Saturday, October 04, 2008

The Economic Meltdown for Dummies

This American Life explains the financial crisis & the bailout

October 4, 2008

by Sam Glover
Caveat Emptor
Copyright 2008

This American Life has done two excellent shows to help ordinary folks like you and me understand the morass that is the U.S. economy.

A few months ago, in The Giant Pool of Money, Ira Glass and his crew explained the link between the housing crisis, the turmoil on Wall Street, subprime lending, and more. Follow the link for the full show.

Today, TAL returned to the economy, trying to unpack the meltdown and figure out whether the country needs to bail out Wall Street, or not. Some key conclusions:

  1. The Wall Street meltdown happened because of the subprime meltdown, obviously, but that manifested in the financial sector in the form of the collapse of the commercial paper and credit default swap markets;
  2. The meltdown is both parties’ fault, not just Democrats’ or Republicans’;
  3. It is fair for taxpayers to be furious about the bailout, and to direct that fury at federal regulators who were sleeping on the job;
  4. The bailout is probably good, but may not work; and
  5. The Treasury should probably use its discretion and pursue a stock injection strategy rather than the Paulson plan (which is obviously unlikely).

If all that sounds like gibberish, listen to This American Life’s Another Frightening Show About the Economy. It was all gibberish to me before I listened to that show, too.

© 2008 Caveat Emptor:

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE


A.I.G. blows through most of its $85 billion Federal Reserve loan in 2 weeks, startling credit ratings agencies.

A.I.G. Uses $61 Billion of Fed Loan

October 4, 2008

Sarasota Herald-Tribune
Copyright 2008

The American International Group said on Friday that it had already drawn down $61 billion of the $85 billion emergency bridge loan it received from the Federal Reserve two weeks ago, an announcement that startled credit ratings agencies.

The emergency loan was supposed to buy the company time to sell its troubled assets in an orderly manner. But the sell-off has not yet begun, and now the insurer faces the additional pressure of trying to sell the businesses at a time when potential buyers are having trouble borrowing money.

Moody’s downgraded A.I.G.’s senior unsecured debt on Friday and said it might downgrade other types of the company’s debt, which could make it more expensive for A.I.G. to borrow money and do business.

A.I.G.’s chief executive, Edward M. Liddy, told securities analysts on Friday that $53 billion to $54 billion of the Fed’s loan had gone to shore up A.I.G.’s troubled structured-finance unit and its securities lending business. Another big block of the Fed’s money has been used to support A.I.G.’s daily operations, Mr. Liddy said in a conference call, because demand for the company’s commercial paper has dried up as a result of the worldwide credit crisis.

After the conference call, Standard & Poor’s said it had changed A.I.G.’s credit watch status to negative, expressing concern about whether A.I.G. would be able to restructure with the help of the Fed, as planned. The change indicated that a downgrade could be coming.

It was a series of downgrades in A.I.G.’s credit ratings in mid-September that set off certain contractual provisions requiring the insurer to post billions of dollars of collateral with its trading partners, a catastrophic event that led to the huge federal bailout.

Since then, A.I.G. has not released any information about whether additional ratings downgrades would lead to any additional collateral calls.

Both ratings agencies cited concerns about A.I.G.’s rapid use of the Fed’s loan.

“The $61 billion draw to date on the facility is much larger than we had previously anticipated,” said Rodney A. Clark, an analyst with Standard & Poor’s, explaining the change in outlook.

A.I.G. is required to pay back its borrowings from the Fed within two years. Mr. Clark said that to raise the money, the rapid drawdown of the loan made it likely that A.I.G. would have to sell off more businesses than Standard & Poor’s had expected.

This would leave “a much smaller and less diversified A.I.G.” to pay off a proportionally bigger debt to the Fed, Standard & Poor’s said in a statement.

