he sees it, not all customers will benefit from greater consolidation. A market, such as the one in the U.S., that is “over-banked,” with a supply of banking services exceeding demand, “is generally good for consumers and businesses because it results in lower prices — i.e., lower loan rates, loan/deposit fees and higher deposit rates — and higher output [in terms of] more varied and innovative products,” he notes. “Some may argue that ‘over-competition’ [or over-banking] could drive weaker banks out of business” — as happened to Washington Mutual, the savings institution that collapsed in 2008 — “but then someone else comes in and replaces them, yet may reduce the number of offices and amount of services.” History Lessons It is no accident that the U.S. has had such a large number of banks. Rather than setting up one, large national bank as other countries do, the U.S. federal government rolled out various laws in 1784 to encourage multiple banks in individual states. In 1863, a new banking act introduced a national charter that encouraged the establishment of more financial institutions even as it taxed banks with state charters. Nearly 70 years later, with the dawn of the Great Depression, the country had more than 30,000 banks. But the stock market collapse took its toll. In 1933 alone, about 4,000 commercial banks and 1,700 savings and loans institutions failed. The next wave of consolidation occurred in 1994 with the arrival of the Riegle-Neal Interstate Banking and Branching Efficiency Act. That made interstate expansion easier, whether it occurred through M&A activity or organically. The number of banks began shrinking annually by about 4.5% before another period of expansion in the late 1990s, according to the FDIC. With another swing of the pendulum last year, consolidation returned to 1994 levels. But in contrast to previous times, much of the consolidation has been due to failures rather than through M&A. Shuttered banks have ranged from American National Bank of Ohio, a small institution with assets of $70 million that had struggled for years to turn a profit and was under regulatory pressure until it was closed in March, to $25 billion Colonial BancGroup of Alabama, which closed its doors in the summer of 2009, a few days after regulators started an investigation into accounting irregularities. As the third largest failure in U.S. history, all of Colonial’s deposits were sold to BB&T, turning it into the ninth-biggest U.S. bank by assets, according to Bloomberg. As for M&A, there were 197 deals last year, a 20-year low. Loretta J. Mester, a Wharton adjunct professor of finance and director of research at the Federal Reserve Bank of Philadelphia, expects consolidation to continue over the next few years. “In the short term, I think consolidation will pick up as weaker banks go through mergers and acquisitions, and stronger banks take time to get their capital shored up” in their pursuit of greater efficiency and economies of scale, she notes. The Little Guy The institutions that will likely be hardest hit by all this activity will be the community banks. Most of these small, locally owned banks have less than $1 billion of assets, but account for 92% of all banks and savings institutions, says the FDIC. For many of them, the arrival of the recent Dodd-Frank Wall Street Reform and Consumer Protection Act was a death knell.Tougher controls involving capital, liquidity and leverage, and a surge in regulatory red tape, have left such banks struggling, particularly those with less than $500 million of assets. “Many small banks feel that they are being pushed out of existence by new regulations,” Thomas states. Their plight hasn’t been lost on the FDIC, which has launched various initiatives to give community banks some relief. A few weeks ago, for example, it released guidelines that lighten requirements for how these banks manage customers whose accounts are consistently overdrawn. The FDIC has also been encouraging entrepreneurs to buy troubled banks. According to Thomas, this trend started two years ago, when new charters were hard to come by. A case in point: BankUnited, a 70-branch Miami Lakes, Fla.-based financial institution, was taken public earlier this year after the FDIC sold it in 2009 to a bevy of private equity investors led by John Kanas — the former chief executive of a Long Island regional bank sold a few years ago to Capital One. Todd A. Gormley , a Wharton finance professor, says community banks play an important role in local economies. They typically have close relationships with individual customers, while, for example, making loan decisions based more on personalized information than the credit scores and other hard data used by large banks. “Smaller firms and local individuals trying to get loans from larger banks could be a subset of the population that is worse off because of consolidation,” Gormley suggests. There is also something to be said for the often underrated efficiency of smaller lenders that rely on personal relationships as a guarantee against loan defaults. In a study published last year, Stephanie Moulton, a professor of public affairs at Ohio State University, found that borrowers with low incomes or bad credit are significantly less likely to default on loans if they borrow from a local bank than if they receive a loan from a distant bank or mortgage company. Personal relationships, she concluded, are an important factor in the reciprocal relationship between lender and borrower, resulting in both sides offering critical information, such as repayment schedules. Easy Come, Easy Go According to Guttentag, consolidation also leaves a handful of banks controlling the majority of certain types of products. Four “mega banks” — Wells Fargo, Bank of America, JPMorgan Chase and Citigroup — now hold three-fifths of the home mortgage market, which limits consumers’ choice of products and their ability to shop around for competitive pricing. “It’s a textbook issue of a concentration of power,” Guttentag says. “A limited number of firms control the market, and they will engage in implicit collusion.” Thomas, meanwhile, is concerned about the concentration in geographic markets as a result of ongoing consolidation. While there are more than enough banks in the entire country, some cities, states and regions have just one dominant bank. “There are a few markets in danger of becoming a one-bank or two-bank town,” he says. For example, in the Pittsburgh metropolitan area, PNC Bank has 47% of the deposit share, according to the FDIC. The second-largest bank in the area is Citizens Bank of Pennsylvania, which has 8.5% of the deposit share. “We need competition because competition lowers prices,” Thomas states. While there are no limits on deposit shares in certain markets, 1994′s Riegle-Neal Act imposes a 10% cap on nationwide deposits for a single bank. That has since been interpreted as a cap on growth that occurs through mergers rather than organically. The Treasury Department is now looking into modifying the cap to include all consolidated liabilities. But Mester says consumers need not worry. “When there is consolidation, there are not necessarily fewer outlets for banking services,” she notes. While the total number of banks may be declining, the number of branches isn’t. Additionally, no matter where they are, consumers have access to a growing number of Internet banking options. In the last 10 years, the number of bank branches nationwide has increased 15%, although that expansion has primarily involved banks with $500 million or more in assets. The number of branches dropped slightly for the first time in a decade in 2010. As for the future, Guttentag predicts that the number of banks will continue to shrink, but he doubts the U.S. will ever look like, say, Canada — which has just 22 banks. Indeed, if consolidation continues as it has over the past 20 years at the average annual rate of 3.3%, it would take 60 years for the total number to fall below 1,000 banks and nearly 130 years to get below 100. “Even if the number of banks shrinks from 6,000 to 100, if those 100 are operating in all market segments and if consumers have many options, there is no reason for concern,” Guttentag says. Additional reading from Knowledge@Wharton: The Dodd-Frank Financial Regulatory Law: Long-Awaited Cure — or Cause for ‘Wild-Eyed Alarm’? ‘A Major Transformation’: The Pros and Cons of the Dodd-Frank Act The Coming Meta-Boom and Meta-Bust — One Economist’s View

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The States Where People Can’t Afford Gas

April 28, 2011

Gas prices fluctuate sharply from state to state. Regular unleaded fuel costs $4.17 per gallon in Alabama, while the price is below $3.50 in other states. Part of the reason for these discrepancies is differing gas taxes and part has to do with the cost to transport fuel. Gas prices in and of themselves do not affect consumer spending. Fuel costs cannot be considered in a vacuum. A household with an annual income of $250,000 may not be bothered much by $5 gas. A household with an annual income of $35,000 could find that $3.50 gas is so expensive that cutbacks on other daily expenses are necessary to offset the cost of daily driving.

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Susan Buchanan: Oyster Growers Say Post-Spill Assistance Is Inadequate

April 25, 2011

(This article was published in “The Louisiana Weekly” in the April 25, 2011 edition.) African American oystermen in Louisiana’s lower Plaquemines Parish, where beds are damaged, are a tenacious bunch and don’t intend to abandon their livelihoods and seek work elsewhere if they can help it. After a disastrous year since the spill, they’re getting assistance from the state but want BP to live up to a commitment to restore beds. And they hope that Gulf Coast Claims Facility paymaster Ken Feinberg will compensate them fairly for losses. “Oyster beds on the east bank of lower Plaquemines were decimated by the opening of the Caernarvon Freshwater Diversion” on the Mississippi River, said Telley Madina, executive director of the Louisiana Oystermen Association based in Pointe a la Hache. He spoke at an April 19 panel on the coast sponsored by the Greater New Orleans Foundation. Last May, the state opened the Caernarvon Diversion — located 15 miles below New Orleans on the east bank near Braithwaite at the St. Bernard and Plaquemines Parish border — at full capacity to keep oil from the west bank and surrounding areas. Fresh water from the river, however, reduced salinity in oyster habitats, with deadly consequences. Madina said that his father in law, Byron Encalade — president of the Louisiana Oystermen Association — expects to harvest nothing this year from the waters around Pointe a la Hache, where Encalade lives. Oysters there died from the intrusion of fresh water. He said “most of the population on the east bank of lower Plaquemines is minority African American, and many families have been surviving off the water there for generations.” In addition to killing oysters, fresh water diversions didn’t always keep oil at bay. “The Caernarvon opening was intended to suppress oil, but oil still got into both the west and east banks, including Spanish Bay,” an oyster area east of the river in Plaquemines, Madina said. Some private beds on the east bank in lower Plaquemines survived oil and the diversion’s opening, however. Madina said “we’re estimating that it will take five years for most east bank beds to recover, partly because it took five years for them to come back strong after Katrina. They had just gotten full grown when the oil spill happened.” Other predictions are that recovery will take 3 to 5 years, or 5 to 10 years, he said. “The diversions were done for the good of the state because of the spill, to keep oil from the west bank and from coming into Spanish Bay on the east bank — although it eventually did,” Madina said. “BP should help the state recoup losses but has already said it doesn’t want to pay for oyster damage from diversions.” Olivia Watkins, spokeswoman for the Louisiana Dept. of Wildlife and Fisheries, said last week “we had a $15 million, verbal commitment for oyster restoration from BP last fall, but they’re trying to back out of it now. In Louisiana, a verbal commitment and a handshake are as good as a promise.” Watkins pointed to the high mortality of oysters along Louisiana’s coast as a result of the oil spill and spill-response actions. “The oyster industry can’t wait for the federal NRDA process–which can take five to ten years to complete–to begin restoration,” she said. Louisiana and other Gulf states are to be returned to pre-spill conditions through a Natural Resource Damage Assessment or NRDA. Scientists involved in the NRDA continue to collect data in the Gulf, and restoration ideas are being sought. Watkins said “we can’t sit back and do nothing” about the beds. The state took action this month, and announced two, $2 million allocations, or a total of $4 million, in emergency funding for cultch planting on public oyster seed grounds on the Mississippi River’s east bank. Cultch, mostly shells and limestone, is used to provide bedding where young oysters, called spat, attach and grow. Louisiana oysters spawn in the spring and in late August or September. Watkins said the state will ask BP to compensate it for the $4 million in cultch spending. She said “we already have permits from the U.S. Army Corps of Engineers for the Lake Borgne cultch planting.” And at the request of the Louisiana Oyster Task Force, “we will be applying for a permit for Black Bay in Plaquemines Parish so that planting can get started there in time for the fall spat set.” Curtis Thomas, Louisiana-based spokesman for BP’s Gulf Coast Restoration Organization, said last week that BP intends to fulfill its environmental and economic commitments to the Gulf, and added “BP knows the NRDA process will resolve many issues that remain through and even after this unprecedented response” to the spill. Thomas continued, saying “with respect to the oyster beds, alleged damage to them caused by the state of Louisiana’s fresh water diversion, which may have reduced water salinity, is not compensable under the Oil Pollution Act — that is, BP is not obligated to pay for such damage because it was not caused by the oil spill.” He also said “some, senior Gulf state regulatory officials are reporting that damage to oyster beds in 2010 was not caused by the spill or the fresh water diversion; rather it was caused by increased water temperature and lower levels of dissolved oxygen.” He did not explain who those state regulatory officials were or what locations they had referred to. BP will provide $1 billion for early, restoration projects in the Gulf for damage to natural resources caused by the spill, NRDA trustees said last week. The trustees include Louisiana, Mississippi, Alabama, Florida, Texas, the U.S. Dept. of the Interior and the National Oceanic and Atmospheric Administration. The trustees said they plan to use the money for rebuilding coastal marshes, replenishing damaged beaches, conserving ocean habitat for injured wildlife, and restoring barrier islands and wetlands. Meanwhile, fishermen are getting the short end of the stick from the Gulf Coast Claims Facility, Madina said. “Less than 10% of GCCF payments have gone to Gulf fishermen, shrimpers and oystermen, who so far have been compensated for only a fraction of their losses.” He had heard that some workers in seafood restaurants in New Orleans had been fully paid on their GCCF claims. “These groups of people shouldn’t be pitted against each other, but GCCF should first help the people affected on the coast, like fishermen,” he said. Madina continued, saying “I don’t think problems on the coast will wrap up in 2012 as Ken Feinberg says. We’re still seeing big tar balls wash ashore in lower Plaquemines, and I won’t be surprised if we have more, enormous fish kills, like we did last September.” Madina knows oystermen in lower Plaquemines who are taking $5,000 final, individual payments from the GCCF and signing away their rights to sue BP because they can’t wait any longer for money. “For shrimpers, the season is starting and they need cash to get their boats ready,” he said. “Fisheries are a $2.4 billion industry statewide, and it is just about the only industry on the east bank of lower Plaquemines.” Madina said “oystermen need money to pay their mortgage or rent. You can’t survive these days floating up and down the river on a boat.” Under a new initiative, oyster shells from participating New Orleans restaurants will be collected to rebuild oyster beds in Louisiana, said Mandi Thompson, executive director of the Gulf Coast Leadership Forum, speaking at that group’s conference in the Crescent City last week.

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Mutual Fund Teaches Grad Students Real World Investing

April 22, 2011

NEW ORLEANS — With all of the ups and downs of the stock markets over the past decade, the average investor might wonder who’s watching over his mutual funds. In the case of the Burkenroad Fund, it’s a group of students at Tulane University’s Freeman School of Business who spend hours combing through the financial reports of companies that a lot of retail investors haven’t heard of and analysts don’t follow – and eventually find many of the stocks the fund buys. The results over a decade of student involvement aren’t anything to sneeze at. According to Burkenroad’s prospectus, the no-load version of the fund, which started Dec. 31, 2001, had returned 11.9 percent since inception through March 31, 2011. The fund, managed by Biloxi, Miss.-based banker Hancock Holding Co., has current assets of about $70 million. The fund licenses its name from the university, but is managed independently from the school. The Russell 2000 index, a benchmark barometer of small- and mid-cap companies, returned an overall 7.5 percent over the same time. In the recessionary year of 2008, when many 401(k) plans lost much of their value, the Burkenroad fund suffered a loss of just under 25 percent compared to 33.8 percent for the Russell 2000 index. But both rebounded the following year. And for the three years ending March 31, the Burkenroad fund returned 10.72 percent compared to 8.6 percent for the Russell 2000 index. Peter Ricchiuti, who teaches the stock analysis course, said he picks most of the companies, and students come up with others. He said the Burkenroad fund’s reliance on student reports is unique, although other business schools put their students to the task of researching investments for university endowments. About 200 students over the current school year have been evaluating 40 companies across the South. Considering the region, it’s not surprising that 15 of the companies have some sort of involvement in the petroleum industry. The others include regional banks, as well as insurance, consumer goods, chicken- and egg- processing and retail companies. All of their final analyses – known as Burkenroad Reports – are available to the public. “At the Freeman school, we do our due diligence and take a more long-term look at investing,” said Anthony Elia, a 25-year-old graduate student in finance from Pasadena, Calif. The companies are generally in the $100 million to $1.5 billion market cap range and located in Texas, Louisiana, Mississippi, Alabama, Georgia, or Florida. The group looks for profitable companies – and those that don’t have many financial analysts following them. “One of the things is that we can clearly understand what they do,” Ricchiuti said. “No wild high-tech companies. Just meat-and-potato companies.” Elia first reported on oilfield services company Key Energy Inc. and now heads a team of students studying Carbo Ceramics Inc., an oilfield services company, and consumer services specialist Rollins Inc. Alexandra Thurber, a graduate student from Bethesda, Md., first reported on oilfield service company Willbros Group Inc. and now is team leader of a group analyzing egg producer Cal-Maine Foods Inc. and Pool Corp., which provides swimming pool products. She’s not sure yet whether she’ll be doing the same task for a living. “My background is in math and this is an extension of that,” Thurber, 25, said. “The dynamic nature of the markets is interesting. I think I will wind up working in a financial career, but not necessarily investing.” In keeping with standard investment house rules, the students are forbidden from investing personally in companies they have researched. They can buy the Burkenroad Fund. These students, from their perspective in life, have grown up around a lot of cynicism concerning investing – the dot-com bust, the scandals of Enron and Tyco International and, last but not least, the collapse of Lehman Brothers and the ensuing retirement savings wipeout of the 2008 financial collapse. “There’s always been some cynicism,” said Arnaba Dasqupta, a 29-year-old graduate student with a previous job at a New York hedge firm and who is now hoping for a banking career. “It doesn’t have to come from a corporate scandal. It can be management being too optimistic. It’s not lying, but it’s misleading to investors.” What would the student stock-pickers tell a potential investor? “I suggest you find a company whose products and values you like and stick with it,” said Tray McCurdy, a 24-year-old graduate student in finance from Baltimore. Elia is against momentum investing – or “jumping on the bandwagon.” “Invest in companies you know and understand,” said Dori Brown, a 21-year-old undergraduate student from Houston. “Don’t focus on one aspect of a company,” Thurber said. “Look at the entire picture and not just one thing that excites you.” Arnab said that if an investor is not confident of his knowledge, he should seek an adviser who can be trusted. “Do your own homework,” he said. “Investing is a system with a lot of people with a lot of different opinions. The markets owe you nothing.”

