Tuesday, June 30, 2015

Wednesday July 1 Housing and Economic stories


Small U.S. frackers face extinction amid drilling drought - (www.reuters.com) Oil field work was coming in fast when GoFrac doubled its workforce and equipment fleet at the beginning of last year, just one of hundreds of small oil service companies thriving on the revival of U.S. drilling. Founded in November 2011 with a loan of around $35 million, the Fort Worth, Texas-based company was by 2014 making nearly that much in monthly revenues, providing the crews and machinery needed by companies including ExxonMobil (XOM.N) to frack oil and gas wells from North Dakota to Texas. Executives flew to meetings across the country in a Falcon 50 private jet, and entertained customers at their suite at the Texas Rangers baseball stadium in Arlington. The firm would soon move into a 22,000-square-foot office on the 12th floor of Burnett Plaza, one of Fort Worth's most prestigious office buildings. Eighteen months on, however, without work and unable to meet monthly loan payments, GoFrac has closed its doors, its ambitions gutted by a steep dive in oil prices. Of the 550-odd employees on the payroll at the beginning of this year, only six remain. 

Puerto Rico faces a 'bailout' problem - (www.cnbc.com)  Mired in $73 billion in debt, Puerto Rico has tried multiple avenues to get its financial affairs in order, including the introduction of HR 870, a U.S. congressional bill that would let its municipalities and public corporations declare bankruptcy under Chapter 9—as is allowed in the states. But some experts think it's unlikely Congress will pass the bill.  "The perception is that, if you give Puerto Rico the authority to file for bankruptcy, that's the equivalent of a federal bailout, and that taxpayers in Iowa, in Texas and Alaska are authorizing federal funds to be spent to bail out Puerto Rico," Frank Shafroth, a professor specializing in municipal bankruptcy at George Mason University, said at a conference this week. Shafroth added that the perception is wrong: Detroit, he noted, did not receive "a thin dime" when it declared bankruptcy in July 2013. Bankruptcy is the opposite of a bailout, he said at the Ravitch Puerto Rican Fiscal Crisis Session in New York. 

Authorities arrest 243 people in $712 million Medicare fraud - (www.reuters.com)  The U.S. Department of Justice said on Thursday that 243 people have been arrested across the country, charged with submitting fake billing for Medicare, a government healthcare program, that totaled $712 million. Attorney General Loretta Lynch described the arrests as the largest criminal health care fraud takedown in the history of the Justice Department. Those arrested included 46 doctors, nurses and other licensed medical professionals. The charges are based on a variety of alleged fraud schemes, the government said, including submitting claims to Medicare and Medicaid, the healthcare program for low-income individuals, for treatments that were medically unnecessary and often never provided. The nationwide sweep, led by the Medicare Fraud Strike Force and the U.S. Centers for Medicare and Medicaid Services, involved about 900 law enforcement officials. It's the largest both in terms of the number of those charged and the amount of money lost.

Greek Deal Won't Save the Country's Banks - (www.bloomberg.comGreek banks, which received two capital infusions in the past two years, may need a third one as a recession drives up losses from bad loans. The four biggest lenders, accounting for 91 percent of the country’s banking assets, could see their 12 billion euros ($14 billion) of tangible core capital wiped out by mounting provisions as overdue and restructured loans default. Even if Greece reaches an agreement with European creditors to free up additional money, its next bailout will need to include a new round of funding for the ailing banks. Bad loans rose last quarter as the economy slipped back into recession and Greeks delayed payments waiting for the new government to pardon debt. With the recovery stalled, the four banks -- National Bank of Greece SA, Piraeus Bank SA, Alpha Bank AE and Eurobank Ergasias SA -- could require 16 billion euros in additional provisions to cover losses if half of the 59 billion euros of overdue and restructured loans on their books sour.

Austrian ‘Bad Bank’ Heta Reports $7.9 Billion Shortfall - (www.bloomberg.com)  Heta Asset Resolution AG, the Austrian “bad bank” that unveiled a 7 billion-euro ($8 billion) capital hole Wednesday, said an insolvency may ultimately be the only way to shut down the company. Heta, the remnant of the failed, nationalized Hypo Alpe-Adria-Bank International AG, warned on Thursday that the insolvency remains on the table even as a debt moratorium imposed by regulators staved it off for now. Heta disclosed yesterday that 7.9 billion euros of writedowns depressed the value of its assets to 9.6 billion euros by the end of last year, 42 percent less than its total liabilities. “In the view of the management board, there are uncertainties about whether an orderly wind-down of Heta is possible outside of an insolvency, especially in the period outside of the debt moratorium currently in place,” Heta said in its annual report published on its website.




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