In the conference call, Mr. Liddy detailed which of A.I.G.’s subsidiaries he intended to keep and which he was putting up for sale. Over all, he said, the company would hold on to its property and casualty insurance business in the United States and its general insurance businesses outside the country. Together, they generated revenue of about $40 billion in 2007.

In addition, Mr. Liddy said A.I.G. would keep a continuing ownership in its foreign life insurance businesses, most of which operate in Asia.

Other than that, he said, virtually everything else under A.I.G.’s corporate umbrella was for sale. That would include its life insurance companies in the United States, its retirement operations on four continents, its aircraft leasing business, its consumer finance business and other lines of insurance and reinsurance.

Mr. Liddy said these were valuable businesses for which A.I.G. had already received many expressions of interest, although he acknowledged that there was a big difference between a nibble and an actual sale. He said that the Blackstone Group and JPMorgan Chase had been hired to put the businesses up for sale.

Earlier, Mr. Liddy had indicated that he hoped A.I.G. would be able to retain its life insurance business in the United States. But in the conference call on Friday, he said that solving the problems of the financial products unit, which dealt in complex debt securities and credit derivatives, “has caused us a lot of pain.”

“We do intend to wind down that operation,” he said. “It is not something you can announce on Friday and expect to do by Monday.”

Mr. Liddy said that all of the energy being expended on that troubled unit was aimed at winding down its affairs — not getting them up and running again. “We are not entering into any new activity” there, he said.

In response to questions, Mr. Liddy said it was impossible to say exactly how much money A.I.G. would have to raise to pay back the Fed and emerge from its crisis as a smaller company with adequate capital.

“It’s kind of a Rubik’s Cube,” he said. “We need to be very flexible” because of the fluid economic environment.

He said that in addition to using the $85 billion Fed loan, A.I.G. would be able to participate in the $700 billion bailout program signed into law by President Bush on Friday. The additional help from the Treasury might ease some of its financial burdens, Mr. Liddy said.

© 2008 Sarasota

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE


"They didn't just put lipstick on the pig, they added pearls."

Historic Bailout Passes As Economy Slips Further


The Wall Street Journal
Copyright 2008

WASHINGTON -- President George W. Bush signed into law an unprecedented $700 billion plan to rescue the U.S. financial system, one of the largest-ever government interventions in the nation's economy -- and almost certainly not the last.

The Treasury Department is expected to move quickly to start buying distressed assets from struggling financial institutions, although any impact might not be felt for some weeks. Many details -- such as who will administer the program and how -- are still to be worked out.

That lingering uncertainty cast a pall over stock and bond markets. Credit markets remained stressed as lenders continued to worry about getting repaid. The three-month Libor rate, a measure of the rate that banks charge to lend to one another, rose to 4.33% Friday from 4.21% the day before.

Stocks, which had been up more than 300 points before the voting began, ended down 157 points at 10325.38. The decline capped the worst week for the Dow Jones Industrial Average in more than six years, and left the market trading where it was nearly three years ago.
[House Speaker Pelosi called the landmark bill 'only the beginning' of government rescue efforts.] Associated

Passage of the bill came amid new evidence from the labor market that the U.S. is tilting further toward recession. Companies shed 159,000 workers in September, the fastest pace in more than five years, the Labor Department reported.

The legislation ranks alongside other broad federal attempts to prop up the economy, such as Roosevelt's New Deal and the resolution of the Savings and Loan debacle of the late 1980s and early 1990s.

It will likely be followed by other moves. The Federal Reserve could cut interest rates and take further steps to ensure there are enough funds coursing through the financial system. Congress has already beefed up jobless benefits and is expected next year to push for new stimulus efforts, such as spending on infrastructure.

Looking to next year, Democratic lawmakers are planning to revamp financial-system regulations, with hedge funds, private-equity funds and investment banks all likely to come in for tighter scrutiny. House Speaker Nancy Pelosi (D, Calif.) portrayed the legislation as "only the beginning" of the legislative response to the faltering economy.

