Here’s a good Wall Street Journal page-one story on how the energy boom is driving economic activity across the U.S.
The lede anecdote is smart. Russell Gold visits a manufactured-housing builder in Idaho, far from the shale boom states, to show how the effects of all the drilling are rippling out into the broader economy. Where the company profiled was laying off people not long ago, it’s hiring them back and giving them overtime today because of demand from wildcatters who can’t find enough housing for their workers.
An energy boom is revving up the U.S. economy. The use of new drilling techniques to tap oil and gas in shale rocks far underground helped add about 158,500 new oil and gas jobs over the past five years, and economists think it has created even more jobs in companies supplying the energy industry and in the broader service industry. U.S. oil production is rising for the first time in decades. Natural gas has become so plentiful that prices recently plunged to a 10-year low.
The economic benefits of rising energy production are spreading far beyond the traditional oil patch, to Ohio and Pennsylvania, Nebraska and New York, North Carolina and Idaho. Truck drivers from pretty much anywhere can find work related to the surging energy business. Private-equity firms completed $24.8 billion of energy deals of all types last year, up from $8.5 billion in 2010, according to data tracker Preqin. Manufacturing plants are returning to the U.S. to take advantage of cheap natural gas, spurring major investments in petrochemical and steel production in the Gulf Coast and Midwest.
Landowners in huge swaths of the country where shale is found are raking in money for leasing their mineral rights. Consumers throughout the U.S. are paying lower bills for heating and electricity because of cheap natural gas. Even the U.S. balance of payments with other countries is improving because of the new energy economy
I would have liked a bit more discussion of the externalities of this growth, like carbon pollution and how low natural-gas prices are slamming the renewable-energy sector.
— Good journalism gets results.
A tough book on Washington’s corrupt culture by GOP consultant Peter Schweizer and Steve Kroft’s 60 Minutes report based on it is helping push a new insider-trading ban for Congress.
Schweizer reported, among other things, that the powerful Representative Spencer Bachus, now chairman of the House Financial Services Committee, shorted the stock market a day after hearing in a secret meeting with Fed Chairman Ben Bernanke that the markets were about to melt down.
Now the Washington Post reports tonight that the Office of Congressional Ethics is investigating whether Bachus violated insider-trading laws.
OCE investigators have notified Bachus that he is under investigation and that they have found probable cause to believe insider-trading violations have occurred.
The case is the first of its kind involving a member of Congress. It comes at a time of intense public scrutiny of congressional ethics, with the House passing legislation Thursday to tighten rules against insider trading by lawmakers. The impetus for the legislation, a version of which passed in the Senate a week earlier, came from a “60 Minutes” report and a book mentioning Bachus’s trades, “Throw Them All Out,” by Peter Schweizer…
In recent years, Bachus has made numerous trades, some of them coinciding with major policy announcements by the federal government and industries under his congressional oversight, according to a review of his financial disclosure forms by The Washington Post.
— Naked Capitalism’s Yves Smith has twelve reasons to hate the $26 billion foreclosure-scandal settlement. Here’s reason No. 1:
We’ve now set a price for forgeries and fabricating documents. It’s $2000 per loan. This is a rounding error compared to the chain of title problem these systematic practices were designed to circumvent. The cost is also trivial in comparison to the average loan, which is roughly $180k, so the settlement represents about 1% of loan balances. It is less than the price of the title insurance that banks failed to get when they transferred the loans to the trust. It is a fraction of the cost of the legal expenses when foreclosures are challenged. It’s a great deal for the banks because no one is at any of the servicers going to jail for forgery and the banks have set the upper bound of the cost of riding roughshod over 300 years of real estate law.
And No. 9:
There is plenty of evidence of widespread abuses that appear not to be on the attorney generals’ or media’s radar, such as servicer driven foreclosures and looting of investors’ funds via impermissible and inflated charges. While no serious probe was undertaken, even the limited or peripheral investigations show massive failures (60% of documents had errors in AGs/Fed’s pathetically small sample). Similarly, the US Trustee’s office found widespread evidence of significant servicer errors in bankruptcy-related filings, such as inflated and bogus fees, and even substantial, completely made up charges. Yet the services and banks will suffer no real consequences for these abuses.
The Los Angeles Times notes that the settlement is “too little, too late” for most homeowners.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at firstname.lastname@example.org. Follow him on Twitter at @ryanchittum.
Tags: Energy, Foreclosures, Insider Trading, Mortgages, Natural Gas