Archives - Business: Page 37
Author: paul carson (Mon Mar 27, 2006 3:48 am)
Title: Sales of new homes falling
Sales of new homes fell 10.5 percent in February, the biggest decline in nearly nine years, while prices fell and the number of homes on the market rose to a record, the government said Friday.
A separate report said new orders for durable goods outside the transportation sector fell short of forecasts, suggesting weakness in business spending plans.
The reports may influence the Federal Reserve as it considers interest rates at its meeting Monday and Tuesday. The Fed is expected to raise borrowing costs for the 15th time since June 2004.
"This is what the Fed wants; they want housing to slow," said Robert B. MacIntosh, chief economist at Eaton Vance Management in Boston. "That is the place where they can most affect wealth creation and spending. The Fed is that much closer to being done. I think they are done after next week."
According to the Commerce Department, the sales pace of new single-family homes slowed to an annual rate of 1.08 million units in February, from the downward revised January rate of 1.21 million units.
Economists had expected new- home sales to decline to a rate of 1.20 million units from January's originally reported rate of 1.23 million units.
While new-home sales slowed, supply surged. The number of new homes available for sale climbed to a record 548,000 by the end of the month. At the current sales pace, that represents 6.3 months of supply, the largest inventory of new homes since January 1996, the government report showed.
Median home prices declined for the fourth consecutive month, hitting $230,400 in February, the lowest level since July 2005.
The Commerce Department also said new orders for durable goods rose 2.6 percent in February, twice forecasts, but a drop in demand outside transportation hinted at weakness in business spending.
New orders for durable goods excluding transportation fell 1.3 percent, below Wall Street forecasts for a 0.9 percent rise. Transportation orders surged 13.4 percent.
In addition, orders for nonmilitary capital goods excluding aircraft, a proxy for business spending, dropped 2.3 percent. Wall Street analysts had expected a 1 percent increase.
grow and be kind
HOUSTON - Former Enron Corp. chiefs Kenneth Lay and Jeffrey Skilling were convicted Thursday of conspiracy and securities and wire fraud in one of the biggest business scandals in U.S. history.
The verdict put the blame for the 2001 demise of the high-profile energy trader, once the nation's seventh-largest company, squarely on its top two executives. It came in the sixth day of deliberations following a federal criminal trial that lasted nearly four months.
Lay was also convicted of bank fraud and making false statements to banks in a separate, non-jury trial before U.S. District Judge Sim Lake related to Lay's personal banking.
The conviction was a major win for the government, serving almost as a bookend to an era that has seen prosecutors win convictions against executives from WorldCom Inc. to Adelphia Communications Corp. and homemaking maven
Martha Stewart. The public outrage over the string of corporate scandals led Congress to pass the Sarbanes-Oxley act, designed to make company executives more accountable.
Enron's demise alone took with it more than $60 billion in market value, almost $2.1 billion in pension plans and 5,600 jobs.
"The jury's verdicts help to close a notorious chapter in the history of America's publicly traded companies," said Rep. Michael Oxley (news, bio, voting record), R-Ohio, chairman of House Financial Services Committee and co-author of Sarbanes-Oxley.
"At the same time today, I remember those who have suffered great economic loss. Today's news should encourage them as they continue to rebuild their financial security," he said.
Enron founder Lay was convicted on all six counts against him in the corporate trial. Former Chief Executive Skilling was convicted on 19 of the 28 counts, including one count of insider trading, and acquitted on the remaining nine.
Lake read the verdict from the bench, intoning "Guilty" for each count.
Lay tossed his head at hearing the first "guilty" on the conspiracy count. He clutched his wife's hand as he heard the word "guilty" over and over again.
Lay sat with his wife, Linda; his daughter, Elizabeth Vittor, a member of his defense team; and Linda Lay's daughter, Robyn. As Lay clutched Linda Lay's hand, the three women leaned forward and began to sob quietly.