The process picked up speed on Monday after the House rejected an earlier version, sending markets into a tailspin and highlighting deep public opposition to the president's plan.

President Bush and the leadership of Congress closed ranks and sweetened the bill with tax cuts. The compromise won wide support in the Senate Wednesday and passed the House on the second attempt on Friday by a vote of 263-171. President Bush signed the bill shortly thereafter.

The bill establishes the Troubled Asset Relief Program. The Treasury will have $700 billion to buy up toxic mortgages, securities and related assets that have undermined the nation's financial architecture.

The bill mandates the government take equity stakes in companies participating in the rescue and would limit compensation for executives, barring "golden parachutes." It also says the administration must develop a plan to ease the wave of foreclosures through modifying loans acquired by the government.

Complex Questions

For all of the changes made to the original Treasury plan, lawmakers succeeded little in imposing control over use of the funds. The bill requires Treasury to set up an insurance-based alternative. But the core of what Mr. Paulson requested survived largely unscathed.

Treasury faces a host of complex questions it must answer before it can roll out the program broadly. Among the biggest issues: which assets to buy, how to buy the assets and whom to buy the assets from.

Treasury doesn't want to buy every mortgage-backed security on the books of every financial institution, according to a person familiar with the matter. Plus, not all mortgage-backed securities are alike and Treasury wants to be careful that it doesn't overpay for the truly worthless assets.

After hiring asset managers to run the program, it's likely to start with securities "where there's enough out there and the market is thick enough so the auction can be done well," said a person familiar with Treasury's thinking. One example would be all private, subprime loans made during a certain financial quarter.

The purchases would likely be made through what's called a reverse auction, in which institutions compete to sell assets. The government would suggest a high price to ensure significant participation, which should then allow Treasury to pick from the lower prices offered until it gets the quantity of securities it wants.

The department plans to hire about two dozen full-time employees to work on the program, including lawyers, accountants and those with financial-market expertise. It's expected to be several weeks before Treasury begins its first auction, according to people familiar with the matter. The department could move more swiftly to buy assets from specific institutions if there's a need.

The bailout bill also allows the Fed to begin paying interest on the reserves that banks leave on deposit with the central bank, something it didn't do before. Paying interest on reserves makes it easier for the Fed to flood the financial system with additional cash.

This comes on top of other steps the Fed has taken in recent weeks to provide financial institutions with the cash they need to keep operating.

But so far, it hasn't been successful in unfreezing credit markets. Short-term money markets -- where companies raise money to finance their operations -- remain distressed. Financial firms went to the Fed for $409.5 billion in emergency overnight loans by midweek, a record.

Political Risks

That congressional leaders turned around the vote in less than a week underscores the widening unease among lawmakers about the state of the economy. The political impact could be immediate, especially for vulnerable candidates in conservative districts who ended up supporting the bill. On Friday, 26 Republicans and 33 Democrats switched from no to yes.

Illinois Rep. Rahm Emanuel, the fourth-ranking House Democrat, suggested rank-and-file lawmakers didn't feel a sense of urgency until after Monday's 777-point stock-market decline. "Monday was the political system looking over the abyss," he said.

Throughout Friday morning, a steady stream of lawmakers strode to the floor to announce they were changing their minds. The turn of sentiment came after members went back to their districts and heard voters sharing stories about their shrunken retirement nest eggs and how the credit crisis is squeezing Main Street.

Some cited the Senate's proposal to temporarily raise federal deposit insurance limits to $250,000 from $100,000. Some pointed to a provision that would press for the overturn of so-called mark-to-market accounting rules, which critics say contributed to the downward spiral of markets. For others, it was a package of tax breaks.

Though "it may be politically damaging," Rep. Howard Coble (R., NC) said he would support the bill after voting against it Monday. He pointed to the raised deposit-insurance limits and the tax changes.

Rep. Zach Wamp (R., Tenn.) said the accounting rule changes will help business. He opposed the bill Monday but now supports it, arguing broad action is needed to stem the decline in credit markets.