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Americans Feel Inflation That Fed Says Doesn’t Exist

April 8, 2011

NEW YORK (Daniel Trotta) – On the streets of America, the debate over inflation is over. Prices are too high and rising too fast, many people say. “The government says inflation is low, but that’s not what I’m seeing at the grocery story,” Jorge Alberto, an 88-year-old retiree in Miami, said walking out of a supermarket. “My pension is being put to the test.” Policy-makers at the U.S. Federal Reserve largely agree that promoting economic growth is still more urgent that constraining a nascent pick-up in consumer prices. They look beyond the volatile fuel and food prices that have pushed up inflation and focus instead on data showing little if any upward rise in wages, something they would see as the seed of a sustained and broad-based rise in prices. “I don’t think the Federal Reserve has a clue about us little people,” said J. McKeever, an instructor at the Montessori Institute of Milwaukee. “I am very frugal, so I watch what I spend. And what I have noticed in recent months is that I have less money before than I used to, while making the same amount of money and having to pay for health care,” she said. Across the country, Americans tell of a disconnect between the real economy they live in and the macroeconomic picture as described by economic indicators. Consumer prices rose 0.5 percent in February from January, and 2.1 percent over the previous year but the rates were half that when stripping out food and energy. “There are no salary increases and you know you have the pressure at work to cut, but on a personal level everything else keeps going up. You never seem to be able to catch up,” said Paty Peterson, 50, of suburban San Francisco. Policy-makers at the Fed must weigh how much the perception of inflation might trigger actual price increases. The worry would be if businesses pushed up prices to cover their rising costs and workers in turn demanded higher wages to cover theirs — which could spark a self-feeding cycle. Consumers’ inflation expectations rose briskly in March, according to the Thomson Reuters-University of Michigan survey. U.S. households are facing higher prices for staple products such as Tide laundry detergent and Hershey chocolate bars as cocoa, sugar, oil, wheat, corn and other commodity prices climb. Major consumer products makers have said in recent weeks that they will be raising prices including Procter & Gamble Co (PG.N: Quote, Profile, Research, Stock Buzz), which said it would raise laundry detergent prices 4.5 percent in June. Kimberly-Clark Corp (KMB.N: Quote, Profile, Research, Stock Buzz) is raising prices on diapers, baby wipes and toilet paper as much as 7 percent. “My grocery bill is up 30 percent over last year,” said Cheryl Holbrook, 47, who educates her seven children at home in Mobile, Alabama. “We have to pinch every little penny and make it squeak.” The Fed’s hawks, who stress the risks of inflation, have stepped up their argument that it may be time to wind down the central bank’s $2.3 trillion securities-buying program to stimulate the economy. So far, they have been out-argued by those who see recovery from the Great Recession as fragile and still in need of a boost. The European Central Bank, by contrast, on Thursday raised interest rates for the first time since 2008 to contain rising prices. If underlying prices rise, or an inflationary psychology starts to take hold, the Fed could change course. A recent Reuters poll found long-term expectations for the food and fuel prices that have pushed inflation higher in recent month are on the rise. Consumers meanwhile complain that food and gasoline consume too much of their income, forcing difficult decisions to stay within budgets. Eileen Reilly, 72, a retired resident of the Chicago suburb of Geneva, said higher gasoline and food prices have forced her to drive less, buy a cheaper food for her dog Lucky, and stop taking pills for a liver condition she declined to identify. “My doctor said I could die if I don’t take them,” Reilly said, rolling her eyes. “I told him that I’m 72 and I’ll be dead soon as it is. Besides, it was either the pills or the car and the dog. And I need the car and I love the dog.” (Reporting by Kevin Gray in Miami, Mark Felsenthal in Washington, Verna Gates in Birmingham, Alabama, Nick Carey in Chicago, Brad Dorfman in Chicago, John Rondy in Waukesha, Wisconsin, Peter Henderson in San Francisco) (Writing by Daniel Trotta) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Janet Ritz: The Non-Mandated Society: Why Obama’s Mortgage Programs Fail

April 5, 2011

To expect banks to care about Americans over their global shareholders is asking banks to become ‘persons’ rather than corporate persons. When programs come from Washington as guidelines rather than mandated, banks use them to maximize profits at the expense of those the initiatives are meant to help. That would seem a harsh statement until one takes into account disturbing reports that support such a conclusion. It’s become more evident recently with a multi-billion program the Obama administration sent to states hardest hit by the recession to provide emergency mortgage loans to the unemployed. It was not altruism. This was initiated to save the tax base in middle class neighborhoods — an essential ingredient to economic recovery. The program had been anticipated by struggling homeowners who’d waited a year for their states to initiate the program that would give them loans to cover their mortgage payments for up to two years. President Obama established the Hardest Hit Fund in February 2010 to provide targeted aid to families in states hit hard by the economic and housing market downturn. Each state housing agency gathered public input to implement programs designed to meet the distinct challenges struggling homeowners in their state are facing. States were chosen either because they are struggling with unemployment rates at or above the national average or steep home price declines greater than 20 percent since the housing market downturn. While investigating the program’s implementation in California, I came across what may be the primary reason that the Obama administration mortgage programs out of their Treasury Department have such an abysmal track record of achieving their stated goals. The California program’s stated goal: Administered by the CalFHA Mortgage Assistance Corporation . The U.S. Treasury Department has approved nearly $2 billion in federal funding to help California families struggling to pay their mortgages. Four key programs: unemployment mortgage assistance, mortgage reinstatement assistance, principal reduction, and transition assistance. When the unemployment mortgage assistance program, however, was unveiled, it was accompanied by an eligibility test that required — wait for it — the unemployed to prove they’d not yet exhausted their unemployment payments, as so many have, and that they did not have a second or equity line, whether they could tap it or not. Based on your answers to the eligibility questions, you do not qualify for the Keep Your Home California program for the following reasons: A cash-out refinance or home equity line of credit is not permitted under this program. For those who know the real estate market, it’s not uncommon for a buyer to have utilized an equity line or second to help with their down payment. That source was tapped even more during the recession as struggling homeowners sought to pay their bills from the only bank that would give them credit — their homes. The condition that unemployment benefits cannot be exhausted as the Congress refuses to extend those benefits was in other states, as well. From Alabama’s site: You may qualify if [for Hardest Hit Alabama’: • you are eligible to receive Unemployment Compensation Benefits. • your total household income is less than 75,740 at time of application. • you owe no more than 258,690 on your home’s mortgage. These are conditions that block many the program was meant to help before it even got off the ground. How could that have happened? From the CalHFA site: NOTE: These programs are only available to homeowners whose mortgage servicing company agrees to the terms and conditions governing the use of these funds. If your servicer is not currently participating in Keep Your Home California, you may want to call them and encourage them to do so. A homeowner cannot receive assistance if their servicer has not signed an agreement with CalHFA MAC. See a list of participating servicers and which programs they are currently offering I contacted CalHFA, the department administering the new program, and asked for the decision makers behind the two conditions blocking participation in the UMA program. After a series of misdirections to Treasury, who pushed it off on HUD, a CA congressman’s office both in CA and in Washington, D.C., and a return to CalHFA, I was told the decision had been made by the banks. Further investigation into the national Hardest Hit Fund produced similar evidence of roadblocks by banks across the eligible states. Again from Alabama : Although your application for HHA assistance may be approved, several servicers have imposed additional requirements before they will accept Hardest Hit funds. We are working diligently with each servicer to provide assistance to all homeowners as soon as possible. A call to JP Morgan Chase led to a confirmation by two different executives: For those who had exhausted their benefits (a growing number around the nation), they are no longer considered unemployed — a requirement for their participation in the CalHFA program — by the bank. That puts Congress’ decision to deny extensions to those who’ve exhausted their unemployment benefits in a new light. Not only have they taken the unprecedented action to deny extensions when unemployment is over seven percent, they’ve given the banks and those who tabulate the unemployed the precedent to codify those who’ve exhausted their unemployment as no longer unemployed. I also came across another blockbuster condition aimed at the unemployed — anyone who has been unemployed during the recession— that had to do with refinancing or granting new loans. The condition, as relayed to me by Chase, was that a borrower must now show two years of uninterrupted qualified income to qualify for a loan or refinance. If there are any periods of unemployment within that two years, they do not qualify, even if they are currently working . When I expressed concern that denial of formally unemployed borrowers coming out of a recession with second mortgages or equity lines (set to rise as soon as interest rates come off their historic low) would cause them to be priced out of their homes, I was greeted with the facelessness of a bureaucracy that saw nothing but their own policies as dictated from their boardrooms and no sense of corporate citizenship to help the economy recover its tax base. That means the well-documented failure of HAMP as managed by banks/servicers is now joined by: the banks’ — as cited in the Chase example — codification of unemployment benefit recipients as unqualified for standard loan servicing until they have two years of uninterrupted income, the codification of those who’ve exhausted their unemployment benefits as no longer being unemployed, and, therefore, not eligible for any programs put forth to help the unemployed, the ineligibility of the hardest hit homeowners to qualify for emergency loans if they have a previously tapped second or equity line, even if they can’t tap that line. Is this the banks’ fault or are they just doing what they do in their faceless bureaucratic way? Banks answer to their global shareholders’ requirements for maximum profits. When these programs come from Washington as guidelines rather than mandated, is there any surprise the banks turn the guidelines over to their number crunchers to look for ways to continue to maximize their profits? When programs come down from Washington as guidelines rather than mandates, should anyone be surprised if the banks do what’s in their global interest rather than America’s interest? Would mandates at least give denied borrowers recourse? Perhaps not as much as they should, but without mandates, the programs are blocked to too many of those they’re intended to help. Even with mandates, the banks would turn over the programs to their number crunchers to find ways to get around the intent. But mandates would give the consumer somewhere to turn. A status change of the unemployed to a protected class would break the bank’s codification against them and perhaps change a growing perception of the unemployed as unworthy of support. The actions against those who lost their jobs through no fault of their own are supported by a growing prejudice against the unemployed in banks, in Washington and around the country that translates as a lack of empathy (or even good business when it means saving tax bases) — an us-and-them-better-them-than-me near-theology that seems to be holding whole sections of our population in its non-empathetic thrall. Unless their intent is to create Naomi Klein’s Shock Doctrine . Then their success is legion. Are the unemployed and formerly unemployed now to be Oliver Twist, punished for holding out their empty bowls to the banks while asking, “please, Sir, may I have more?” Is that what the administration has been doing with the banks? It’s not only the banks. Too many Americans, including in government, those in the throes of money woes, disconnected due to Internet relationships and 24/7 punditry, and, above all, there-but-for-the-grace-of-God-go-I mindsets, are losing or have lost their capacity for empathy — one of the most important components of a successful society. They’ve become open to the drumbeat of the other. The first ‘other’ was the unemployed… Were the shock doctrinaires shocked they got away with demonizing them — our neighbors, our family members, our spouses? Apparently not for long, since they were soon on to their next target: unions. The lack of mandates from Tim Geithner’s Treasury on the guidelines to banks undermines economic recovery and puts the 2012 election at risk. The undercurrent of anger in November, 2010, was not the Tea Party asking for cuts, no matter how much that spin is believed by the incurious. It was the desperation of Americans, a full 81% who know someone unemployed , crying out to their representatives and to their president, Help us . If programs like the Hardest Hit Fund had the mandate to require that the banks include anyone who’d received unemployment compensation and had not yet found work — even if they’d exhausted those benefits — those closest to losing their homes in middle class neighborhoods would be better able to weather the storm until jobs return. Of course, that would mean Washington would have count those who’ve exhausted their benefits (the so-called 99ers ) as unemployed and those numbers could be staggering. Reelection politics aside, if the banks were mandated to stop demonizing the unemployed in unemployment recovery programs and anyone who’s shown any unemployment in the prior two years, that would allow programs to have a better percentage of success than their current rate of failure. The additional example of the exclusion of those with second mortgages or equity lines — even those the homeowner can’t tap — also needs immediate investigation as to the intent and consequences of that exclusion. When you put that together with the denial of bank services to those who’ve been unemployed within the prior two years of their refinance request and the inevitable rise of interest rates on their second mortgages and lines, the need for investigation takes on urgency. Finally, the government needs to recognize that banks have codified those who have received or who have exhausted unemployment benefits within a prior two year period as ineligible for their services and mandate that such discrimination is not only un-American but a threat to economic recovery. For more on this topic, visit THE ENVIRONMENTALIST . Follow The Environmentalist: on Twitter: @environmentlst on facebook: www.facebook.com/environment.org

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Massey Mines Hit With 80 Citations For Safety Violations

March 28, 2011

CHARLESTON, W.Va. — Massey Energy Co. has been hit with more than 80 citations for safety violations uncovered in the latest round of special inspections by federal regulators. The Mine Safety and Health Administration said Monday that the Massey citations are among 166 issued at eight mines in five states during special inspections in February. The agency started the so-called impact inspections after 29 miners were killed in an explosion at Massey’s Upper Big Branch mine in West Virginia on April 5, 2010. Four Massey mines in West Virginia, Virginia and Kentucky accounted for more than half the violations issued nationally during impact inspections last month. MSHA also cited mines in Alabama and Pennsylvania. A spokesman for Virginia-based Massey had no immediate comment. The company is being bought by rival Alpha Natural Resources.

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Andrew Reinbach: Fracking Tide Turns — Frackers Get Mean

March 28, 2011

The PR tide seems to be turning against fracking, and predictably, the political rhetoric from the gas industry and its allies is turning nasty. In upstate New York, for instance, Richard Downey, director of a local landowner’s coalition that hopes to lease its land to drillers, recently published an opinion piece in the Oneonta Daily Star playing the class warfare card — claiming pro-drillers are good, truck-driving local folk, while the antis are Volvo-driving, brie-eating NIMBY elitists against anything ruining the view from their estate. Downey himself is a retired New York City teacher, and while his rhetoric seems less than measured, it’s typical of the posture displayed in letters to the editor columns across the state, many of which read like pieces in right-wing blogs — vitriolic, largely fact-free, and wrapped in the flag, A recent editorial in The New York Post , for instance, did everything but claim anti-frackers are led by former Weatherman Bill Ayers, calling anti-frackers “Hard-core lefties and environmental groups” that include the Working Familes Party and MoveOn.org. This characterization of the anti-frackers isn’t even true; in New York’s Marcellus Shale region, for instance, the anti-fracking forces include local families farming the same land since the Revolution. The same is becoming true in states as far apart as Pennsylvania, Arkansas, and Wyoming, where concerns about the effect of hydro-fracking upon ground water supplies are getting more pronounced everyday — together with lawsuits over the same. But the rhetoric is a good indication of how defensive the frackers have become, as a rising tide of media stories about the dangers of fracking to the environment appear alongside reports of serious environmental accidents, and local governments banning fracking within their precincts. Pittsburgh, for instance, passed an anti-fracking ordinance last November. Since then, local townships across upstate New York have done the same — recently joined by Ontario, Canada. And last May in Flower Mound, Texas, no-fracking candidates swept a recent municipal election. In fact, the tide of public opinion is visibly turning against hydro-fracking — and not just in the Marcellus Shale region that begins in northern Alabama and ends near Utica, New York. Generally speaking, early industry assertions that hydro-fracking is perfectly safe have collapsed under a flood of facts about the procedure, leaving deep suspicions about the industry’s intentions and reliability. Enter a Philadelphia PR firm, Gregory/FCA, which charted the turning tide in a recent article it published in its blog, displaying data that made it clear that public opinion is turning against fracking. “Since the beginning of 2010, the positive sentiment in traditional media for Marcellus Shale has fallen dramatically, from a high of +3.1 to a low of -0.3 in January 2011,” wrote Gregory Matusky, the company president, in the report. Matusky follows up that polling data — he says he analyzed millions of media reports to come up with the downward trend — with what amounts to a memo on how to counter media reports like the one from Moundsville, West Virginia that the municipal water supply temporarily ran dry because local gas drillers withdrew so much water from it. Matusky’s main heads: • Publish an ocean of information about the Marcellus Shale. Matusky, who says he has no energy company clients, claims that the Marcellus Shale gas play is generally a good thing, but that the anti-fracking forces “…aren’t under the same time constraint as gainfully employed Americans [and] have…idle time to plant falsehoods, raise suspicions, and demonize the oil and gas industry.” • Never respond to the supposed negatives. Constantly focus the conversations on how domestic reserves of clean energy of natural gas that will reduce our nation’s carbon footprint, says Matusky. • Make it about people. “The people of Marcellus Shale are fierce, noble individuals who have been ignored for generations. The industry needs to…make their stories of economic renewal a mainstay of the storytelling.” How? “The industry should underwrite a [reality] show,” he says. • Dominate the online discussion. “The industry needs to dominate online conversations as a way to positively impact consumers, regulators, influencers, and ironically, the traditional media….” • Connect the dots for the public [about the benefits of natural gas]. • Language is important. Find a better term than fracking, says Matusky; “The very term “fracking” has a negative connotation. Much of what Matusky recommends is already finding its way into the public realm — Downey’s op-ed piece being only one example. Missing from Matusky’s analysis? Whether allowing hydro-fracking in the Northeast is a good business deal. People fighting to keep gas drilling out of their backyards like to point out, for instance, that the West and Midwest are running out of fresh water, and will eventually lead people and industry back to where it is — the Northeast. These people then say that looked at this way, swapping the region’s plentiful supplies of clean water for the money gas drilling will bring is, to all intents, trading its birthright for a mess of pottage. Whether notching up the rhetoric will save the gas industry’s bacon is uncertain at best. Pennsylvania and West Virginia may have already made their deal with the industry, but New York hasn’t, and aside from signs that new regulations covering fracking may be delayed almost indefinitely, two recent bills were introduced in the state legislature that would keep the fracking wolf from the door for some time: Assembly Bill A06541 proposes a 5-year moratorium on hydro-fracking, and Senate Bill S4220 would ban it altogether. Also muddying the water for the energy industry: The Environmental Protection Agency, under fire for having exempted fracking from the Clean Water Act in 2004, is conducting a wide-ranging analysis of all the environmental impacts of hydro-fracking and isn’t expected to issue a report for several years. The newly installed Commissioner of New York’s Department of Environmental Conservation, Joseph Martens, has made conflicting statements that, when parsed, suggest little may be approved in New York until the EPA issues its own regulations. Delay, though, may not turn out to be the best outcome, since it gives the energy industry plenty of time to follow Matusky’s advice and slap some new reality show on the airwaves. Maybe it’ll be called Gas Driller Angels.