After Lake left the courtroom, Lay's family and some friends gathered around him as the ex-chairman, red-faced and fighting back tears, hugged them and thanked them for their support.
Skilling's wife, Rebecca Carter, couldn't get to the courthouse in time, but Skilling, sitting with his brother, Mark, showed no emotion. He occasionally raised his eyebrows when whispering with Mark or his lead attorney, Daniel Petrocelli, who affectionately straightened his client's purple tie before Lake read the verdicts.
The sentencing will come five years, almost to the day, that Skilling sold 500,000 shares of Enron stock for $15.5 million, for which he was convicted of insider trading.
Skilling's $5 million bond remains in effect. Lay's children and family have to help put up a $5 million cash bond for him, which will be addressed at a 2 p.m. CDT hearing. Lake ordered Lay to stay in the courthouse until his passport was surrendered and until the conclusion the hearing.
"Obviously, I'm disappointed," Skilling told reporters outside the courthouse. "But that's the way the system works."
Skilling's lawyer, Petrocelli, said the verdict "doesn't change our view of what happened at Enron ... or Jeffrey Skilling's innocence."
Lake set sentencing for Sept. 11. The charges for which Lay was convicted carry a maximum penalty in prison of 45 years in the corporate trial and 120 years in the personal banking trial. The charges for which Skilling was convicted carry a maximum penalty of 185 years in prison.
Jurors found through their verdict that both men had repeatedly lied to cover a vast web of unsustainable accounting tricks and failing ventures at Enron.
The panel rejected Skilling's insistence that no fraud occurred at Enron other than that committed by a few executives skimming millions in secret side deals, and that bad press and poor market confidence combined to sink the company.
"I wanted very, very badly to believe what they were saying, very much so, and there were pieces in the testimony where i felt their character was questioned," juror Wendy Vaughan said after the verdict was announced.
Both men testified in their own defense.
The government's victory caps a 4 1/2 year investigation that garnered 16 guilty pleas from ex-Enron executives, including former Chief Financial Officer Andrew Fastow and former Chief Accounting Officer Richard Causey.
All are awaiting sentencing later this year except for two, who either finished or are still serving prison terms.
The Enron case tested the federal government's ability to prove complicated corporate skullduggery. Its implosion and the subsequent scandals scared off investors, increased regulatory scrutiny over publicly traded companies and prompted Congress to stiffen white collar penalties.
"This verdict encourages us ... to continue to combat corruption wherever we find it," said Deputy Attorney General Paul McNulty, at the Justice Department in Washington. Attorney General Alberto Gonzales was recused from the Enron case because he once was a partner at Houston law firm Vinson & Elkins LLP, which represented Enron.
White House press secretary Tony Snow congratulated the Justice Department on "successfully concluding a highly complex conviction."
Former WorldCom head Bernard Ebbers awaits a 25-year prison term for orchestrating the $11 billion accounting fraud that bankrupted the company. Stewart did five months in prison and more time confined to work and home for lying about a stock sale. Adelphia Communications founder John Rigas and his son got double-digit prison terms for looting their company.
HealthSouth Corp. founder Richard Scrushy bucked the trend with his acquittal last year of fraud charges despite five former finance chiefs pointing the finger at him in a $2.7 billion scheme to inflate earnings. He dropped in on the Lay-Skilling case during Fastow's lengthy testimony in March, saying the ex-CFO couldn't be believed.
But those cases were much simpler than that against Lay and Skilling.
The government's vast investigation seemed to stall until Fastow pleaded guilty in January 2004 to two counts of conspiracy and paved the way for prosecutors to secure indictments against his bosses. Fastow also led investigators to Causey, who was bound for trial alongside Lay and Skilling until he broke ranks with their unified defense and pleaded guilty to securities fraud just weeks before the trial began.
Associated Press writers Mike Graczyk and Erin McClam in Houston and Mark Sherman in Washington contributed to this report.