"Monday, I cast a blue-collar vote," he said. "Today, I'm going to cast a red, white and blue vote for my country."

'Serious Surgery'

At least 11 of the 26 new GOP votes in favor of the bill came from the conservative Republican Study Committee, which had voted 4-to-1 against Monday's legislation.

One vulnerable Republican, Rep. Lee Terry of Nebraska, said improvements to the bill had convinced him to vote in favor, but he lamented that "those greedy pigs on Wall Street don't deserve help from hard-working Americans."

A large part of the new Democratic support came from members of the Congressional Black Caucus, where 13 of 21 representatives who opposed the original bill switched.

Democratic Rep. Barbara Lee said she was glad her opposition had slowed the package long enough for some improvements. The budget crisis in her home state of California demonstrated the need for urgent action.

Despite complaints from fiscally conservative Democrats about the addition of $150 billion in tax breaks, support from the moderate Blue Dog caucus held strong. Of its 47 members, all 25 who voted yes on Monday maintained their approval, and six members provided support for the first time.

Phone calls and emails flooded Capitol Hill. The Club for Growth, a conservative group, opposed the bailout. So did, a liberal group, which denounced the Senate's decision to add tax cuts. "They didn't just put lipstick on the pig, they added pearls," the group said.

The effort was countered by the business community, which jumped into the fray alongside the Bush White House and the Republican and Democratic presidential nominees, John McCain and Barack Obama, in support of the plan.

Congressional leaders are planning bills next year that would toughen oversight of the financial-services sector.

"We will be back next year to do some serious surgery," said House Financial Services Chairman Barney Frank (D., Mass.). Mr. Frank wants legislation to rewrite housing finance -- including the roles of mortgage giants Fannie Mae and Freddie Mac -- and overhaul regulation of financial services.

—Jon Hilsenrath, Brad Haynes and Romy Varghese contributed to this article.

© 2008 Dow Jones & Company,

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE


Friday, October 03, 2008

“This is not what we wanted, but it’s a start.”

First 391 SRPC meeting is heated


The Navasota Examiner
Copyright 2008

The first meeting of the Iola 391 Sub-Regional Planning Commission got off to a rocky start Tuesday morning at the courthouse annex, most of the questions centering on the appointment of local attorney and former county judge Lovett Boggess to the commission.

Grimes County commissioners in July approved joining the Iola 391 group and appointed Precinct 1 Commissioner John Bertling as the county’s representative.

Iola Mayor Christina Stover convened the meeting, reiterating that the Iola City Council believes the commission “is a worthy cause” and that Iola was not interested in such a commission if it creates another level of bureaucracy in the county.

Stover then nominated Boggess as an at-large member of Iola’s commission, which immediately sparked questions from those present about Boggess’ commitment to the commission.

Don Lemon asked to speak from the audience on behalf of the public, to which Stover replied, “We already know how the public feels.”

Bertling asked Boggess what his objection was to the commission, to which Boggess replied, “I can’t say I oppose it, but I do have questions. There are pros and cons to organizations of this type. It depends upon how it is conducted.”

Bertling asked Boggess if he would support the commission to other communities. Bogges replied he would have no objections but would want public input.

Mike Nevill said he thought there might be a conflict of interest in appointing Boggess if he represents any county or local governmental bodies in a professional capacity.
Several people at the meeting said Boggess had previously voiced disapproval of the commission. “Why set up a person opposed to it?” asked Nevill. “That won’t help the commission, and it sends a bad signal to start off.”

Stover insisted that since the commission is new, she thinks having someone to provide legal input is valuable.

Billie Lemon said she thought the commission should hear what the public has to say and that Stover need not be “antagonistic to us.”