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Congressional Republicans Set Sights On Homeowners, Elizabeth Warren As Split Emerges with State GOP Leaders

March 11, 2011

WASHINGTON — As state and federal officials near an agreement with the nation’s largest financial firms to settle allegations of abusive foreclosure practices, top Republicans in Congress are aggressively disputing their authority, decrying the possibility of expensive penalties against banks and questioning the need to help distressed homeowners. But the calls from Capitol Hill run counter to those made by Republican state attorneys general, who are involved in the 50-state investigation seeking restitution for improper foreclosures. The debate over how best to heal the nation’s troubled housing market exposes a rift between Washington legislators and local law enforcement, who are investigating potential violations of state laws. It also undercuts lawmakers’ prior demands last autumn for a full investigation into widespread allegations of wrongful foreclosures. On Wednesday, leading Republicans on the House Financial Services Committee sent a letter to Treasury Secretary Timothy Geithner expressing their concerns with any proposed settlement that would further regulate the mortgage industry or lead to large fines being levied against financial institutions. Also Wednesday, Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, blasted the negotiations between banks and government officials, likening them to a “shakedown.” At least rhetorically, such attacks undermine government efforts to seek restitution for wronged borrowers. They also bode ill for attempts to reform what’s widely acknowledged to be a broken mortgage finance system. It’s a reprise of last year’s debate to reform the broader financial system, during which many Republicans sought to kill a proposed agency dedicated to protecting consumers from abusive lenders. The temporary head of that nascent agency, Elizabeth Warren, now finds herself cross-wise with the congressional GOP. So do state attorneys general, many of them Republicans, who serve as their states’ top law enforcement officials and view improper foreclosure practices as violations of state law. “We want to remedy losses that have occurred as a result of those problems,” John Suthers, Colorado’s attorney general, said of bank errors during the foreclosure process. Suthers is a Republican and one of four attorneys general leading the states’ settlement talks with the nation’s five largest mortgage firms. “Let’s go now and negotiate with the banks,” said Mark Shurtleff, the Republican attorney general of Utah. Shurtleff added that the Republican attorneys general are waiting for a proposed final settlement agreement before deciding whether they will support it. The current spate of criticism from GOP leaders contrasts with their calls for a wide-ranging investigation into foreclosure practices last fall. The current negotiations are a direct result of state and federal inquiries into the matter. In October, Shelby demanded that federal banking regulators “immediately review the mortgage servicing and foreclosure activities” at major banks to “determine exactly what occurred at these institutions.” He asked for the findings to be presented to the banking committee “without delay.” That same month, a spokesman for House Speaker John Boehner (R-Ohio), then the lower chamber’s minority leader, told The Huffington Post that “at a time when economic uncertainty and unemployment are putting great pressure on homeowners and the housing market, it is imperative that we get all of the facts about this situation, and quickly.” A spokesman for Boehner was not immediately available for comment Friday. But Rep. Randy Neugebauer, a Texas Republican who serves on the financial services committee, said Thursday that the current settlement discussions are a “terrible” move that “verges on extortion.” Still, Neugebauer emphasized that he wants a full investigation into bank practices, and for those findings to be made public. “There should be more transparency to these processes,” he said. Neugebauer declined to support the kinds of penalties regulators are now discussing. All 50 state attorneys general joined together last fall to probe bank foreclosure practices after several companies halted home repossessions when improper paperwork practices — like the so-called “robo-signing” scandal — came to light. The law enforcement officers have said they’ve found that banks violated numerous state laws. State and federal officials are considering a large-scale settlement with the largest banks that could include penalties totaling up to $30 billion and requirements to modify distressed mortgages, people involved in the discussions said. A settlement agreement and requirements to modify troubled mortgages could help calm the roiling housing market, officials said. In January, Sheila Bair, the Republican chair of the Federal Deposit Insurance Corporation, said that “chaos in mortgage servicing and foreclosure has created a dangerous new uncertainty in this fragile market.” Bair is among the officials looking for at least a $20 billion settlement, according to people familiar with the discussions. Reforming the industry is one of the primary goals of the settlement talks, according to senior Treasury Department officials. Meeting with reporters Thursday, one top Treasury official said that bank foreclosure practices remain terrible, four years after the subprime crisis erupted. Some Republican attorneys general are also looking for broader industry reforms. Suthers said that he and other law enforcement officials are looking forward to hearing mortgage firms’ ideas on “how to structure a system that isn’t the mess the system has been the past couple years.” Meanwhile, however, congressional Republicans have scored some political points by latching onto Warren’s involvement in the discussions, part of a broader GOP effort to hamstring the emerging Consumer Financial Protection Bureau before it gets off the ground. Last month, House Republicans voted to slash the bureau’s budget for this year by about half. Now, in letters to the administration and in speeches, they’re singling out Warren in questioning the bureau’s authority to even participate in efforts to protect consumers and reform the broken process by which troubled mortgages are modified and homes are repossessed. “They’re trying to scapegoat her,” said a person involved in the settlement discussions who wasn’t authorized to speak publicly. That person added that some of the Republicans who opposed the creation of the agency during last year’s debate to reform the financial system, like Shelby and Alabama Rep. Spencer Bachus, now appear to be trying to undermine Warren’s participation in the settlement discussions as a way to disrupt the government’s enforcement effort and also isolate and marginalize the still-developing consumer unit. Bachus, the Republican chairman of the House Financial Services Committee, was one of the signatories to Wednesday’s letter to Geithner. Spokespersons for Shelby and Bachus didn’t respond to calls seeking comment. Neugebauer didn’t hold back, however. “We question whether Ms. Warren has any authority to be playing a role, because she is not the head of the bureau,” he said. “I was in the homebuilding business. There’s a difference between the homebuilder and the homeowner,” Neugebauer continued. “As I look at Ms. Warren’s task, she’s supposed to be the homebuilder, not the homeowner. That agency, they have no head. The emperor has no clothes.” The settlement discussions have only just begun, people familiar with the matter said. But unlike their Republican colleagues in Washington, state attorneys general are open to significant fines. The 50-state probe is led by an executive committee of 13 attorneys general, six of whom are Republicans. During their association’s annual spring meeting in Washington this week, many Republican attorneys general said they strongly supported the settlement talks. When asked if a $20 or $30 billion penalty was too high, Shurtleff of Utah said no, pointing to numerous settlements state officials have entered into over the years with individual subprime lenders that totaled in the hundreds of millions — in the case of Countrywide Financial, more than $8 billion. “The servicers themselves acknowledge there are very serious problems in the foreclosure process,” Suthers said. “That’s a good starting point.” ************************* Zach Carter is a staff reporter in The Huffington Post’s Washington bureau. He can be reached at zach.carter@huffingtonpost.com. Shahien Nasiripour is a business reporter for The Huffington Post. You can send him an e-mail ; bookmark his page ; subscribe to his RSS feed ; follow him on Twitter ; friend him on Facebook ; become a fan ; and/or get e-mail alerts when he reports the latest news. He can be reached at 646-274-2455.

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Ariela M. Migdal: Women: Do You Work Just for the Sake of Working?

March 1, 2011

Detrix Young, a Wal-Mart employee in Aiken, South Carolina, reports that she sat in a store-wide meeting where one of her female co-workers asked why the men in the store earned more than the women. One of the male managers answered that “men are working as the heads of their households, while women are just working for the sake of working.” Another male manager laughed, even though several of the women were single mothers trying to make ends meet on a Wal-Mart paycheck. Young is one of more than a hundred current and former Wal-Mart employees who submitted declarations to a federal court in support of their joint claim that Wal-Mart ― the nation’s largest private employer ― discriminated against women in stores around the country, paying them less than male workers and promoting them less frequently. Later this month, the Supreme Court will hear the case to decide whether the women may bring their claims as a class action, or must bring their cases one at a time. The ACLU, along with the National Women’s Law Center and joined by 32 other civil rights organizations, filed a friend-of-the-court brief today supporting the women. In order to go forward as a class action, the women have to show that the discrimination they experienced has common elements ― that the sexist comments and pay inequity reported by Detrix Young in Aiken, South Carolina had enough in common with women’s experiences in Wal-Mart stores around the country to justify hearing the cases together as one. The evidence presented in the early stages of the case ― including the women’s declarations ― shows that the archaic stereotype about women workers that Young described is also reflected in other women’s accounts of how managers at Wal-Mart justified women’s lower pay. In St. Petersburg, Florida, Ramona Scott reports that her store manager explained that men at Wal-Mart made more than women because “Men are here to make a career and women aren’t. Retail is for housewives who just need to earn extra money.” In Riverside, California, Stephanie Odle testified that her District Director of Operations explained an apparent gender-based pay inequality by saying that the man in question “supports his wife and his two kids;” her store manager in a Sacramento Sam’s Club (a division of Wal-Mart) explained women’s unequal pay by saying “Those girls don’t need any more money; they make enough as it is.” And the list goes on. As infuriating as they are, these explanations by Wal-Mart managers for unequal pay aren’t just the isolated opinions of a few sexists. On the contrary: the stereotype that men are their families’ breadwinners, while women work for “pin money” is deeply entrenched, and has long been used by discriminatory employers to justify paying women less. The stereotype is not only insidious, it’s increasingly untrue ― the number of women who are also the primary breadwinners for their families has risen dramatically in the past few decades, and is now about 4 in 10 mothers . The other declarations submitted by Wal-Mart employees also reveal that outdated stereotypes were present at Wal-Mart and were used to justify inequality. One of the most common is the belief that, as Tammy Hall says her male store manager explained to another male manager in Alabama, all women should be “at home with a bun in the oven” and “barefoot and pregnant.” Courts have recognized that, when this attitude is used to deny women equal opportunities for advancement, it violates the civil rights laws. Yet when Julie Donovan, who worked in Wal-Mart’s headquarters in Bentonville, Arkansas, complained to her supervisor, a senior manager, after she says another senior manager told her that she “should raise a family and stay in the kitchen” instead of advancing her career, she was told to shrug it off and have a thick skin. Even women who didn’t have families report being subjected to this stereotype, like Karla Rojas of Dallas, Texas, who attests that her District Manager suggested that she resign from her job as an assistant manager and “find a husband to settle down with and have children to relieve” her “work-related stress.” And women including Geanette Bell of Pontotoc, Mississippi, report that managers assumed they wouldn’t “want to be in the Management Training Program” (despite her inquiries) because they would not want to relocate their children. Discrimination against women based on the assumption that they will not be able to perform in supervisory positions because of their presumed parenting duties is called “family responsibility discrimination,” and courts and the Equal Employment Opportunity Commission recognize it as illegal sex discrimination. Finally, many of the women report being denied opportunities to do work considered the province of men. Sheila Hall of Conway, Arkansas, states that when she asked to work in hardware, her manager said, “you’re a girl, why do you want to work in hardware?” Alix McKenna declares that she was told by a manager in Lawrence, Kansas, that she could not be promoted to manage sporting goods because she wouldn’t “want to work with guns.” And Joanne Jaso, a single mother in Bakersfield, California, reports that her store manager refused to consider her for a promotion to a job in electronics because the job was “a man’s job” that required “a lot of heavy lifting.” Perhaps it goes without saying that all of these accounts reflect the belief that women are less valuable workers than men and have no business competing for certain kinds of jobs. The courts should allow the women of Wal-Mart to establish the link between managers’ stereotyped beliefs and the statistical evidence of pay and promotion disparities at Wal-Mart stores around the country by proceeding as a class action.

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Digital Divide: Only 60 Percent Of Rural Homes Use Broadband

February 18, 2011

COFFEEVILLE, Ala. — After a couple of days in this part of rural Alabama, it is hard to complain about a dropped iPhone call or a Cee Lo video that takes a few seconds too long to load.

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Susan Buchanan: Private Seafood Tests Uncover Toxins Missed By Feds

February 9, 2011

Consumers used to worry about ordering seafood fried, instead of the healthier broiled-or-stewed option, but since the BP spill they’re unsure about whether to eat it at all. Independent testing by environmental groups and individuals has accelerated since last April, and they’ve found toxins — from oil, dispersants and other sources–in the local catch. Government agencies, meanwhile, say seafood from reopened, Gulf fishing areas is safe to eat. The upshot for consumers is that when buying fish, ask questions and listen to any information that comes your way. Peter Brabeck, environmental monitor at the nonprofit Louisiana Bucket Brigade, said last week, “we received test results a week ago from samples of oysters collected in Terrebonne Bay and Grand Bayou Felicity in Lafourche Parish.” Those samples were tested by a Wisconsin lab run by Pace Analytical Services, which also has a sediment-and-water lab in St. Rose, La. The Bucket Brigade sent three, separate samples to Wisconsin, where they were chemically tested in batches of 7 to 9 oysters each. “To my horror, the results showed extremely elevated levels of cadmium — which is associated with oil from the BP spill,” Brabeck said. The cadmium detected was 150 to 200 times what’s considered safe for human consumption by the Environmental Protection Agency’s carcinogenicity ‘RfD’ or oral reference doses for food, he said. When asked about reference doses, a U.S. EPA spokesman in Washington, said “information can be found at the RfD table on our Integrated Risk Information System web page for cadmium.” The agency’s RfD for human studies involving chronic, cadmium exposure is 1E-3 mg/kg/day for food. “The E in those numbers refers to exponents in scientific notation,” he said. Health information is posted on the agency’s IRIS, based on reviews of chronic, toxicity data by EPA scientists. Brabeck said “the reason we had oysters tested for cadmium is that it’s a carcinogen that can linger in the body for 20 to 30 years, and the National Oceanic and Atmospheric Administration and the Food and Drug Administration labs don’t test for it.” Manufacturing facilities might have been the source of the cadmium, he said, but added “since these oysters came from a heavily oiled area, I would lean toward them being contaminated from BP’s finest.” He continued, “Now we’re waiting for lab results to come back on samples of oysters, shrimp, crabs and snails collected in Barataria Bay and Terrebonne Bay.” Brabeck visits the coast frequently and ventures into the water. “A week and a half ago in Barataria Bay, the area where I was collecting samples had visible oil sheen, along with weathered mats of oil — that were over an inch thick in places — covering the marshes,” he said. “Yet these areas were open for fishing, and shrimping boats were in the very same water.” Testing by other environmental groups has yielded worrisome results. Paul Orr, whose title is “River-keeper” at Lower Mississippi River-keeper in Baton Rouge, said his organization — along with its parent Louisiana Environmental Action Network — began collecting seafood samples from the coast in early August to analyze the spill’s impacts. Oysters, crabs and fin fish were gathered from twenty locations between the western edge of Terrebonne Parish and the Louisiana-Mississippi border. They were tested for total petroleum hydrocarbons or TPHs and polycyclic aromatic hydrocarbons or PAHs. Testing was done by two, commercial-lab companies, using EPA-recognized protocols, Orr said. “All of the seafood organisms that we collected came back with TPH levels that were of concern to us, and a number of them were very, very high,” Orr said. “As far as we can determine after talking with researchers and a toxicologist, there should be no detectable levels of TPH in seafood. We also found some high levels of total PAH’s.” Orr continued, saying “some of the organisms we tested came from waters that were open for fishing, and the samples all looked beautiful. They smelled good, and there was nothing that made me think that they might be contaminated with oil.” Orr doubted anything would be found in the first oyster samples that the group sent for testing. “But they came back from the lab containing 9,780 mg/kg of total petroleum hydrocarbons, which was a bit alarming. Since then, we’ve sampled from the western edge of Terrebonne Parish to the Louisiana-Mississippi line, and the results we got back suggest to me that the government’s ‘all clear’ was sounded far too soon.” Last October, Nancy “Mac” MacKenzie from NOLA Emergency Response bought two pounds of shrimp from a Venice, La. dock and sent the digestive tracts, along with some stock that she prepared from the heads and shells, to Analytical Chemical Testing Lab, Inc. in Alabama. She said “I’m a teacher, not a scientist, but I’m also a cook and wanted to know what was in the the shrimp after the spill.” She continued, saying “after making the stock, I threw away the turkey baster I used to transfer my stock from the pot to specimen jars, because it had orange, oily spots on it that I couldn’t get out–even by soaking it with boiling water.” Her lab-test results showed “oil and grease” in the shrimps’ digestive tracts in amounts of 193 parts per million. After a series of phone calls to the FDA, the Unified Command in response to the Deepwater spill, NOAA, EPA and poison experts, she learned that her test results were many times above safe consumption levels. But she also found out that “there’s no ‘acceptable level’ for oil in general.” She said that since various oils are composed of different concentrations of chemicals, metals and compounds, the government calculates safe consumption levels based on components, like benzene and toulene. Meanwhile, the report on MacKenzie’s shrimp stock showed “PAH’s that were below the lab’s minimum level of detection,” which, she said, didn’t ensure it was safe to eat. MacKenzie received a response from a U.S. Coast Guard public affairs officer late last year, saying that analytical methods for oil and grease can’t distinguish between petroleum oils and other fatty materials, including fats that occur in shrimp. She remains upset by the runaround that she got from federal agencies, and said that seafood information presented on their websites can be difficult to understand. She also said that paying for private testing is expensive. Robert Naman, president of Analytical Chemical Testing Lab, Inc. in Mobile, Alabama, said that without seeing the test results from the Louisiana Bucket Brigade samples, it’s possible that cadmium found in local oysters is from soil contaminated by manufacturing plants. Nonetheless, he said, “large and small labs in Louisiana and across the Gulf are finding elevated PAHs, associated with the spill, in seafood.” He also said “current FDA protocol allows much higher concentrations of Petroleum Hydrocarbons in seafood sold to consumers than the government allowed after the Exxon Valdez spill” in 1989. “Many individuals have come to us to have seafood, water and tarballs tested since the spill,” Naman said. His firm, for example, tested water in a fish pond on an Alabama property half a mile from the beach. The fresh water fish had died, and the pond water tested positive for dispersants. The owner drained, refilled and restocked the pond, and the second batch of fish died. “We also found dispersant in swimming pools near the coast,” Naman, a chemist, said. “We suspect dispersants were sprayed on the coastline though that’s illegal for the most part.” The U.S. Coast Guard and the EPA authorize dispersant use. Naman said “tarballs we tested recently were 7% oil, and the rest was COREXIT dispersant and watery goop. A thick sludge containing petroleum and dispersant covers part of the Gulf ocean floor that could be seen in government, satellite photos if they wanted to show them to us.” Meanwhile, Washington agencies say Gulf seafood is safe to eat. Christine Patrick, NOAA spokeswoman, said “under government protocol to reopen fishing areas, waters must be free from oil, and every seafood sample taken from an area must pass a sensory and a chemical test.” Since the spill, four phases of sampling and testing have occurred in fishing areas, and they are characterized as baseline, boundary-surveillance, reopening and post-opening stages by NOAA. Boundary surveillance was the sampling done to make sure that all tainted fish were included inside a specific area, Patrick said. During the four phases, NOAA vessels have collected samples at sea and delivered them to the agency’s Pascagoula, Miss. seafood lab for analysis. Samples continue to be taken from docks and processing plants. “NOAA is conducting post-opening sampling now to support consumer confidence that fish in open areas of the Gulf are testing clean,” Patrick said. Since late April of last year, about 10,000 seafood samples have been collected and tested by the government, she said. “Post-opening samples number about a thousand to date, and all have passed sensory and chemical analysis.” As sampling continues in the Gulf, the only remaining federal area that’s closed to fishing is near BP’s wellhead. “All Gulf samples, state or federal, go to the National Seafood Inspection Laboratory within NOAA’s Pascagoula facility, where they’re dissected, with tissues put into sterile jars for analysis,” Patrick said. Samples are examined by a Pascagoula sensory panel — made up of NOAA and FDA experts. “During the reopening phase, it’s a seven-person panel of more than seven, rotating experts, and during the post-opening phase, it’s a panel of three,” she said. The lab’s staff of over a hundred includes scientists and technicians. Sensory testing is a longstanding method used in the food industry, and it is a science, Patrick said. “Reopening protocol calls for 21 tests on raw and cooked seafood for taste and smell, and in order for a sample to pass, five of seven panelists must pass it.” Chemical testing, including dispersant testing, for samples taken from federal waters is done at NOAA’s lab in Seattle, while state samples are chemically tested by FDA labs elsewhere. NOAA and the FDA developed a chemical test, announced in late October, to detect dispersant in fish tissues. “However, none of the thousands of fish tested in Seattle and elsewhere showed dispersant residue at levels harmful to humans, and over 99% of the over 4,000 samples tested so far had no detectable residue at all,” Patrick said. NOAA on Feb. 2 reopened 4,200 square miles that were closed to fishing after a royal red shrimper’s net yielded tarballs last October. When asked about the reopening, Brabeck of the Louisiana Bucket Brigade said “NOAA and FDA continue to make decisions affecting consumers based on too few samples, not sampling for all the toxins, not testing for all the metals and not listening to what scientists, fishermen and nonprofit groups are saying. They have shown the same woefully inadequate protocol in every fishery reopening since the well was capped.” Brabeck shows community groups how to take seafood samples. “These groups are actively engaged in seafood issues, and they decide what they want to test for,” he said. The Louisiana Bucket Brigade does training and pays for tests–which can be expensive. “Once we have results, we bring an interpretation of the numbers to the community where the samples were taken, and report what the results can mean for environmental and public health,” he said. “This should be the job of the FDA and NOAA, and it sickens me that it’s not being done by our government.”

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Robert L. Cavnar: Responding to the Hydraulic Fracturing Issue

February 8, 2011

As we’ve discussed before, the practice of hydraulic fracturing to produce oil and gas has grown into a controversy being argued about in local townhalls all over the country all the way to the halls of Congress in Washington.