Stover said if she had been defensive, she apologized.
Others questioned Boggess’ sincerity in serving on the commission, but in the end, Stover stuck with her nomination and said she would obtain clarification on the conflict of interest matter Nevill mentioned.
“If we decide we don’t want him, we can remove him,” said Bertling. “We’re trying to make the best of a bad deal. Let’s do something, even if it’s wrong. Let’s try to make it work.”
Stover then nominated herself to serve as the commission’s recording secretary and Bertling nominated himself to chair the commission. The two seconded their own motions.

The commission will meet again on Thursday, Oct. 30 at 9 a.m. in commissioners’ court chambers to consider by-laws for the commission and receive a ruling on Boggess status as a representative.

Nevill has already submitted by-laws for the commission to consider, but Bertling said he wanted time to review them before their adoption.

“This is not what we wanted, but it’s a start,” Bertling said.

© 2008 The Navasota

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE


“We don’t have the luxury of waiting for someone else..."

Ports-to-Plains conference ends today


By Karen Gleason
Del Rio News-Herald
Copyright 2008

The 11th Annual Ports-to-Plains Conference wraps up today with a tour of several maquiladora operations across the border in Ciudad Acuña, Coah., Mexico.

Following a breakfast at the Del Rio Civic Center hosted by the Del Rio Chamber of Commerce and a welcome from Del Rio Mayor Efrain Valdez, Sid Cauthorn, chairman of the Ports-to-Plains Coalition, addressed the group.

Cauthorn said his involvement with Ports-to-Plains began 11 years ago when he served as the economic development director for the Del Rio Chamber of Commerce and he attended a meeting in Lubbock to discuss the construction of a four-lane divided highway between international ports of entry from Mexico to Canada.

“Knowing a little bit of history about Marco Polo and the importance of trade corridors, I recognized early on that my involvement in Ports-to-Plains was going to be among the most important things that I could do in my community, in my home town, to further opportunities for economic prosperity,” Cauthorn told the group.

“Now, 11 years later, I’m more convinced than ever that Ports-to-Plains is vital to the economic interests of all the members along our corridor,” Cauthorn added.

Cauthorn said he often wondered what Del Rio and Acuña would be like today if the area’s leaders of 45 years ago “had aggressively sought to bring Interstate 10” through Del Rio.

“This generation of people from along our corridor has the opportunity for a second chance, and it’s a second chance that we must take advantage of,” Cauthorn urged.

He said the Del Rio conference would focus on how Ports-to-Plains can create jobs and put “put dollars in you pocket.”

“We’ve talked for a number of years about what Ports-to-Plains can do as far as highways. We want to talk to you at this conference about what Ports-to-Plains can do to put dollars in your pockets and in the pockets of your citizens,” Cauthorn said.

Cauthorn previewed the remainder of the conference events by saying that the Del Rio conference would showcase Del Rio’s industrial and warehousing base.

“We want to brag a little bit about what we do here,” Cauthorn said. “Here in Del Rio and in Acuna, we manufacture giant dump trucks, we manufacture campaign buttons, we manufacture wire harnesses, we manufacture seat belts, we manufacture cotton balls and much more and we do so with unmatched quality and unmatched speed.”

Today’s event schedule for the conference, which includes a discussion of doing business in Mexico, also includes tours of several major maquiladora – or twin plant – operations across the border.

Cauthorn also urged participants in the conference to be diligent in working toward the vision of Ports-to-Plains, a trade corridor stretching from the Mexico border north through Texas, Oklahoma, Colorado and New Mexico.

“We don’t have the luxury of waiting for someone else to do,” Cauthorn said. “We must be diligent and we must be dedicated to what it is we’re working on, because we know that one day. . .our national leadership and our state leadership will understand how important transportation is to the economic well-being at the local and the regional and the state level.”

“We know that one day our national and our state leadership will understand what Marco Polo did 700 years ago and what President Eisenhower did 50 years ago and what New Mexico Gov. Bill Richardson understands today: Transportation infrastructure is critical – critical – to the national, state and regional economic prosperity.”