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Spartan Gold Ltd. Appoints Former Rio Tinto Senior Executive Mr. Marcus Flis to Chair Newly Formed Advisory Board

February 3, 2011

SCOTTSDALE, AZ–(Marketwire – February 3, 2011) – Spartan Gold Ltd. (“Spartan” or “The Company”) ( OTCBB : SPAG ), a diversified U.S. based gold junior exploration company, has today announced the appointment of Mr. Marcus Flis (“Mr. Flis”) as Chairman of the Company’s newly formed advisory board. Formerly a senior executive and project director at Rio Tinto Ltd. (“Rio Tinto”), Mr. Flis bring nearly 30 years experience as an explorationist for a wide range of mineral commodities in varied mineral terrains and geographies. Mr. Flis will immediately assist Spartan’s management in developing the Company’s gold concessions in Alabama and Nevada, as well as evaluate potential acquisition opportunities in Australia. Currently Mr. Flis is Managing Director of Australian Stock Exchange (“ASX”) listed Royal Resources Ltd., a Perth, Australia based diversified exploration company.

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Spartan Gold Ltd. Appoints Former Rio Tinto Senior Executive Mr. Marcus Flis to Chair Newly Formed Advisory Board

February 3, 2011

SCOTTSDALE, AZ–(Marketwire – February 3, 2011) – Spartan Gold Ltd. (“Spartan” or “The Company”) ( OTCBB : SPAG ), a diversified U.S. based gold junior exploration company, has today announced the appointment of Mr. Marcus Flis (“Mr. Flis”) as Chairman of the Company’s newly formed advisory board. Formerly a senior executive and project director at Rio Tinto Ltd. (“Rio Tinto”), Mr. Flis bring nearly 30 years experience as an explorationist for a wide range of mineral commodities in varied mineral terrains and geographies. Mr. Flis will immediately assist Spartan’s management in developing the Company’s gold concessions in Alabama and Nevada, as well as evaluate potential acquisition opportunities in Australia. Currently Mr. Flis is Managing Director of Australian Stock Exchange (“ASX”) listed Royal Resources Ltd., a Perth, Australia based diversified exploration company.

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Ian Fletcher: Why Free Trade Can’t Abolish International Economic Rivalry

January 25, 2011

A recent article criticizing my work contained this multifaceted gem of fallacies: Even a dumb lawyer like me can see that modern global supply chains have made “a world of ruthless economic rivalry” a thing of the distant past, and that trade (i.e., voluntary, mutually beneficial exchanges) has never, ever been a zero sum game. Let’s take this apart, step-by-step. 1. The idea that modern global supply chains have abolished international economic rivalry is trivially false. Even if aircraft, say, are now made out of components manufactured all over the world and brought together for assembly, this doesn’t change the fact that the steps of the supply chain with high value-added per man-hour will take place in some nations and not others. And high value-added per man-hour is the only possible basis of sustainable high wages. That’s why Alabama paid $153 million in incentives to land a Mercedes-Benz plant, and governments all over the world are in a similar race. 2. The statement that “trade (i.e., voluntary, mutually beneficial exchanges) has never, ever been a zero sum game” is, by virtue of its id est parenthesis, strictly speaking a mere tautology. I assume that what the author meant to say was that “trade consists of voluntary, mutually beneficial exchanges and has therefore never, ever been a zero sum game.” (He is welcome to correct me if I misunderstand him here.) There are three problems with this idea: a) Trade doesn’t have to be a zero-sum game to be a rivalry. Football isn’t a zero-sum game, because even if you lose, you still have the fun of playing the game. But that doesn’t mean there aren’t winners and losers. b) By the “mutually beneficial” standard, it is advantageous for a starving man to sell his shoes! True enough, narrowly speaking, but it avoids the much more important question of how he got to be starving and without any other assets in the first place. Selling his shoes is a response to a particular bargaining position that he finds himself in; it does nothing about how he got into this position or how to avoid ending up thus. Analogously, America borrowing money from abroad to buy flat-screen TVs (as we do) is indeed better for us than going without the TVs. But what would be even better for us is if we had the capacity to produce them for ourselves, as then we would not only enjoy the TVs, but also the high-paying jobs associated with hosting a technologically advanced major industry. c) The calculation of what is “mutually beneficial” depends, in a market economy, on prices being right. And there are any number of reasons why they can be wrong in international trade. Let’s start with the obvious fact of China’s government artificially manipulating its currency to gain competitive advantage. If prices are wrong due to state intervention, then free-market responses to those prices will be wrong, too. As I’ve noted before, libertarianism only works in a perfect world.

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One Of America’s Most Dangerous Cities Fires Half Its Police Force

January 18, 2011

Budget pain hit home in Camden, N.J., on Tuesday, as nearly a sixth of city employees lost their jobs in one of America’s most dangerous cities , AP reports. The layoffs are just the latest consequence of devastating budget strains that have crippled the nation’s cities. As Camden attempts to cut spending to compensate for diminished revenue, the city has begun to execute a plan , approved last month, to cut a fourth of the municipal workforce. Residents fear the cuts will deal a critical blow to the already struggling city. About 335 municipal workers lost their jobs Tuesday, according to mayor Dana Redd. That includes about half of the police force, and a third of firefighters. Already, Camden is one of the nation’s most dangerous cities: An analysis of recent FBI data ranks it number two. Layoffs will turn Camden into a “living hell,” according to a police union advertisement in a local paper, AP reports. While Camden faces severe challenges, it’s hardly alone. After the worst financial crisis since the Depression, the nation’s cities have seen their revenue wither. As enormous pension obligations come due — one estimate places the unfunded liabilities of city pension plans at $574 billion — cities are having to make cuts that seemed unthinkable just half a decade ago. As Camden lays off workers, nearby Newark is dealing with the effects of having fired more than 13 percent of its police force late last year. A recent spike in crime has left many Newark residents worried that the layoffs have made their city more dangerous. The city contends, though, that re-deployments have ensured that the same number of officers are patrolling Newark’s streets. Outside of New Jersey, other cities have also resorted to seemingly desperate measures. Prichard , Alabama, has illegally stopped paying its pensioners. Hamtramck , Mich., has repeatedly tried to enter bankruptcy. Detroit is considering a plan that would deprive a fifth of its city of basic municipal services, like trash collection and police protection. As cities are forced to make tough choices, officials tend to cast public unions in a negative light. Redd, the Camden mayor, said public employe unions’ refusal to accept a pay cut made layoffs necessary. But unions resist such talk. “We get paid to do a service, and we do that service very well,” Gregory Floyd, president of the New York City local division of the Teamsters union, told the Huffington Post. “We’re not rich, we don’t retire rich, and we don’t have lucrative pensions.”

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Jamie Dimon: Be Afraid of Municipal Bonds

January 12, 2011

As cities across the nation face increasing budget strains, the vocal group of experts warning about municipal defaults has gained a powerful member: Jamie Dimon. The JPMorgan CEO said he expects to see more U.S. municipalities declare bankruptcy, Bloomberg News reports. His concerns echo those of Meredith Whitney , the analyst who has said the next major financial crisis will come from a wave of local government defaults, and those of famed investor Warren Buffett , who has called the municipal debt situation a “terrible problem.” “If you are an investor in municipals you should be very, very careful,” Dimon said, according to Bloomberg . His warning comes as local governments contend with painfully depreciated tax revenue, which in some cases threatens to ruin budgets. In the wake of the worst financial crisis since the Depression, cities and states have had to severely cut back their spending, even as the need for their services has grown. While official bankruptcy remains rare (Vallejo, California, is the most recent example ), experts say there’s trouble brewing. Different cities have different problems, but one thing remains constant: there’s not enough money coming in. Often, revenue isn’t enough to cover even the most basic of services. In Detroit , the problem has gotten so bad that a new proposal would deprive a fifth of the city of basic municipal services, like trash collection and police protection. Neighboring Hamtramck has run out of services to cut, and expects to spend its last dollar early this year. Prichard , Alabama, in a desperate response to depleted coffers, has illegally stopped paying its pensioners. Newark has cut 13 percent of its police force. Camden , N.J., one of the nation’s most dangerous cities, has begun a process of cutting about half of its police department. “It’s a frequency issue,” Whitney said on CNBC Wednesday morning. When host Andrew Ross Sorkin asked her to name the three municipalities most at risk of default, she refused. “Too dangerous a game,” Sorkin admitted. Indeed, the bond market tends to punish the weakest cities. As ratings agencies downgrade municipalities, and as investors get nervous, yields on muni bonds rise, meaning it’s more expensive for cities to borrow money. “It’s a downward spiral,” George Rusnak, national director of fixed income for Wells Fargo, told the Wall Street Journal .

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Video: Agent Yee Says He’d Start Auburn’s Newton Versus Alabama: Video

November 26, 2010

Donald Yee, agent for New England Patriots quarterback Tom Brady, says he would start Auburn University quarterback Cam Newton, a candidate for the Heisman Trophy, against Alabama this weekend. Lee also says allowing private-equity firms to operate college football programs would lead to beneficial “innovation” in the sport. Bloomberg’s Michele Steele speaks. (Source: Bloomberg)

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Video: Royce Concerned With `Moral Hazard’ in Financial Rules

November 19, 2010

Nov. 19 (Bloomberg) — U.S. Representative Edward Royce, a Republican from California, talks about his concerns about U.S. financial regulation and the Federal Reserve’s policy of quantitative easing. Royce is seeking the chairmanship of the House Financial Services Committee, challenging Alabama Representative Spencer Bachus, the panel’s ranking Republican. Royce speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)

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Viper Powersports Announces Alabama Businessmen Tim Wellborn and Grant Lynch as Director Nominees

October 5, 2010

HOPKINS, MN–(Marketwire – October 5, 2010) –  Viper Powersports ( OTCBB : VPWI ), announced today that Tim Wellborn, Alabama businessman, and Grant Lynch, Chairman of Talladega Superspeedway, have agreed to join the board as directors of Viper Powersports Inc.

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BP Spil Compensation Fund Slowed By Inflated Claims, Fraud, Administrator Says

October 5, 2010

ORANGE BEACH, Ala. — In the rush to get compensation from BP after its massive oil spill, the $20 billion fund that the company created has been inundated with questionable documentation, inflated claims and in some cases, outright fraud — all slowing down the process for legitimate claims, the administrator of the program says. Claims have been bogged down by the sheer volume of requests for money — nearly 98,000 — as livelihoods have crumbled since the April 20 rig explosion that killed 11 workers and spewed more than 200 million gallons of oil. Confusion and frustration have become the only constants for desperate fishermen and business owners. Sales manager Jeff Silvers was shocked to learn that his building supplies shop just a half mile from the Alabama coast was not considered to be affected by the oil that sullied beaches and marshes, sent tourists packing and kept fishing boats idle at harbors. Swift Supply, he said, lost a huge chunk of revenue because customers canceled plans to build docks, do home improvements and complete construction on new houses with the uncertainty that followed the explosion and oil gusher. He applied for compensation from the Gulf Coast Claims Facility, which is doling out BP’s money to oil spill victims, but initially got nothing. “We were told we weren’t in the geographic area of the spill,” Silvers said. Just last week, however, he got a check for everything he asked for. It came as attorney Kenneth Feinberg, who is administering the fund, decided that proximity to affected areas will no longer play a role in compensation approval. It’s the latest in a string of changes to the shifting process that has dragged on for weeks, with promises of generosity and fairness, but delivery of little more than apologies to many. “I’m very happy, but there’s still a lot of businesses that haven’t been paid,” Silver said. Just as hope was fading that the troubled program could be fixed, Feinberg appears to be putting it into overdrive, re-evaluating previously denied claims and reaching out to some people who believe they were shortchanged. In just the last week, denied claims dropped from 528 to 116, as checks were cut and mailed to businesses that were initially told they would get no help. In an interview last week, Feinberg promised that kinks would be worked out and more generous payments would come. In addition to those still waiting for money, The Associated Press interviewed dozens of people who say they have received small fractions of the compensation they requested. Beach wedding planner Sheryl Lindsay said she filed a claim for about $240,000 for lost revenue from July through December because of cancellations. She got a check from the BP claims center for $7,700. Lindsay closed her coastal Alabama office and will soon file for bankruptcy. “We don’t have any business left,” Lindsay said. A final settlement will be offered to Gulf residents in the coming months which they can accept or deny and instead choose to sue BP, but Lindsay says she needs money now. She recently got word from the facility that her claim would be reviewed for possible additional payments. To date, the fund has paid out nearly $1 billion to about 50,000 claimants. However, claims officials would not provide AP with the total amount actually requested by those claimants. A Feinberg spokeswoman said the number is “irrelevant,” given the volume of claims filed with no proof of losses, inflated requests and fraudulent ones. Feinberg notes that complaints about small payouts have “not fallen on deaf ears,” but that the amount of money being sought has no correlation to the size of the check cut. “People can put down on a claims form all sorts of numbers,” he said. He referred to a fisherman’s claim for $10 million in lost revenues “on what was obviously a legitimate claim of a few thousand dollars.” “We have thousands of claims where there is no documentation, none,” Feinberg said. Of the nearly 98,000 claims filed as of Oct. 2, about 35,000 require additional documentation and remain on hold. Even the Justice Department weighed in, with a Sept. 17 letter to Feinberg expressing concern over the slow pace of payments. “The Deepwater Horizon Oil Spill has disrupted the lives of thousands upon thousands of individuals, often cutting off the income on which they depend,” the letter read. “Many of these individuals and businesses simply do not have the resources to get by while they await processing.” But even as some are getting a second look and possibly additional checks, others simply stew. Fishing guide Mike Garey got just $21,000 in response to his request for $70,000 in losses. “And we have no recourse whatsoever,” Garey said. He is also concerned about accepting any final settlement and giving up his right to sue BP. “The phones aren’t ringing. The e-mails aren’t coming in,” he said. “Where will we be in a year from now? Nobody knows the answer to that so how can we accept a final payment?” Feinberg, who previously oversaw claims for 9/11 victims, promises things will get better, but says the entire process will take time to get right. He said potentially fraudulent claims are holding up the process, and are under review before being forwarded to the Justice Department for criminal investigation. “We have scores of applications for financial aid that appear to be fraudulent,” Feinberg said. “Our resources are diverted, and we become skeptical and concerned. “At the beginning, it’s always rough,” he added. “Hopefully, by the end of this program, people will feel that the fund treated them fairly.” Feinberg declined to say how much he is being paid by BP, only that it is a flat fee “totally unrelated” to the size of the fund and amounts paid.

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Gulf Coast Tourism Hopes For Boost As Feds Allow Fishing Of Red Snapper, Normally Off Limits In Fall

September 22, 2010

ORANGE BEACH, Ala. — The Gulf Coast’s tourism industry is betting on red snapper to survive the winter. In an unusual move, the federal government is allowing fall fishing of the popular schooling snapper, a favorite for anglers who missed nearly an entire summer of saltwater fishing because of the BP oil spill. Enthusiasts typically flock to the Gulf to catch red snapper during the summer, and the fish is off limits later in the year. But the National Oceanic and Atmospheric Administration announced Tuesday it was allowing snapper fishing over eight three-day weekends beginning Oct. 1. In coastal areas hardest-hit by the oil, the special season is more about tourism dollars than seafood. Tackle shops, restaurants, hotels and stores that suffered steep declines in revenue because of the Gulf of Mexico gusher are hoping for a big boost headed into what is historically the slowest season of the year. “It’s not going to save the summer, but it’s certainly going to help put cash in the drawers and get people through the winter,” said Mike Foster, a spokesman for the Alabama Gulf Coast Convention and Visitors Bureau. Danny Pitalo’s small tackle shop in Biloxi, Miss., depends heavily on coastal visitors for business, and he said the fall snapper season could help keep him going. “It will be a big help for us,” said Pitalo, whose shop is still operating out of a trailer because of damage from Hurricane Katrina five years ago. “Our tackle business is gone, our tournaments are gone. The charter season is pretty much gone.” Red snapper seasons in the Gulf are based on weight quotas. This year’s limit was about 6.9 million pounds, with commercial boats allowed to catch 51 percent and recreational boats allowed to harvest the rest. The regular season opened June 1, and plenty of snapper were caught off the coasts of Florida and Texas before it ended in late July. But fishery experts estimate only one-third of the quota set aside for recreational anglers was harvested since so much of the Gulf was closed because of the oil spill. Peter Hood, a federal fishery biologist, said estimates show about two-thirds of the recreational limit is still waiting to be caught. That means an estimated 2.2 million pounds of red snapper are available this fall in areas with pent-up demand like Alabama, Mississippi and Louisiana. Repeated testing hasn’t shown any spill-related contamination in fish taken from areas that have been reopened for angling, Hood said, and experts don’t expect any problems with red snapper. Johnny Greene, a charter captain based at Orange Beach Marina on the Alabama coast, said some boat operators aren’t interested in the fall snapper season because they made so much money off a BP program that paid crews thousands of dollars each week to scout for oil in Gulf waters. “(And) some people are so far behind they say there’s nothing that can help them,” he said. “Personally, I think it’s a really good thing.” Tourist revenues were down as much as 50 percent on the Alabama coast because of the oil spill, and that contributed to a 10 percent decline in tourism statewide, said Lee Sentell, director of the Alabama Tourism Department. The state spent about $300,000 on promotions for the beach before Labor Day, and it has a TV commercial geared toward fishing that will likely air this fall in conjunction with the red snapper season, he said. Sen. Mary Landrieu, D-La., said the red snapper season was a commonsense step toward bringing business back to charter captains. Anglers are allowed to catch a maximum of two red snapper a day with a minimum length of 16 inches on Fridays, Saturday and Sundays until Nov. 22, when the season closes.

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Obama Blasts Bush Tax Cuts, Calls Out John Boehner In Ohio Economic Speech

September 8, 2010

CLEVELAND — Politically weakened but refusing to bend, President Barack Obama insisted Wednesday that Bush-era tax cuts be cut off for the wealthiest Americans, joining battle with Republicans – and some fellow Democrats – just two months before bruising midterm elections. Singling out House GOP leader John Boehner in his home state, Obama delivered a searing attack on Republicans for advocating “the same philosophy that led to this mess in the first place: cut more taxes for millionaires and cut more rules for corporations.” Obama rolled out a trio of new plans to help spur job growth and invigorate the sluggish national economic recovery. They would expand and permanently extend a research and development tax credit that lapsed in 2009, allow businesses to write off 100 percent of their investments in equipment and plants through 2011 and pump $50 billion into highway, rail, airport and other infrastructure projects. The package was assembled by the president’s economic team after it became clear that the recovery was running out of steam. There was a political component, too: With Democrats in danger of losing control of the House in November, Obama is under heavy pressure to show voters that he and his party are ready to do more to get the economy moving and get millions of jobless Americans back to work. However, none of Wednesday’s proposals, nor Obama’s call for allowing tax rates to rise for the wealthiest Americans, seems likely to be acted on by Congress before the elections, reflecting the battering Obama and congressional Democrats have taken in public opinion polls. Obama made one of his strongest appeals yet to allow the tax cuts passed under President George W. Bush – in 2001 and 2003 – to expire at the end of the year on schedule, but just for individuals earning more than $200,000 annually or joint filers earning over $250,000. The changes would affect dividend and capital gains rates and various other tax benefits as well as income from wages and salaries. The president’s strategy – pushing for legislation to save some tax cuts but not all – carries its own risks. Since all the tax breaks would expire automatically at the end of the year if Congress failed to act, that could result in sweeping increases for taxpayers at every income level – a major blow to recovery hopes and a colossal dose of blame for voters to parcel out to lawmakers and the White House. Some influential Democrats, and Obama’s own former budget director, Peter Orszag, have suggested a compromise might be necessary – one to temporarily extend all the tax cuts, perhaps for a year or two – given the current election-year animosity between the two parties. But in his remarks in Cleveland, Obama strongly signaled he wasn’t about to sign off on any such deal. “Let me be clear to Mr. Boehner and everyone else. We should not hold middle class tax cuts hostage any longer,” the president said. The administration “is ready this week to give tax cuts to every American making $250,000 or less,” he said. It was a slight misstatement of his own position, since the $250,000 would apply to household income. The threshold for individuals would be $200,000 White House officials said Cleveland was picked as the speech site expressly because Boehner, who probably would become House speaker if Republicans take back control of the chamber in November, laid out his party’s economic agenda here in a fiery Aug. 24 speech. At that time, the Ohio Republican called for Obama to fire key economic advisers and to support an extension of all the Bush tax cuts. Boehner kept up the attack on Wednesday. “If the president is really serious about focusing on jobs, a good start would be taking the advice of his recently departed budget director and freezing all tax rates, coupled with cutting of federal spending to where it was before all the bailouts, government takeovers and `stimulus’ spending sprees,” he said after Obama spoke. Earlier, Boehner was even more specific on ABC’s “Good Morning America,” saying Congress should freeze all tax rates for two years and pare back federal spending to 2008 levels. The deep recession began in December 2007. White House press secretary Robert Gibbs noted that keeping the Bush tax cuts in effect just for two more years would represent a change from past calls by Boehner to keep them in place permanently. “My question for him is: Are they abandoning the permanent or are they going with the two-year plan? I’ve seen him saying permanent so many times that I tend to believe that,” Gibbs told reporters aboard Air Force One. “That’s his plan and I think that continues to be his plan.” Republicans, and some Democrats, argue that the fragile state of the economy makes this a poor time to raise taxes on anyone – and that increases could stifle wealthier people’s appetite for spending. Obama argued that the rich are more likely to save additional money than spend it. And he said the struggling U.S. economy can’t afford to spend $700 billion to keep lower tax rates in place for the nation’s highest earners. That $700 billion is what the nonpartisan congressional Joint Committee on Taxation estimates it would cost the Treasury to continue tax cuts for top earners over 10 years. What Obama wants to do would cost just over $3 trillion over the same period, the panel estimates. The debate over the Bush tax cuts is an unwelcome one for dozens of vulnerable Democratic incumbents just weeks before Election Day. Already, a handful of Democrats in conservative or swing districts, such as Reps. Gerry Connolly in the northern Virginia suburbs of Washington, D.C., and Bobby Bright in southeastern Alabama, have come out publicly for extending all the cuts – at least temporarily. Sen. Michael Bennet, D-Colo., engaged in a tight re-election battle, said he “would not support additional spending in a second stimulus package” and that any new initiatives such as Obama’s infrastructure package should be paid for with leftover funds in the $814 billion stimulus package passed last year. Still other embattled Democrats, wary of alienating middle-class voters, are siding with Obama. In central Ohio, for example, Rep. Mary Jo Kilroy has said the tax cuts for higher earners should be repealed but middle-income people should see no tax increases. Obama acknowledged recovery had slowed noticeably, with unemployment hovering just under 10 percent. “The middle class is still treading water, while those aspiring to reach the middle class are doing everything they can to keep from drowning,” he said. Polls have shown a steady slippage in Obama’s approval ratings and an accompanying rise in Republican prospects for winning House and Senate seats in November. That has chipped away at Obama’s leverage to get things done in Congress. Obama has sought to frame the election as a choice between continuing his policies or reinstating those pursued by Bush. He acknowledged in an interview with ABC after his speech that “if the election is a referendum on are people satisfied about the economy as it currently is, then we’re not going to do well, because I think everybody feels like this economy needs to better than it’s been doing.” The excerpt was aired Wednesday on ABC’s evening news. Fuller portions of the interview were airing Thursday morning on “Good Morning America.” ___ Tom Raum reported from Washington. Associated Press writers Stephen Ohlemacher and Erica Werner in Washington contributed to this report.

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Gulf Oil Spill Cleanup Winners And Losers

August 26, 2010

The Gulf oil spill is a bonanza for some and a bust for others. The worst offshore oil spill in U.S. history has spurred something of an economic boom in some communities where cleanup operations are based, an Associated Press analysis has shown. But BP’s oil spill has delivered a double whammy to areas too far away from the cleanup to serve as a staging ground for masses of workers, but close enough to experience severe losses in tourism, fishing and drilling. Sales tax revenue in Gulf states showed a stark difference. In Louisiana’s Plaquemines Parish alone, a fishing and oil-and-gas mecca that saw an influx of about 5,000 cleanup workers, state sales tax revenue shot up 80 percent in June over the same month of 2009. By contrast, Vermilion Parish in the Cajun country of western Louisiana, close enough to the spill to turn off tourists but too far to play a significant role in the cleanup, suffered a 45 percent decrease for the same period. The two areas share a common thread: Both have been affected by the closing of Gulf fishing grounds and the threat to oil field jobs posed by a federal moratorium on deepwater drilling. But if there is good news to be found in the oil spill, it is in front-line places like Plaquemines, where thousands of spill workers and companies that serve their needs, such as caterers, have snapped up lodges and rental housing and have spent their pay in local honky-tonks and restaurants. “The cleanup is a whole industry,” said Brooke Andry, whose 20 or so rental properties in Plaquemines are booked up with cleanup workers and BP officials instead of the customary recreational fishermen. The AP analysis showed that, taken together, the 39 Gulf Coast counties and parishes in Louisiana, Mississippi, Alabama and Florida actually saw a modest increase in year-over-year sales tax revenue following the spill. However, this is a tale of booms canceling out busts, of selective prosperity, and of temporary relief that has done little to assuage anxiety about the future. Using year-to-year changes in the amount of taxes collected by retailers or service providers whenever they do business is an imperfect method of calculating the impact of the oil spill since other factors also play a role. Yet the data offers a glimpse into some of the unexpected economic distortions caused by the BP disaster – and the lives and livelihoods it overturned. In Vermilion and other areas on the fringe, tourists have stayed away under the false impression that the whole coast is lathered in oil. And a federal drilling moratorium has cast a shadow on the future of the oil business, a linchpin of the local economy. “People don’t want to be in an area that has problems like this,” said Betty Bernard, owner of Betty’s RV Park in the Vermilion community of Abbeville, which has lost half its business this summer from last year. “The news media has it that we have oil in our backyards, and we don’t.” The economic impact of the April 20 rig explosion that killed 11 workers and sent more than 200 million gallons of crude gushing into the Gulf of Mexico hasn’t yet been fully calculated. BP already has paid out $399 million in claims to residents and businesses who say they were affected by the spill, and the $20 billion set aside by BP at the behest of the Obama administration to compensate spill victims will certainly help ameliorate suffering. Yet the feeling along much of Gulf Coast is high anxiety. “A lot of the revenues come from oil-producing companies, so if they’re not producing, we’re not getting any revenue,” said Ray Dugal, president of the Greater Abbeville-Vermilion Chamber of Commerce. As for tourism, “one of the perceptions … is that we’re in 6 feet of oil,” he said. Given the uncertainty, workers and residents just don’t want to spend money, Dugal said. In nearby St. Mary’s Parish, state sales tax revenue dropped 9.9 percent in May and 3.2 percent in June. At St. Mary Seafood & Marina, sales of fish, crabs and crawfish dropped by a third as out-of-state buyers grew worried about whether Gulf seafood was safe to eat. “Whenever all of the pictures of the birds in oil came out, that is when the sales started to drop,” said owner Daniel Edgar. Of all the Gulf parishes and counties, the biggest boom has been in Plaquemines, where oil from the well about 50 miles offshore first touched the U.S. mainland April 29. Other oil-affected Louisiana parishes saw a sales tax boost in June, too: St. Bernard (15 percent), St. Tammany (14 percent) and LaFourche (9.6 percent), according to the AP analysis. Sharon Couture, 60, runs a convenience store in Yscloskey, a tiny fishing village in eastern St. Bernard. “They come in all the time,” she said of cleanup workers. “They buy beer, energy drinks, cigarettes, that sort of thing. “I’d say I’m about breaking even because of them. The fishermen used to come in and spend $40, $50. These guys come in and spend $5, $10. There’s just more of them.” But she doesn’t know how quickly the fishermen will return, and she is fearful. “I told my husband if BP pulls out, we’ll just close up and leave. We won’t make enough to live on then,” she said. Plaquemines President Billy Nungesser – a frequent and vocal critic of the spill response – said the windfall his parish collected will be banked to offset projected declines in early 2011 as the cleanup effort winds down. He said he expects revenue from marinas to fall by 70 percent and at hotels by 80 percent. “As we go into the winter and next year … we’ll need it to make up the shortcomings in those months after BP is gone,” Nungesser said. The exception to the southeast Louisiana mini-boom is New Orleans, where state sales tax dropped 5 percent in May and 10.5 percent in June from a year ago. The numbers may be less a reflection of the spill than the completion in the past year of several post-Hurricane Katrina construction projects, said economist Loren Scott. Outside Louisiana, which has taken the brunt of oil, changes in sales tax revenue for other Gulf counties were small. In Florida, coastal counties outside the Panhandle, where not a drop of oil washed ashore, revenue grew over last year for the most part. In the Panhandle, revenue rose in every coastal county except one in May. In June, it rose slightly in half the counties and dipped slightly in the rest. Baldwin County, Ala., saw a tiny decrease in state sales tax revenue this summer. Harrison and Jackson counties in Mississippi had slight decreases in May but solid increases in June, helped by the influx of cleanup workers. Hancock County, Miss., which hasn’t had as many cleanup workers, had decreases of 9.6 percent in May and 6.7 percent in June. In other places, it seemed clear that fluctuations had less to do with the oil than other factors. The reopening of a Wal-Mart Super Center in St. Bernard Parish, La., contributed to the 15 percent jump in year-over-year state sales tax revenue in June, said Councilman Frank Auderer. But, he added, the influx of cleanup workers can’t be discounted in the working-class parish just east of New Orleans. Residents of the boom areas, meanwhile, don’t expect their windfall to last long. “Everyone who is local is trying to make good out of a bad situation while they can,” said Andry, the lodge owner. “We’re all riding a wave, but once the spill is cleaned up, or allegedly cleaned up, will there be any fishing? Will the phone be ringing?” ___ AP Writer Mary Foster contributed from Yscloskey, La.

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Oil Spill Claims: New Guidelines Could Rule Out Many Gulf Victims

August 21, 2010

MIAMI (Associated Press) – A flower shop in Florida that saw a drop-off in weddings this summer is probably out of luck. So is a restaurant in Idaho that had to switch seafood suppliers. A hardware store on the Mississippi coast may be left out, too. The latest guidelines for BP’s $20 billion victims compensation fund say the nearer you are geographically to the oil spill and the more closely you depend on the Gulf of Mexico’s natural resources, the better chance you have of getting a share of the money. Also, a second set of rules expected this fall will require that businesses and individuals seeking compensation for long-term losses give up their right to sue BP and other spill-related companies — something that could save the oil giant billions. The new rules for the claims process were released Friday by Washington lawyer Kenneth Feinberg, who was picked by President Barack Obama to run the fund and previously oversaw claims for 9/11 victims. Beginning Monday, the claims will be handled by Feinberg rather than BP, which is still footing the entire $20 billion bill. Who gets paid and who doesn’t will depend largely on how much proof there is that losses were caused by the spill and not by something else, such as the recession. Feinberg’s guidelines say key factors include a claimant’s geographic proximity to the disaster and how much the business or property is linked to “injured natural resources.” Feinberg elaborated on his reasoning during town meetings this week in Louisiana. “How close are you to the beach? To the Gulf? BP got claims from restaurants in Idaho. Go figure,” he said. “How close are you? That’s a major factor. How dependent are you, as an individual or a business, on the resources of the Gulf?” That worries business owners like Susan Mitchell, who runs a flower shop about a mile from Pensacola Beach, Fla., where tarballs from the spill washed up. She said her business was down about $4,000 this year in July from the year before. “But it is hard to prove exactly why that is and everyone keeps telling us we have to prove that it was because of the oil,” she said. “We usually have beach weddings all summer. We deliver to hotels with people having birthday parties and celebrations on the beach.” Jeffrey Breit, a Virginia-based lawyer who represents more than 600 Gulf Coast fishermen, said the geographic limitations will certainly cut out many deserving claimants. “I think it’s unfair to draw arbitrary geographic lines when it is clear that many businesses rely on the natural resources of the Gulf for their livelihoods,” Breit said. The new rules govern emergency claims that can be made between Monday and Nov. 23 at Gulf Coast claims offices, by mail or through the Internet. Feinberg said his goal is to issue emergency checks within 24 hours for individuals and seven days for businesses. Many people have complained about the sluggish BP process. The attorneys general of Alabama and Florida sent Feinberg letters objecting to many of the new rules. Florida’s Bill McCollum said people will face a much heavier burden of proof trying to show the spill caused their losses. “The current process appears to be even less generous to Floridians than the BP process,” McCollum wrote. “Such an outcome is completely unacceptable.” Those seeking emergency payments will not have to give up their right to sue BP and other companies. But the rules for final, long-term settlements will include a waiver of that right. That drew protests Friday from a leading trial lawyers group, the American Association for Justice, which said the rule could force claimants to decide whether to accept a BP payment or go to court before the full extent of the damage is known. For example, attorneys said, there could be health effects that take years to develop, or environmental damage that might not surface for years. “BP is trying to cut off damages. They realize that small payments will be grabbed by some, and then in the future they will have no access to justice,” said Jere Beasley, a Montgomery, Ala., lawyer who is representing oil spill clients. “Which is sad, but true.” But many people might choose to file a claim because lawsuits can drag on for years and because attorneys often take one-third of any damages as their fee. Already more than 300 lawsuits have been filed against BP and other companies involved in the disaster, which began April 20 with an explosion aboard an offshore oil rig that killed 11 workers. At Diamondhead, Miss., along the Gulf Coast, Don Farrar, owner of Diamond Ace Hardware and Diamondhead Florist, said he has received two checks from BP for thousands of dollars but is worried what will happen when the claims process changes hands. He said the spill’s economic toll has reached far beyond fishermen and tourist businesses. “I have a hardware store and a florist. Even my florist is down,” he said. “When a fishermen is not making money, he’s not going to be buying a house, he’s not going to be painting his house, and he’s not going to be buying paint from me.”

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Video: Shelby Discusses Review Into Soldiers’ Death Benefits: Video

August 16, 2010

Aug. 16 (Bloomberg) — U.S. Senator Richard Shelby, a Republican from Alabama and ranking member on the Senate Banking Committee, talks about his request for the panel to review insurers’ profits from the practice of retaining soldiers’ death benefits rather than making lump-sum payments to survivors. He speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (This is an excerpt of the full interview. Source: Bloomberg)

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Alabama Sues BP Over Gulf Oil Spill

August 12, 2010

MONTGOMERY, Ala. — Alabama’s attorney general is suing BP and others over the Gulf oil spill because he says the oil company has broken too many promises about accepting responsibility for the disaster. Attorney General Troy King filed two lawsuits in federal court in Montgomery late Thursday afternoon on behalf of the state. The lawsuits – one against BP and the other against Transocean, Haliburton and other companies associated with the spill – seek economic and punitive damages. No specific amount was listed. The lawsuit accuses them of damaging Alabama’s coast and economy through “negligent or wanton failure to adhere to recognized industry standards.” BP spokesman Justin Saia said the company had not seen the lawsuit and had no comment. At least 300 federal lawsuits have been filed in 12 states against BP and the other three main companies involved in the April 20 explosion aboard the Deepwater Horizon drill rig, which triggered the disaster. King sued against the wishes of fellow Republican, Gov. Bob Riley, who hopes to reach an out-of-court settlement with the companies. BP was leasing the rig Deepwater Horizon from owner-operator Transocean Ltd. when it exploded and sank, killing 11 workers. Halliburton Energy Services Inc., had been working to cap the well that ended up leaking with cement prior to the explosion. The broken well spewed some 200 million gallons of oil into the Gulf for three months before it was plugged. Riley spokesman Todd Stacy said the governor had not seen the lawsuits. He said the state is still compiling a list of economic damages that it will submit to BP soon. If the company doesn’t provide fair and fast compensation, then the state would have a dispute. “When there is a dispute, then a lawsuit is appropriate,” he said. King said his move is not premature. “As Alabama’s lawyer, I say that, if anything, based on BP’s broken promises, their history of saying one thing and doing another, and now, new information that they have been secretly working to gain a legal advance, further delay can only further damage our people,” King said. He said BP is retaining the best expert witnesses to keep the other side from using them to testify against BP and is selling assets perhaps to keep an American court from reaching them to satisfy a judgment. Riley appointed King as attorney general in 2004. But since then, they have become adversaries. Riley created the task force on gambling because King wouldn’t take action against electronic bingo games at casinos. They’ve been battling it out in the courts over whether the task force has the authority to raid the casinos and seize the games. As for the spill, a team of economic experts is still trying to put a figure on the state’s economic losses. King will be out of office before the lawsuit makes much progress in court. He lost the Republican primary June 1 to Birmingham lawyer Luther Strange. Strange said King should have consulted with the governor and Gulf coast mayors to make sure the litigation doesn’t hurt ongoing negotiations with BP. The Democratic nominee for attorney general, Montgomery lawyer James Anderson, said King may have had a stronger case if he brought in Alabama cities and counties affected by the spill and possibly even other Gulf states. He said BP has already lined up some of the top lawyers in the state, and the attorney general’s office will have to bring in outside lawyers with experience in this type of litigation if it hopes to win. “We’ve got plenty of time to add on attorneys,” said Chris Bence, the attorney general’s chief of staff.

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Obama’s Beach Will Be Clean, But Oil Lies Beneath Sand Nearby

August 12, 2010

The Florida Panhandle beach where the Obamas are going to spend the weekend to boost tourism in the region is indeed pristine and oil-free. Panama City Beach, where the White House has announced the first family will be staying Saturday and Sunday, was spared the worst of the BP oil spill, sullied only by sporadic tar balls that were easily cleaned up. Starting just 80 miles to the west, from Pensacola Beach and on to Alabama, the beaches were hit a lot worse. And a University of South Florida scientist told HuffPost those beaches, thanks to a “superficial” cleanup job by BP, remain contaminated. In some cases, the beaches look clean at first glance – certainly as compared to when they were covered in brown oil – but they “weren’t cleaned up very well,” said Ping Wang, an associate professor of geology at USF whose research teams have been monitoring the shoreline. “There are small tar balls everywhere on the back beach, and there’s buried oil that wasn’t cleaned up,” Wang said. According to Wang’s report , at least as much oil as was cleaned up remains buried under the surface. “The buried oil contamination has been observed up to 6 inches thick extending over a wide zone of beach,” the report says. “Buried oil is much more difficult to clean because it is not directly visible and buried to various depths. In addition, buried oil will have a much longer lasting effect because it will not be weathered by the sunlight as easily as the surface oil.” Wang said the Obamas shouldn’t just stay where they’re based. “I think they should inspect a beach that’s contaminated more than Panama City Beach,” he said. “If they look carefully, if they dig a hole on the beach, they’ll find what’s left over from a superficial cleanup.” And that includes the kids. “If they dig a hole, they’ll find oil,” Wang said. “I’ll be happy to go help them.” “Every minute you see a BP advertisement saying they’re committed to cleaning up the coast. Well, that’s not cleanup,” Wang said. “They need to do a lot more.”

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Saul Friedman: Consequences of Unequal Distribution of Wealth: The Rich Get Richer…

August 8, 2010

Shirley Sherrod had it about right when she said, “Y’all, it’s about poor versus those who have. It’s really about those who have versus those who don’t. And they could be black, they could be white, they could be Hispanic…” That wasn’t exactly the whole truth, for she and her husband Charles were ardent, longtime civil rights activists who understood that years of racism played a large role in perpetuating the ignorance and poverty in the South among blacks as well as whites. (Racism is here defined as the belief among many whites, supported by the law, that non-whites were inferior. Only in America did the Supreme Court, in Dred Scott , hold that black slaves were chattel, less than human.) Overcoming that sad heritage, Ms. Sherrod, who has spent a lifetime helping in the struggles of the poor, of all shades, put her finger on a fundamental human problem in much of the world — especially the United States — the unequal distribution of wealth among too many of us. That is the subject of a new book that has become the rage among social scientists and activists in Europe, especially Britain. It’s called The Spirit Level: Why Greater Equality Makes Societies Stronger , written by British public health researchers Richard Wilkinson and Kate Pickett, who have produced an unprecedented rediscovery of the causes of so much of today’s anger towards the institutions of government and finance. The book was called to my attention by a Canadian reader, Dr. Rob Dumont, a PhD, from a prominent and wealthy family. In a reply to one of my pieces on poverty, he quoted from the book to tell me that according to its central thesis, the growing gap in many countries between the haves and the have-nots, is responsible for more than the misery of poverty. According to the book, such health and social problems as “Obesity, Mental illness, drug and alcohol abuse, homicides, imprisonment rates, lowered life expectancy, over consumption of resources, teen pregnancy and the lack of social mobility,” all have in common strong links to inequality of wealth. Interestingly, the authors, who have exhaustively documented their work, do not denounce the wealthy. Rather they point out that the most affluent citizens as well as the most wealthy countries also suffer from these ills. Their analysis mocks the American Declaration of Independence which proclaimed, “all men are created equal.” The original sin of slavery gave lie to that promise and the lack of equality has taken a toll in this nation even today. As one knowledgeable Amazon reviewer, Dr. Nicholas P. G. Davies, a Briton, wrote, “Inequality issues are often presented as being about the poor, but this book shows we are all poorer for living in more unequal societies. Inequality is as bad for the rich as it is for the poor. Society is poorer as inequality becomes greater.” AWilkinson and Pickett make this clear with dozens of graphs, which rate the nations based on the problems that come with inequality. As they say, “The impacts of inequality show up in poorer health, lower educational attainment, higher crime rates, lower spending of social capital, lower cooperation with and trust of government.” One graph, showing that “health and social problems are worse in more unequal countries,” makes these points: “The U.S., Portugal and the United Kingdom rate high in the mount of income inequality. For the U.S., low taxes (by international standards), a weak trade union movement, low minimum wage and a tradition of individualism have resulted in a high level of income inequality.” Indeed, the U.S., with its obsession with the market economy, has modest social programs, Social Security and Medicare, while most of the other 20 nations listed are Social Democracies with a broad array of social insurance benefits, including universal health care. Canada is roughly in the middle of the pack, along with France, Spain and Switzerland. Japan and the Scandinavian nations have the lowest income inequality; offering cradle-to-grave social programs. Some critics suggest that the book cherry picks its statistics and the alleged problems to prove their point. But who could argue with the graph that puts the U.S., the richest country, almost off the charts that show the relationship between a huge income gap — perhaps the highest among civilized countries — and such health and social problems as infant mortality, higher than most European nations, homicide and imprisonment rates, the highest in the world, obesity, child well-being (poverty among children has reached new heights) and drug and alcohol addiction? Any thinking American can verify the sad truth in another graph that shows these health and social problems are worse in more income unequal states. With the rise of unfettered rapacious, anti-labor capitalism, which touted sweatshops and child labor, income inequality rose to criminal leves. And today, as you might expect, the southern states, namely Mississippi, Louisiana, Alabama, Texas, Tennessee, Kentucky, West Virginia and Florida “have high levels of income inequality and much poorer outcomes in the health and social areas.” These states also have the highest levels of poverty, and the lowest levels of education attainment, and in the last couple of years, income inequality has become worse throughout the United States, especially in the industrial north, as a result of the 2008-9 recession, which has increased home foreclosures, personal bankruptcies, and the numbers of Americans — nearly 50 million — struggling against poverty or near poverty. Yet at the same time, the rich are becoming obscenely richer. Michelle Singletary reported in the Washington Post last month that while the average income for the top one percent of earners rose 281 percent, or $973,000 per household, in the last decade, the bottom fifth saw their incomes increase 16 percent, or $2,400 per household. Former Labor Secretary Robert Reich, who wrote the forward for the American edition of the book, noted that today’s CEOs are paid more than 350 times that of the average worker. Surely we’ll see the results of such inequality in health and social problems in the next few years.. In his inaugural speech, President Obama said “The nation cannot prosper long when it favors only the prosperous.” But that’s exactly what has happened, as bankers have made huge profits and gotten scandalous bonuses while real unemployment reached towards 15 percent. Franklin Roosevelt fought the economic royalists of his day to help Shirley Sherrod’s Georgia get electricity and survive the Great Depression with the Tennessee Valley Authority and the Works Progress Administration. What has Obama done? One can blame the Republicans or the U.S. Senate, but where is the leadership of the President? It won’t do to give Ms. Sherrod a job. Platitudes like “I feel your pain” are not true. It might help to use the powers of his federal government to put Americans to work. But as she said, “Folks with money want to stay in power and they’ll do what they need to do to stay in power…It’s always about money, y’all,” You can find out more about “Spirit Level,” at the excellent British web site Equality Trust . Write to saulfriedman@comcast.net Friedman also writes for www.timegoesby.net

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Gulf Oil Spill Leaves Local Businesses With A Lost Summer

August 4, 2010

ORANGE BEACH, Ala. — A stack of business cards for tourists sits on a countertop beside the cash register at Zeke’s Marina on the Alabama shore. Beside it sits another stack, advertising mental health counseling for locals. It’s been a depressing summer for business owners along the coasts of Alabama and the Florida Panhandle. Unlike Louisiana, which has fishing, and Mississippi, which has gambling, resort towns on this stretch of sugar-white sand rely largely on one industry: tourism. The oil well that blew on April 20 off Louisiana and sullied the season is now capped, at least temporarily, and has been pumped with drilling mud to stem the flow. But with just a few weeks left before school starts, and many tourists having already made other plans, business owners say the remaining time before Labor Day will largely do nothing to keep them afloat. Even now, with the beaches relatively clean and the water clear, business is a bust as many tourists stay away, having heard about soiled beaches or fearing the unknown. Oil or no oil, the summer is shot, and everyone from hotel managers to souvenir shop owners and restaurateurs is looking to BP PLC to help keep their doors opens, their employees paid and their livelihoods intact until next summer. At the Paradise Inn Motel on the main drag in Pensacola Beach, Fla., where a bright yellow sun on the sign advertises its bayside bar and grill, manager Dana Powell said the remaining few weeks of the peak season won’t even be a Band-Aid to the bottom line. The inn is usually booked full through the summer but is now down about 50 percent. Powell wondered whether she would even have a job this winter. “I don’t ask that question because I don’t want to know,” she said, shaking her head. “Anxiety, stress. People have been pretty miserable around here. It’s just been depressing.” About 25 miles east in Perdido Key, Fla., souvenir shop owner Wayne Cavalier is exhausted. He has given up on saving summer and now spends most of his days plowing through paperwork for his BP claims. “There’s just not enough business left to save us,” he said. “Without BP, we’re done.” Cavalier runs two souvenir shops along the coast road, selling beach towels, T-shirts, sandals, rafts, shells, jewelry and other fare typical of tourist traps. He speaks with grief in his voice, pausing occasionally to sigh. “I’m in jeopardy of closing both of them down, and just losing them,” he said. “All of this is coming down on me, man. We’re just trying to make a living.” Tony Kennon, mayor of Orange Beach, agreed that BP will have to come through on claims for many of his constituents to stay afloat. “Summer’s gone, and there was nowhere near enough cash generated for our businesses to make it through the off-season,” Kennon said. “We’re going to do the best we possibly can with the remaining weeks, but our businesses won’t survive without BP’s help.” The company has begun speeding up the claims process for business owners along the coast and has started easing documentation requirements, BP spokeswoman Pat Wright said Tuesday. Taxable lodging rentals for Orange Beach area and Gulf Shores, just down the road, declined 7.3 percent from the year before for May alone, according to the Alabama Gulf Coast Convention & Visitors Bureau. Numbers are not in yet for June and July, typically the busiest months and those that saw the most tourist cancellations this year. A recent report from the Natural Resources Defense Council found the oil had forced beaches along the Gulf Coast to issue nearly 10 times as many closing and advisory days as last year – more than 2,000, compared with 237 in 2009. The Fourth of July weekend fizzled, with many fireworks displays canceled, replaced instead by cleanup workers and heavy equipment removing oil-stained sand from the beaches. Tourist traffic picked up this past weekend in Gulf Shores, bringing a drive-in crowd that can make last-minute plans – but not the kind of weeklong visitors who make or break the summer. A few scattered tar balls stained the sand and a light sheen shimmered in the sun just offshore while families splashed in the surf, sunbathed and tried to make the best of one of the first nice – and clean – beach weekends there in weeks. “Growing up, we always came to Gulf Shores, and this is about as pretty the water has looked as I can remember,” said Michael Hitch, 34, a pastor from New Orleans who came over for the weekend with his wife and three children. “Well, at least today it is,” he added with a nervous chuckle. “We’ve been staying away for about 2 1/2 months now.” Even with weekend tourist traffic picking up, it’s nowhere near what it should be. Don Roberts just opened his beachside service business in Gulf Shores this year, hoping to make some cash renting chairs, floats and umbrellas. “The season’s over now, man,” Roberts said with a sigh, sweating in the early morning sun as he set out his wares. A few tourists trickled by, but an hour later, he had made no sales. “I just hope people start coming back if they haven’t already made other plans,” he said. “It’s going to be tough.” No matter that the beaches appear clean and the water clear now, perception – not oil – has become the region’s biggest hurdle. “Look at the beach; it’s as clean as it can be,” griped B.J. Johnson, owner of Funny Cars in Pensacola Beach, which rents out vehicles similar to golf carts that visitors can use to ferry themselves around town. “But where are the people?” He’s waiting on his BP claims check to help keep his doors open. “We’re 30 days away from Labor Day. You can’t make up an entire summer in 30 days,” Johnson said. “There’s just no way.”

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Harry Moroz: The Urbanity of Financial Reform

August 3, 2010

The financial reform bill is like a gigantic, half-completed connect-the-dots puzzle. The image is visible if you squint and make a few assumptions — those must be Elizabeth Warren’s spectacles — but much remains unclear. Regulators, some of whom remain to be created by other regulators, will determine the ultimate clarity of the financial framework that results from the Dodd-Frank bill. The lesson that implementation often involves legislating is important and one that health care reform has demonstrated, as well. This is a long way of saying, as many others have, that the financial reform bill is at once significant and indefinite. It is dangerous, then, to speculate about the ultimate impact of the legislation. However, it is clear that the Dodd-Frank bill holds great potential for reversing some of the damage done to metropolitan areas by the mortgage crisis and for protecting cities from the predatory lending and other shady financial practices that weakened neighborhoods throughout the country. First, the legislation will make it more difficult for Wall Street banks to defraud municipalities and other local governments. By strengthening oversight of the municipal securities industry and registering the advisers that push “innovative” financial products on local governments, the legislation will curb – though certainly not eliminate – the type of abuse that occurred in Birmingham, Alabama where financial innovators nearly bankrupted the city by selling it a “synthetic interest rate swap” to fund a new sewer system. Matt Taibbi describes the bankers at the center of these municipal securities schemes as: [M]odern barbarians…These guys aren’t number-crunching whizzes making smart investments; what they do is find suckers in some municipal-finance department, corner them in complex lose-lose deals and flay them alive. The Economist , describing a similar occurrence in Milan, was more staid: “One of the greatest advantages of financial innovation, it was often said, was that risk would end up going to those best qualified to hold it. In fact, much of it seems to have ended up in the hands of those least able to understand it.” The Dodd-Frank bill also includes additional funds for the Neighborhood Stabilization Program, a Bush-era policy that links neighborhood rehabilitation and redevelopment to the provision of affordable housing while ending the negative feedback loop that results when foreclosed homes are abandoned and property values fall, putting additional homes at risk of foreclosure. The funds are targeted to cities and metro areas most affected by the foreclosure crisis. The elephant in the room, of course, is the Consumer Financial Protection Bureau which, if staffed with diligent regulators and imbued with a culture protective of consumer interests, could greatly influence the geography of metropolitan areas for years to come. By cracking down on unfair and abusive lending practices and expanding the information available to consumers taking out mortgages, the Bureau could become a force for smarter and more cost-effective development, a role reversal for a federal government that has always supported the cheap mortgages that make suburban sprawl possible. More positively, the Bureau could even improve and promote innovative (!) loan products like energy – and location -efficient mortgages that reward sustainable and affordable development. There is much uncertainty surrounding the Dodd-Frank financial reform bill and its impact on cities suffers from the same ambiguity. New York’s financial services sector, for example, will survive intact but its composition will likely evolve. However, the bill provides an opportunity for the federal government to reverse course and support the cities and metro areas that were made weaker by the housing crisis and an overgrown financial sector.

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Riki Ott: Oilgate! BP and All the President’s Men (Except One) Seek to Contain Truth of Leak in the Gulf (PHOTOS)(VIDEO)

August 2, 2010

Barataria, LA. — Bonnie Schumaker slowed her souped-up Cessna 180 from 130 to 50 knots so I could hold open the window for documentary film producer Bo Bodart to shoot the grim scene below us. The oil-laced air rushed in and stung our throats and eyes. Bay Jimmy on the northeast side of Barataria Bay was full of oil. So was Bay Baptiste, Lake Grande Ecaille, and Billet Bay. Sitting next to me was Mike Roberts , a shrimper with Louisiana Bayoukeepers, who has grown up in this area. His voice crackled over the headset as I strained to hold the window. “I’ve fished in all these waters – everywhere you can see. It’s all oiled. This is the worst I’ve seen. This is a heart-break…” Bay Jimmy, northeast end of Barataria Bay. July 31, 2010. Bo Bodart. We followed thick streamers of black oil and ribbons of rainbow sheen from Bay Baptiste and Bay Jimmy south across Barataria Bay through Four Bayou Pass and into the Gulf of Mexico. The ocean’s smooth surface glinted like molten lead in the late afternoon sun. Oil. As far as we could see: Oil. This was July 31, Day 103 of BP’s disaster and more than two weeks after BP had sealed its broken wellhead that had hemorrhaged oil into the Gulf for nearly three months. BP’s latest pretend is that tropical storm Bonnie washed the oil away – or at least off the surface – so the company is busily laying off response crews and claiming damages were over-exaggerated. Since Day 1, BP has consistently downplayed the size of its gusher and the damage it was causing to wildlife and people. This is what happens when governments leave the spiller in charge of the spill or, in this case, the criminal in charge of the crime scene. Evidence disappears as the criminal seeks to minimize its liability for damages. What should be a war on the spill becomes a war against the truth, the environment, and the injured people. The official story emerging now from BP and most of the president’s men – and now being echoed by some national media – is: the oil is gone; the danger is past and was exaggerated; the dispersants were effective in keeping oil from reaching the shore; the oil that does reach shore is mostly weathered and not toxic; and federal officials have found no unsafe levels of oil in air or water samples and no evidence of illness due to oil or dispersant use. As my father used to say: Good story if true. The official story does not match the reality that I saw from the Cessna or have heard from people I have met during community visits since the well was temporarily sealed – and ever since I first arrived in early May. Public health is a huge concern – and with good reason. BP has created Frankenstein in its Gulf laboratory: an oil-dispersant chemical stew that so far has contaminated over 44,000 square miles of ocean and caused internal bleeding and hemorrhaging in workers and dolphins alike, according to Hugh Kaufman , a senior policy analyst at the EPA, who recently blew the whistle on the industry-government cover up. BP has sprayed dispersants steadily in the Gulf with Coast Guard approval from the beginning – under the sea, on the surface, offshore, near shore, in inland waters, at night, during the day – despite a public uproar to cease and desist. The dispersants used in BP’s draconian experiment contain solvents such as petroleum distillates and 2-butoxyethanol. Solvents dissolve oil, grease, and rubber. Spill responders have told me that the hard rubber impellors in their engines and the soft rubber bushings on their outboard motor pumps are falling apart and need frequent replacement. They say the plastic corks used to float the absorbent booms during skimming operations dissolve after a week of use. They say the hard epoxy resin on and below the waterline of their fiberglass boats is also dissolving and chipping away. Divers have told me that they have had to replace the soft rubber o-rings on their gear after dives in the Gulf and that the oil-chemical stew eats its way into even the Hazmat dive suits. Given this evidence, it should be no surprise that solvents are also notoriously toxic to people, something the medical community has long known. In Generations at Risk, medical doctor Ted Schettler and others warn that solvents can rapidly enter the human body: They evaporate in air and are easily inhaled, they penetrate skin easily, and they cross the placenta into fetuses. For example, 2-butoxyethanol is a human health hazard substance: It is a fetal toxin and it breaks down blood cells, causing blood and kidney disorders. I suspect that the oil-chemical stew is likely the culprit behind the strange rashes reported by people across the Gulf – rashes that break out into deep blisters on legs or repeated peeling on hands. Stories accompany the rashes, stories of handling dead sea turtles, wading or swimming in the Gulf, or washing clothes of spill responders. Medical doctors are diagnosing rashes as staph infections or scabies, but the rashes are not responding to medical treatment as they would if the causation was biological instead of chemical. Blisters and rashes experienced by fisher and Venice, Louisiana, Councilwoman Kindra Arneson are widespread across the Gulf. Rashes are not responding to treatment for staph or scabies. The cause may be chemical, not biological. 2010 Kindra Arneson. Cindy Feinberg and her family visited Ft. Walton, Florida, on vacation in mid June when the “ocean was full of tar” and crews were picking up tar balls on the beach. The day after swimming in the Gulf – people were told it was safe, her palms became fiery red and flaked and peeled repeatedly for several days. Other people have shown me similar rashes that have lingered for months. June 18, 2010. Cindy Feinberg. In Sound Truth and Corporate Myths, I wrote of similar rashes and peeling skin experienced by Exxon Valdez spill responders, especially ones who used dispersants and other chemical solvents. Yet in the Gulf, many doctors are turning a blind eye to chemical causes, because BP insists that solvents “disappear” after only a day or two. Retired toxicologist and forensic chemist John Laseter disagrees. Laseter’s long career includes evaluation of human health effects of some of the largest toxic chemical and petroleum releases into the environment in the United States and Europe. He also founded and ran Accu-Chem, a lab that analyzed blood work for criminal justice cases. Laseter told me that solvents “solubilize” or become soluble in oil and remain a threat for up to two months. He said the oil-solvent mixture sticks on biological tissue – gills of fish, the organic film coating sand grains and raindrops – and can wreak havoc. He told me that the dispersants are “almost certainly” making the oil penetrate more deeply into the skin and could very well be causing the rashes in the Gulf. Other toxicologists confirm that dispersants amount to a “delivery system” for oil: the combination is worse for human and sea life than the oil or dispersant alone. Yet all the president’s men – the Coast Guard, OSHA, NIOSH, FDA, and the EPA (except the EPA whistleblower noted above), in keeping with the cover up, cannot seem to find any unsafe levels of oil or solvents in the air or water. But other people are. For example, about a week after the oil started coming ashore in Alabama, the Mobile television station WKRG took samples of water and sand from Orange Beach, Gulf Shores, Katrina Key, and Dauphin Island. The test was nothing fancy. The on-air reporter simply dipped a jar into the ocean and another into some surf water filling a sand pit dug by a small child. In the samples, oil was not visible in the water or the sand, but the chemist who analyzed them reported astonishingly high levels of oil ranging from 16 to 221 parts per million (ppm). Except for the Dauphin Island sample — that one literally exploded in the lab before testing could be completed. The chemist thought maybe the exploding sample contained methane or 2-butoxyethanol. There is also evidence of dangerous levels of oil in the air. A preliminary study commissioned in mid-July by Guardians of the Gulf, a community-based nonprofit organization in Orange Beach, Alabama, found that nightly air inversions – common in the area during the summer and fall – were trapping pollutants near the ground. Total Volatile Organic Compounds (VOCs) – including the carcinogen benzene, and oil vapors – reached 85 to 108 ppm at 9:00 a.m. but rapidly dropped to zero (or nondetectable) within half an hour as the sun burned through the inversion layer. (For comparison, the federal standard for 15-minute exposure to benzene is 5 ppm.) The EPA did find unsafe levels of VOCs once in early May, but pulled much of its early data, as I reported earlier . Such high levels could explain the bout of respiratory problems, dizziness, nausea, sore throats, headaches, and ear bleeds that I have heard about from residents and health professionals from Houma, Louisiana, to Apalachicola, Florida. Even the oil industry knows that these chemicals are unsafe. As long ago as 1948, the American Petroleum Institute confirmed, “The only absolutely safe concentration for benzene is zero.” When we landed after our 2-hour flight, our pilot told us that she sometimes has to wipe an oily reddish film off the leading edges of her plane’s wings after flying over the Gulf. Hurricane Creekkeeper John Wathem documented similar oily films on planes he chartered for Gulf over-flights. Bonnie doesn’t wear gloves when she wipes her plane. She showed me her hands — red rash, blisters, and peeling palms. If peeling palms are an indication of the oil-solvent stew, the reddish film on Bonnie’s plane and others means that the stew is not only in the Gulf, it is in the rain clouds above the Gulf. And in the middle of hurricane season, this means the oil-solvent mix could rain down anywhere across the Gulf. Why all this pretend in the Gulf by BP and all the president’s men except the EPA whistleblower that oil and dispersants are not toxic? By comparison, last week in Calhoun County, Michigan, an Enbridge pipeline ruptured, spilling at least 19,500 barrels of oil. At least thirty families were temporarily relocated because of the stench and roads and beaches were closed. Health officials have warned people to stay away from the fumes and beaches, and to avoid swimming and fishing near oiled areas. “It’s a very toxic and dangerous environment,” Calhoun County health officer Jim Rutherford said. If spilled oil is “toxic and dangerous” in Michigan, it’s also toxic and dangerous in the Gulf. But in the Gulf, public officials have downplayed the health risk despite hard evidence of an epidemic of chemical illnesses related to, I believe, the oil-chemical stew. The fact that the official story in the Gulf does not match what people are experiencing is more alarming to me than the oil disaster. How can our president hold BP accountable if he accepts – or worse is complicit in – the crime? Correcting the false official story is the first step toward holding the criminal accountable to the law and lore of the land. If the government fails to hold the criminal accountable, as it did during the Exxon Valdez, then the people and environment will bear the costs of this avoidable tragedy. Riki Ott, marine toxicologist and author of Not One Drop: Betrayal and Courage in the Wake of the Exxon Valdez Oil Spil l (Chelsea Green, 2008), is working with Gulf residents and others to design and implement an independent air and water quality sampling program.

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Video: Shelby Discusses Warren, Consumer Protection Agency: Video

July 21, 2010

July 21 (Bloomberg) — U.S. Senator Richard Shelby of Alabama, the ranking Republican on the Senate Banking Committee, talks with Bloomberg’s Peter Cook about Elizabeth Warren, who leads the congressional panel overseeing the Troubled Asset Relief Program, as a potential head of the new Consumer Financial Protection Bureau. (This is an excerpt of the full interview. Source: Bloomberg)

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Financial Reform Bill Passes — And Regulators Left To Sort Out Bill’s Details

July 16, 2010

WASHINGTON — In the end, it’s only a beginning. The far-reaching new banking and consumer protection bill awaiting President Barack Obama’s signature now shifts from the politicians to the technocrats. The legislation gives regulators latitude and time to come up with new rules, requires scores of studies and, in some instances, depends on international agreements falling into place. For Wall Street, the next phase represents continuing uncertainty. It also offers banks and other financial institutions yet another opportunity to influence and shape the rules that govern their businesses. In hailing the bill’s passage in the Senate on Thursday, Treasury Secretary Timothy Geithner acknowledged that implementing the new law will take time. “But we are determined to move as quickly as we can to provide clarity and certainty,” he said. Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, criticized the bill as not “real reform,” saying it doesn’t address the problems of mortgage giants Fannie Mae and Freddie Mac, whose questionable lending helped start a collapse in the housing market. Speaking on ABC’s “Good Morning America,” he also complained the bill creates a massive bureaucracy but doesn’t create jobs. Among the first impacts of the bill, which Obama is expected to sign as early as Wednesday, will be the immediate creation of a 10-member Financial Stability Oversight Council, a powerful assembly of regulators chaired by the treasury secretary to keep watch over the entire financial system. The Obama administration has one year to create a new Bureau of Consumer Financial Protection. Congress will keep its eye on that agency, eager to see whom Obama chooses as its director. The agency will have vast powers to enforce regulations covering mortgages, credit cards and other financial products. One of the candidates often mentioned for the top consumer spot is Elizabeth Warren, a Harvard Law School professor who was among the first to suggest the creation of an agency to safeguard consumers in their financial transactions. Warren heads the Congressional Oversight Panel, which has been a watchdog over the Treasury Department’s bank bailout fund. Others mentioned include Michael Barr, an assistant treasury secretary who has been one of the architects of the administration’s regulatory plan. But while the oversight council and the consumer bureau might bloom swiftly, other central provisions of the bill will take time, in some cases years, to take root. The consumer bureau, for instance, has as long as 30 months after it is created for its regulations on predatory lending to take effect. The legislation calls for a two-year study before regulators write rules on how risk-rating agencies should avoid any conflict of interest with the firms whose financial products they assess. The Fed has until April to derive standards to measure the fairness of fees charged by banks to merchants for customers who use debit cards. And regulators will have to fine tune the broad restrictions in the legislation for the complex derivatives market. Key will be determining what firms and corporations will face new restrictions. The U.S. Chamber of Commerce counts more than 350 rules that the legislation directs regulators to write. Senate Banking Committee Chairman Christopher Dodd, an author of the bill, says the legislation gives regulators a specific blueprint to follow. “This bill directs the regulators to do things,” he said in an interview. “We leave to the regulators how best to achieve the goals, but the goals are clear. Congress is not a regulator.” In many instances, regulators already have embarked on rule-writing. The SEC, for instance, has been working on rules that would impose the same professional standards on stockbrokers and dealers that are imposed on financial advisers. The legislation insists that the SEC conduct a study first. Hailing the bill Thursday, Fed Chairman Ben Bernanke said the central bank is also ahead of the game, “overhauling its supervision and regulation of banking organizations.” Regulators also will have to figure out how to implement new standards for how much capital banks should hold in reserve to protect against losses. The legislation requires rules in 18 months. But the U.S. is also part of international negotiations on what global capital standards should be, and those could move more slowly. “I am very confident with the strong hand that this (legislation) gives us, that we will be able to bring the world with us,” Geithner told reporters Thursday. ___ AP Economics Writer Martin Crutsinger contributed to this report.

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Gulf Oil Spill Cost Now $3 Billion

July 5, 2010

NEW ORLEANS (AP) — BP’s costs for the disastrous Gulf of Mexico oil spill climbed nearly half a billion dollars in the past week, raising the oil giant’s tab to just over $3 billion for work on cleaning and capping the gusher and payouts to individuals, businesses and governments. London-based BP PLC, the largest oil and gas producer in the Gulf, released its latest tally of response costs Monday. The total of $3.12 billion was up from $2.65 billion a week earlier. The figure does not include a $20 billion fund for Gulf damages BP created last month. As BP continued drilling relief wells that are the best hope for plugging the blown-out well, a giant new oil skimming vessel was tested in the Gulf. But lousy weather means it may be longer than first hoped before officials know if it can work full-time sucking crude from the sea. The Taiwanese skimmer dubbed “A Whale” has been able to show off its maneuverability during a weekend test in a 25-mile-square patch of water just north of the site where an April 20 explosion on the Deepwater Horizon killed 11 workers and started the worst oil spill in Gulf history. TMT, the shipping firm that owns the vessel, had hoped to test a containment boom system designed to direct greater volumes of oily water into the 12 vents or “jaws” that the ship uses to suck it in, according to spokesman Bob Grantham. But lingering bad weather in the form of stiff winds and choppy seas has made that impossible, and prevented a flotilla of smaller skimmers from working offshore along the coasts of Alabama, Mississippi and Florida. “As was the case yesterday, the sea state, with waves at times in excess of 10 feet, is not permitting optimal testing conditions,” Grantham said in an e-mail Sunday. The skimmers, which have been idle off the coasts since a spell of bad weather last week kicked up by Hurricane Alex, were on the water along the Louisiana coast over the weekend. Officials with the U.S. Coast Guard are waiting for the weather to improve before sending them out elsewhere. “We’ve got our guys out there and they’re docked and ready, but safety is a huge concern for us, especially with the smaller vessels,” said Courtnee Ferguson, a spokeswoman for the Joint Information Command in Mobile, Ala. On Sunday, huge barges used to collect oil from skimming vessels were parked at the mouth of Mobile Bay, waiting for conditions to subside as waves rose to about 5 feet high miles offshore. The current spate of bad weather is likely to last well into next week, according to the National Weather Service. “This should remain fairly persistent through the next few days, and maybe get a little worse,” meteorologist Mike Efferson said. On the shore, beach cleanup crews were making progress on new oil that washed up thanks to the high tides generated by last week’s bad weather. In Grand Isle, about 800 people were removing tar balls and liquid oil from seven miles of beach, Coast Guard Cmdr. Randal Ogrydziak said. “In a day or two, you wouldn’t be able to tell the oil was even there,” he said. By Wednesday, Ogrydziak said they should have a machine on the beach that washes sand where the oil washed ashore. Crews have also been working to put containment boom thrown around by the storms back into place, he said. So far, weather has not slowed drilling on two relief wells meant to finally plug the spill. BP officials have said they’re running slightly ahead of schedule on the drilling, but expect weather or other delays. Early to mid-August is still the timeframe for the completion of the drilling. Along with the drilling, the capture and burning of oil and gas at the site of the leaking well has gone on without interruption from the weather. But the choppy seas have delayed the operation of another vessel that officials say will roughly double the amount of oil being collected or burned. The Helix Producer is supposed to connect with the leaking well by a flexible hose that will help it disconnect and reconnect quickly if a hurricane or other major storm forces an evacuation of the site. Coast Guard officials say they’re hoping to have the Helix Producer connected to the well and collecting oil by Wednesday.

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Video: Shelby `Doubtful’ Republicans Can Block Financial Bill: Video

July 1, 2010

July 1 (Bloomberg) — Republican Senator Richard Shelby of Alabama talks with Bloomberg’s Peter Cook about the outlook for passage of the U.S. financial-regulatory bill, approved by the House of Representatives yesterday. Sixty votes are needed in the Senate to move the merged bill toward final passage. Democrats need to retain votes from at least two of the four Republican senators who voted for the bill. (Source: Bloomberg)

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From Fluor to Booms to Costner, BP Cleanup Means Some Clean Up

June 18, 2010

By Mark Drajem and Katarzyna Klimasinska June 18 (Bloomberg) — Michigan’s depressed economy nearly toppled Grand Rapids-based awning maker Prestige Products. In April, the company’s fortunes changed when executive Brian Rickel got a phone call from an old contact at BP Plc . It was 10 days after the BP-leased Deepwater Horizon rig had exploded, and the company needed help containing the gush of oil. Six weeks later, Prestige has rented a factory, filled it with millions of dollars of new equipment, and hired 74 workers, up from six in April. Using material similar to the vinyl in awnings, Prestige is churning out 12,000 feet a day of booms, the floating barriers that help contain oil slicks. Prestige hopes to double its output, if it can hire 50 additional workers. “We’re in Michigan,” Rickel said in an interview. “The economy has been horrible for everybody here. But the expertise is here and we cashed in on it.” The spill in the Gulf of Mexico will inflict billions of dollars’ worth of damage on the economies of Louisiana, Alabama, Mississippi and Florida by destroying fisheries, halting oil drilling, and scaring off tourists. But for scores of businesses — from small fry like Prestige to construction giant Fluor Corp. — there’s money to be made in the aftermath of the worst oil spill in U.S. history, Bloomberg Businessweek reports in its June 21 issue. Help Wanted Signs It’s a dichotomy present across the Gulf region. A sign on a shuttered seafood shop in Grand Isle, Louisiana, blames BP and President Barack Obama for its woes. Nearby motels and repair shops display Help Wanted signs for maids and mechanics to help with the crush of cleanup activity. Local caterers are aggressively advertising, trying to persuade BP to hire them to feed spill-response workers gathering on the coast. Rene Vegas, owner of Bridge Side Cabins & Marina, also in Grand Isle, says his summer sport fishing season is lost due to the fast-expanding oil slick. So, like many area businesses, he’s shifting his focus. Vegas has begun stocking rubber boots, hard hats and ropes to sell to cleanup crews. Troy Petrovich, co-owner of T+T Boat Rentals in Buras, Louisiana, has seen demand for his marine-related services spike. Before the spill, “I kept calling, putting out more phone calls” in search of oil-company customers, Petrovich said. “Now my phone is ringing pretty steady; everybody is looking for boats.” T+T has rented out all 10 of its boats to oil companies and raised the daily rate to $450 from $325. ‘Mop Up Oil’ Plenty of other companies aren’t waiting for business to come to them. Shortly after the spill began, MOP Environmental Solutions Inc. , a Bath, New Hampshire-based maker of a substance it claims absorbs up to 30 times its weight in oil, sent four employees to the Gulf to conduct demonstrations for cleanup officials. The MOP workers came armed with fish tanks, oil and the absorbing material in the trunks of their cars. Some of the company’s shareholders hired a local pilot to fly around the region with a banner reading, “We mop up oil.” After weeks of being pestered, BP purchased its first three truckloads of the oil-absorbent material for $155,000, MOP President Charles Diamond said. The company didn’t have to wait as long to get a full hearing as actor Kevin Costner . Costner’s company, Ocean Therapy Solutions Inc., uses barge-based turbines to separate water from oil. He first demonstrated the centrifuges to BP officials at a technology conference 10 years ago, but wasn’t given the go- ahead to test the gear in open water until earlier this month. Now Ocean Therapy says it has sold 32 of the centrifuges to BP. Corexit, Skimmers Another beneficiary of the cleanup is Nalco Holding Co. More than one million gallons of Nalco’s chemical dispersant Corexit, which breaks up oil slicks, have been used in the Gulf. The company sold $40 million of Corexit to BP through the week of May 15, according to spokesman Charlie Pajor . Some faraway businesses are profiting from producing or deploying equipment to get rid of the oil residue. The Slickbar Products division of Finland’s Lamor Corp. sent employees to Mississippi to help install its skimmers, which collect oil from the water, onto shrimp boats. Its oil-boom plant in Seymour, Connecticut, is operating at a pace not seen since the Exxon Valdez spill in 1989. Slickbar has made more booms in the past month than it had in the previous 12 months, Chief Executive Officer Stephen Reilly said. There’s activity on land as well. Irving, Texas-based Fluor has a contract to supply BP with workers to clean up tar on Alabama and Florida beaches. So far it has hired 1,200 workers in Alabama and 2,400 in Florida, all of them off unemployment rolls in those states, said spokesman Brian Mershon . Fluor plans to increase its Florida workforce to 4,100. Birds, Shipwrecks The Shaw Group Inc., a Baton Rouge-based power-plant builder that has a $360 million contract to construct barrier islands along the Gulf Coast, is hiring staffers to count birds on nearby islands and map shipwrecks. The cleanup rush isn’t generating just blue-collar work. The Pensacola, Florida, law firm of Levin Papantonio Thomas Mitchell Echsner Rafferty & Proctor has hired an airplane to fly a banner over beaches reading “Prosecute BP” and is offering free claims evaluations. “There are probably hundreds of lawyers who are working to generate claims on the BP spill,” said Fredric Levin, a partner in the firm. Washington’s K Street lobbying crowd also stands to benefit as federal regulators crack down on drillers. Transocean Ltd., owner of the Deepwater Horizon rig, has hired former Oklahoma congressman Bill Brewster ’s firm, Capitol Hill Consulting Group , to represent its interests, according to a regulatory filing on May 10. BP Employees Litigation or legislative changes may generate years of billings. For now, businesses in the affected area are taking advantage of the spill work while they can. Marina owner Vegas says he has as many as 60 BP employees and contractors staying at his marina, which normally caters to sport fishermen and beachgoing families. “The motel is booked, the motel is doing fine,” he said. “But when they leave in January or December, we’re in trouble.” To contact the reporters on this story: Mark Drajem in Washington at mdrajem@bloomberg.net Katarzyna Klimasinska in Houston at kklimasinska@bloomberg.net

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BP Bankruptcy Would Offer No Protection From Costs

June 15, 2010

By Margaret Cronin Fisk and Linda Sandler June 15 (Bloomberg) — BP Plc , whose potential liability for the Gulf of Mexico oil spill has lawmakers and analysts raising the specter of bankruptcy, would be unlikely to avoid paying claims by seeking court protection, restructuring experts said. The spill, the worst in U.S. history, threatens wetlands, wildlife, fishing and tourism in five states. BP has spent more than $1.43 billion to stop the leak and clean it up, and to compensate local businesses and residents since the April 20 explosion of the Deepwater Horizon oil rig. The U.K. energy company faces more than 200 lawsuits , and the U.S. is assessing the cost of restoring natural resources destroyed or fouled by the spill. BP’s liabilities include $37 billion in cleanup and potential litigation expenses, according to a June 2 Credit Suisse report. While a U.S. bankruptcy may halt many claims, it wouldn’t allow BP to avoid paying for most of the cleanup and damages, said New York bankruptcy lawyer Martin Bienenstock of Dewey & LeBoeuf LLP. “It’s highly unlikely the claims would be so large that BP would pay any valid claims less than in full,” said Bienenstock, who advised General Motors Co. and Chrysler Financial Corp. in their bankruptcies. “The environmental claims and other claims would all ride through bankruptcy and be paid in the normal course.” BP said it won’t seek court protection. “We categorically deny those rumors,” said David Nicholas , a company spokesman. Lowest Price BP fell yesterday to its lowest price in more than seven years, down 46 percent from the day the oil rig blew up, killing 11 workers. The cost to protect $10 million of BP debt for a year reached $695,000, according to CMA DataVision. It was $29,000 on April 30. The shares were little changed at 355.15 pence as of 8:44 a.m. in London. “The bankruptcy option is clearly there,” said John Olson, managing partner of Houston Energy Partners, a hedge fund unit of Sanders Morris Harris Group Inc . “BP’s board and CEO can say they’ve ruled it out, but you can’t rule it out, realistically.” Olson doesn’t hold any BP shares. On June 13, White House Adviser David Axelrod called on BP to establish an escrow account for claims tied to the spill. U.S. Senate Majority Leader Harry Reid requested that the London-based company set up a $20 billion fund administered by an independent trustee, according to a letter from his office. The Obama administration should consider placing the company in receivership to preserve its assets because BP is likely to end up in bankruptcy, said Representative Steve Cohen , a Tennessee Democrat. Louisiana State Treasurer John Kennedy agreed, saying bankruptcy is a possibility and state and federal governments need to plan for it. The spill has sullied or threatened the coastlines of Louisiana, Alabama, Mississippi, Florida and Texas. ‘Ability to Pay’ The plan by state and federal governments to stop the gusher, clean it up and compensate victims “is all predicated on BP’s ability to pay for these objectives. And I say we need a plan in the event that it cannot pay for these objectives,” Kennedy said. “I don’t want us to miss a beat in the event that BP decides to seek protection of the U.S. bankruptcy laws.” Such a U.S. bankruptcy filing, restructuring experts said, wouldn’t protect BP from liability for damage and cleanup costs stemming from the disaster. It may simply provide the company with a single venue from which to pay claims quickly. Environmental Bankruptcy In last year’s settlement of the largest-ever U.S. environmental bankruptcy, all claims were paid in full by the debtor, mining company Asarco LLC , said Gregory Evans, a lawyer at Milbank Tweed Hadley & McCloy LLP in Los Angeles. Asarco paid $1.8 billion in restoration and cleanup costs for water, land and air pollution at 100 sites across the U.S. under the auspices of the U.S. Bankruptcy Court in Corpus Christi, Texas. The Asarco court employed a process called estimation, which lets injured parties and the company present evidence of claims directly to the judge on an expedited basis. Estimation removed trial lawyers from the process and skirted years of potential delays, said Evans, who helped lead Tucson, Arizona-based Asarco through the bankruptcy. “The perception is that a company runs to bankruptcy to avoid its environmental liabilities,” said Evans. “But if the assets are there to pay a claim, and the judge decides the amount is fair, then that is what is owed.” Every Dollar Asked After a federal judge discharged Asarco from bankruptcy in December, Associate U.S. Attorney General Tom Perrelli said taxpayers got more than a dollar back for every dollar asked. BP, the largest oil and gas producer in the Gulf of Mexico, may put all or part of the company into Chapter 11 bankruptcy, said Lynn Lopucki , a law professor at the University of California, Los Angeles. That would immediately halt spill litigation against it and place all claims under the control of the bankruptcy judge, he said. “All claims could be liquidated expeditiously using the bankruptcy code’s magical estimation power, and the company could set aside an amount of stock or cash flow to pay off the estimated claims over a period of years,” Bienenstock, the New York bankruptcy lawyer, said. The alternative to seeking court protection might be a “nightmare” lasting five or 10 years as BP dealt with claims while its stock remained under a cloud, he said. Houston Energy Partners’ Olson said that while bankruptcy is “a plausible tactic” to protect BP’s North American assets, “any whisper of bankruptcy is something the short sellers would be likely to encourage.” Public Sentiment BP fell 36.45 pence to 355.45 pence in London trading yesterday. The company closed at 655.40 the day of the spill. While providing an organized, single venue for addressing spill-related claims, a Chapter 11 filing might also inflame public sentiment. President Barack Obama said in an interview with NBC News broadcast June 8 that he’s looking for “whose ass to kick” and that BP Chief Executive Officer Tony Hayward “wouldn’t be working for me.” “Political pressure can change what judges do. It would be very difficult for any judge to make a ruling in favor of BP right now,” said Lopucki. “It’s better right now for BP to avoid any court decisions.” A bankruptcy filing would carry risks for BP management, including Hayward and the board, Lopucki said. “The people in charge are generally forced out,” he said. “Bankruptcy seems to accelerate the process.” BP wouldn’t succeed in assigning liability to a subsidiary that is subsequently placed into bankruptcy because creditors may seek to reverse the move, said John Penn , an attorney at Haynes & Boone LLP in Fort Worth, Texas, and a former president of the American Bankruptcy Institute. Evans, the Asarco lawyer, cited the example of Exxon Mobil Corp. and the two decades of litigation it faced over the 1989 Exxon Valdez oil spill as a justification for letting judges, not juries, resolve the claims. “Everyone deserves representation, but not to the point of the company spending 10 years circling the drain,” Evans said. “Justice delayed is justice denied, even for the company.” To contact the reporters on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net and; Linda Sandler in New York at lsandler@bloomberg.net .

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BP Bankruptcy Would Offer No Protection From Gulf Damages, Cleanup Costs

June 15, 2010

By Margaret Cronin Fisk and Linda Sandler June 15 (Bloomberg) — BP Plc , whose potential liability for the Gulf of Mexico oil spill has lawmakers and analysts raising the specter of bankruptcy, would be unlikely to avoid paying claims by seeking court protection, restructuring experts said. The spill, the worst in U.S. history, threatens wetlands, wildlife, fishing and tourism in five states. BP has spent more than $1.43 billion to stop the leak and clean it up, and to compensate local businesses and residents since the April 20 explosion of the Deepwater Horizon oil rig. The U.K. energy company faces more than 200 lawsuits , and the U.S. is assessing the cost of restoring natural resources destroyed or fouled by the spill. BP’s liabilities include $37 billion in cleanup and potential litigation expenses, according to a June 2 Credit Suisse report. While a U.S. bankruptcy may halt many claims, it wouldn’t allow BP to avoid paying for most of the cleanup and damages, said New York bankruptcy lawyer Martin Bienenstock of Dewey & LeBoeuf LLP. “It’s highly unlikely the claims would be so large that BP would pay any valid claims less than in full,” said Bienenstock, who advised General Motors Co. and Chrysler Financial Corp. in their bankruptcies. “The environmental claims and other claims would all ride through bankruptcy and be paid in the normal course.” BP said it won’t seek court protection. “We categorically deny those rumors,” said David Nicholas , a company spokesman. Lowest Price BP fell yesterday to its lowest price in more than seven years, down 46 percent from the day the oil rig blew up, killing 11 workers. The cost to protect $10 million of BP debt for a year reached $695,000, according to CMA DataVision. It was $29,000 on April 30. “The bankruptcy option is clearly there,” said John Olson, managing partner of Houston Energy Partners, a hedge fund unit of Sanders Morris Harris Group Inc . “BP’s board and CEO can say they’ve ruled it out, but you can’t rule it out, realistically.” Olson doesn’t hold any BP shares. On June 13, White House Adviser David Axelrod called on BP to establish an escrow account for claims tied to the spill. U.S. Senate Majority Leader Harry Reid requested that the London-based company set up a $20 billion fund administered by an independent trustee, according to a letter from his office. The Obama administration should consider placing the company in receivership to preserve its assets because BP is likely to end up in bankruptcy, said Representative Steve Cohen , a Tennessee Democrat. Louisiana State Treasurer John Kennedy agreed, saying bankruptcy is a possibility and state and federal governments need to plan for it. The spill has sullied or threatened the coastlines of Louisiana, Alabama, Mississippi, Florida and Texas. ‘Ability to Pay’ The plan by state and federal governments to stop the gusher, clean it up and compensate victims “is all predicated on BP’s ability to pay for these objectives. And I say we need a plan in the event that it cannot pay for these objectives,” Kennedy said. “I don’t want us to miss a beat in the event that BP decides to seek protection of the U.S. bankruptcy laws.” Such a U.S. bankruptcy filing, restructuring experts said, wouldn’t protect BP from liability for damage and cleanup costs stemming from the disaster. It may simply provide the company with a single venue from which to pay claims quickly. Environmental Bankruptcy In last year’s settlement of the largest-ever U.S. environmental bankruptcy, all claims were paid in full by the debtor, mining company Asarco LLC , said Gregory Evans, a lawyer at Milbank Tweed Hadley & McCloy LLP in Los Angeles. Asarco paid $1.8 billion in restoration and cleanup costs for water, land and air pollution at 100 sites across the U.S. under the auspices of the U.S. Bankruptcy Court in Corpus Christi, Texas. The Asarco court employed a process called estimation, which lets injured parties and the company present evidence of claims directly to the judge on an expedited basis. Estimation removed trial lawyers from the process and skirted years of potential delays, said Evans, who helped lead Tucson, Arizona-based Asarco through the bankruptcy. “The perception is that a company runs to bankruptcy to avoid its environmental liabilities,” said Evans. “But if the assets are there to pay a claim, and the judge decides the amount is fair, then that is what is owed.” Every Dollar Asked After a federal judge discharged Asarco from bankruptcy in December, Associate U.S. Attorney General Tom Perrelli said taxpayers got more than a dollar back for every dollar asked. BP, the largest oil and gas producer in the Gulf of Mexico, may put all or part of the company into Chapter 11 bankruptcy, said Lynn Lopucki , a law professor at the University of California, Los Angeles. That would immediately halt spill litigation against it and place all claims under the control of the bankruptcy judge, he said. “All claims could be liquidated expeditiously using the bankruptcy code’s magical estimation power, and the company could set aside an amount of stock or cash flow to pay off the estimated claims over a period of years,” Bienenstock, the New York bankruptcy lawyer, said. The alternative to seeking court protection might be a “nightmare” lasting five or 10 years as BP dealt with claims while its stock remained under a cloud, he said. Houston Energy Partners’ Olson said that while bankruptcy is “a plausible tactic” to protect BP’s North American assets, “any whisper of bankruptcy is something the short sellers would be likely to encourage.” Public Sentiment BP fell 36.45 pence to 355.45 pence in London trading yesterday. The company closed at 655.40 the day of the spill. While providing an organized, single venue for addressing spill-related claims, a Chapter 11 filing might also inflame public sentiment. President Barack Obama said in an interview with NBC News broadcast June 8 that he’s looking for “whose ass to kick” and that BP Chief Executive Officer Tony Hayward “wouldn’t be working for me.” “Political pressure can change what judges do. It would be very difficult for any judge to make a ruling in favor of BP right now,” said Lopucki. “It’s better right now for BP to avoid any court decisions.” A bankruptcy filing would carry risks for BP management, including Hayward and the board, Lopucki said. “The people in charge are generally forced out,” he said. “Bankruptcy seems to accelerate the process.” BP wouldn’t succeed in assigning liability to a subsidiary that is subsequently placed into bankruptcy because creditors may seek to reverse the move, said John Penn , an attorney at Haynes & Boone LLP in Fort Worth, Texas, and a former president of the American Bankruptcy Institute. Evans, the Asarco lawyer, cited the example of Exxon Mobil Corp. and the two decades of litigation it faced over the 1989 Exxon Valdez oil spill as a justification for letting judges, not juries, resolve the claims. “Everyone deserves representation, but not to the point of the company spending 10 years circling the drain,” Evans said. “Justice delayed is justice denied, even for the company.” To contact the reporters on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net and; Linda Sandler in New York at lsandler@bloomberg.net .

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BP Claims Process: Government Poised To Seize Damage Reward Process From Company

June 15, 2010

PENSACOLA, Fla. (AP) — President Barack Obama is reassuring people in Gulf Coast states that he’s up to the enormous job of helping them recover from the disastrous oil spill, laying the groundwork for a prime-time speech Tuesday night. His chief spokesman said Obama is poised to seize the handling of damage claims from BP, if necessary. Spokesman Robert Gibbs appeared on morning news shows Tuesday as Obama prepared for a second day of briefings – this time in Florida – and as the president prepared to give an address at Pensacola Naval Air Station and fly back to Washington for the 8 p.m. address from the Oval Office. The aim of wresting claims-handling from BP, Gibbs said, would be to make individuals and businesses “whole.” The claims issue is among several difficult problems that Obama will address directly in the speech, his first from the Oval Office. Voicing increasing confidence in his ability to confront the nation’s worst environmental crisis, Obama was ready to outline a comprehensive response and recovery program and was set to assure not only the people from the afflicted region, but all the country as well, that the administration will see to it that America surmounts this crisis. On the matter of the disputed damage payments, Gibbs said, “We have to get an independent claims process. I think everyone agrees that we have to get BP out of the claims processes and, as I said, make sure that fishermen, hotel owners have a fast, efficient and transparent claims process so that they’re getting their livelihoods replaced.” “This disaster has taken their ability to make a living away from them,” he said. “We need to do this quickly, and we have to make sure that whatever money goes into that – that in no way caps what BP is responsible for. Whatever money they owe to anybody in the Gulf, they’re going to have to pay regardless of the amount.” He noted in one interview that Obama “has the legal authority” to make the claims process independent. And Gibbs said “the best way to prevail upon BP is to take the claims process away from BP.” “The president will either legally compel them,” he said, “or come to an agreement with BP to get out of the claims process, give that to an independent entity.” Obama’s address to the nation sets the stage for his showdown White House meeting Wednesday with top BP executives. BP leased the rig that exploded April 20 and led to the leak of millions of gallons of coast-devastating crude. It’s part of an effort by Obama, who’s been accused of appearing somewhat detached as the oil spill disaster has unfolded, to convince a frightened Gulf Coast and a skeptical nation that he is in command. Obama was to deliver the speech upon his return from a two-day swing through Mississippi, Alabama and Florida, his fourth trip to the Gulf since the Deepwater Horizon drilling rig explosion that set off the disaster, but his first outside the hardest-hit state of Louisiana. The trip gave him ammunition for the speech and for his meeting with BP executives where he intends to finalize the details of a victims compensation fund. He visited vacant beaches in Mississippi where the threat of oil had scared off tourists, heard the stories of local employers losing business, watched hazmat-suited workers scrub down boom in a staging facility in Theodore, Ala., and took a ferry ride through Mobile Bay and then to Orange Beach, Ala., where oil has lapped on the shore. He was beginning the day Tuesday in Pensacola, Fla., where he was to attend a briefing and then make remarks at Naval Air Station Pensacola. “We’re gathering up facts, stories right now so that we have an absolutely clear understanding about how we can best present to BP the need to make sure that individuals and businesses are dealt with in a fair manner and a prompt manner,” the president said Monday. “I am confident that we’re going to be able to leave the Gulf Coast in better shape than it was before,” he said. That pledge was reminiscent of George W. Bush’s promise to rebuild the region “even better and stronger” than before Hurricane Katrina in 2005. Bush could not make good on that promise, and Obama did not spell out how he would fulfill his. Tuesday’s speech will give him the chance. Presidents reserve the Oval Office for rare televised addresses. When they take their place behind the desk, it’s a time for solemnity and straight talk – often a moment of history. There is a sense of gravity. One man by himself before one television camera speaking to the nation. Oval Office addresses typically aren’t lengthy discourses like a State of the Union, but if a president has to go for broke, this is where he does it. Bush addressed the nation from the Oval on the evening of Sept. 11, 2001. Ronald Reagan spoke there after the space shuttle Challenger explosion. John F. Kennedy grimly explained the Cuban missile crisis. Richard Nixon announced his resignation. Obama hasn’t used it yet. Not even during the worst economic crisis since the Great Depression. Not to explain painfully high unemployment rates. Or bank and auto company bailouts. Not to speak of terrorism threats. Even when his health insurance plan was in peril, he did not speak from the Oval Office to rally support or explain to Americans why he considered it vital. Gibbs appeared on ABC’s “Good Morning America,” CBS’s “The Early Show,” NBC’s “Today” show and CNN.

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Obama Vows to Restore Gulf States’ Environment, Economy After BP Oil Spill

June 14, 2010

By Hans Nichols and Kate Andersen Brower June 14 (Bloomberg) — President Barack Obama told residents and businesses affected by the oil spill from a damaged BP Plc well in the Gulf of Mexico that government will ensure the coast and their livelihoods will be restored. The president, making his fourth visit to the Gulf of Mexico coast since the April 20 explosion aboard the Deepwater Horizon drilling rig triggered the spill, said the government and BP are in “preliminary” talks about setting up a mechanism to pay claims of damage from the spill. “It’s going to take time for things to return to normal,” Obama said after getting a briefing from federal and local officials and touring a staging facility in Theodore, Alabama. “But I promise you this: things are going to return to normal.” The spill, the worst in U.S. history, has closed as much as 37 percent of the Gulf of Mexico to fishing, cut the number of offshore drilling rigs in the nation by half and polluted 140 miles of shoreline from Louisiana to Florida. It also may be a political threat to Obama as he comes under criticism from Republicans and some Democrats over the administration’s response. Obama is spending two days in the region, staying overnight in Florida. He plans a televised address on the subject at 8 p.m. Washington time tomorrow and the next day he will meet with BP Chairman Carl-Henric Svanberg and other company officials in Washington. Today he defended the government’s action in dealing with the spill. Recovery Effort “We are confronting the largest environmental disaster in our history with the largest environmental response and recovery effort in our history,” he said. Obama said he expects the meeting with BP officials will bring progress on an agreement to have the company establish a multibillion dollar fund to compensate for economic damage caused by the spill. The goal is to make sure that claims are “dealt with justly, fairly, promptly,” he said. “My hope is that by the time the chairman and I meet on Wednesday that we’ve made sufficient progress that we can start actually seeing a structure that would be in place,” he said. While the administration hasn’t set a specific amount, U.S. Senate Democrats, in a letter today to BP Chief Executive Officer Tony Hayward , called on the company create a $20 billion fund to pay for cleanup and economic damages. Demonstration Creating such an account would be “a useful first step for demonstrating that BP intends to meet its commitments,” the letter said. They requested a response by June 18. Hayward is scheduled to appear at a June 17 hearing of the House Energy and Commerce Committee. While reviewing efforts to deal with the spill’s damage, Obama also is preparing to fill the vacancy left when Elizabeth Birnbaum , director of the Minerals Management Service, became the first administration official to step down in connection with the oil spill. Obama may announced his choice to oversee federal management of offshore oil and gas drilling in his speech tomorrow, an administration official said on condition on anonymity. The president has criticized the agency, part of the Interior Department, for having a “cozy” relationship with the industry it regulates and being “plagued by corruption for years.” Obama today also said the government will undertake a multi-agency effort to ensure the safety of seafood taken from the Gulf. Seafood Industry “Seafood from the Gulf today is safe to eat,” Obama said. “But we need to make sure it stays that way.” Commercial fishing along the Gulf coast from Texas to Florida contributes $1 billion to the gross domestic product, tourism and recreation another $13 billion, and oil and gas $11 billion, according to the National Ocean Economics Program. The effects of the spill may be felt for years, he said. “We’re dealing with here is unique because it’s not simply one catastrophic event, it’s an ongoing assault,” Obama said. BP has submitted a new plan to the government that would contain more of the spill faster, Bill Burton , deputy White House press secretary, told reporters traveling with the president. Under the plan, more than 50,000 barrels of oil could be contained per day by the end of June, two weeks earlier than originally proposed, Burton said. Obama is making his fourth visit to the Gulf since the disaster began on April 20 and it is his first to see the impact on Mississippi, Alabama and Florida. Democratic Senator Bill Nelson of Florida told reporters in Pensacola today Obama needs to set up a “military-type chain of command structure” for the spill response. “The White House has been listening to their critics, including this senator, and I think they are making changes,” Nelson said. To contact the reporters on this story: Hans Nichols in Gulfport, Mississippi at hnichols2@bloomberg.net ; Kate Andersen Brower n Washington at Kandersen7@bloomberg.net

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