© 2008 Del Rio News-Herald:

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE


Thursday, October 02, 2008

"We’ve all learned a terrible lesson.”

Agency’s ’04 Rule Let Banks Pile Up New Debt


The New York Times
Copyright 2008

“We have a good deal of comfort about the capital cushions at these firms at the moment.” — Christopher Cox, chairman of the Securities and Exchange Commission, March 11, 2008.

As rumors swirled that Bear Stearns faced imminent collapse in early March, Christopher Cox was told by his staff that Bear Stearns had $17 billion in cash and other assets — more than enough to weather the storm.

Drained of most of its cash three days later, Bear Stearns was forced into a hastily arranged marriage with JPMorgan Chase — backed by a $29 billion taxpayer dowry.

Within six months, other lions of Wall Street would also either disappear or transform themselves to survive the financial maelstrom — Merrill Lynch sold itself to Bank of America, Lehman Brothers filed for bankruptcy protection, and Goldman Sachs and Morgan Stanley converted to commercial banks.

How could Mr. Cox have been so wrong?

Many events in Washington, on Wall Street and elsewhere around the country have led to what has been called the most serious financial crisis since the 1930s. But decisions made at a brief meeting on April 28, 2004, explain why the problems could spin out of control. The agency’s failure to follow through on those decisions also explains why Washington regulators did not see what was coming.

On that bright spring afternoon, the five members of the Securities and Exchange Commission met in a basement hearing room to consider an urgent plea by the big investment banks.

They wanted an exemption for their brokerage units from an old regulation that limited the amount of debt they could take on. The exemption would unshackle billions of dollars held in reserve as a cushion against losses on their investments. Those funds could then flow up to the parent company, enabling it to invest in the fast-growing but opaque world of mortgage-backed securities; credit derivatives, a form of insurance for bond holders; and other exotic instruments.

The five investment banks led the charge, including Goldman Sachs, which was headed by Henry M. Paulson Jr. Two years later, he left to become Treasury secretary.

A lone dissenter — a software consultant and expert on risk management — weighed in from Indiana with a two-page letter to warn the commission that the move was a grave mistake. He never heard back from Washington.

One commissioner, Harvey J. Goldschmid, questioned the staff about the consequences of the proposed exemption. It would only be available for the largest firms, he was reassuringly told — those with assets greater than $5 billion.

“We’ve said these are the big guys,” Mr. Goldschmid said, provoking nervous laughter, “but that means if anything goes wrong, it’s going to be an awfully big mess.”

Mr. Goldschmid, an authority on securities law from Columbia, was a behind-the-scenes adviser in 2002 to Senator Paul S. Sarbanes when he rewrote the nation’s corporate laws after a wave of accounting scandals. “Do we feel secure if there are these drops in capital we really will have investor protection?” Mr. Goldschmid asked. A senior staff member said the commission would hire the best minds, including people with strong quantitative skills to parse the banks’ balance sheets.

Annette L. Nazareth, the head of market regulation, reassured the commission that under the new rules, the companies for the first time could be restricted by the commission from excessively risky activity. She was later appointed a commissioner and served until January 2008.

“I’m very happy to support it,” said Commissioner Roel C. Campos, a former federal prosecutor and owner of a small radio broadcasting company from Houston, who then deadpanned: “And I keep my fingers crossed for the future.”

The proceeding was sparsely attended. None of the major media outlets, including The New York Times, covered it.

After 55 minutes of discussion, which can now be heard on the Web sites of the agency and The Times, the chairman, William H. Donaldson, a veteran Wall Street executive, called for a vote. It was unanimous. The decision, changing what was known as the net capital rule, was completed and published in The Federal Register a few months later.

With that, the five big independent investment firms were unleashed.

In loosening the capital rules, which are supposed to provide a buffer in turbulent times, the agency also decided to rely on the firms’ own computer models for determining the riskiness of investments, essentially outsourcing the job of monitoring risk to the banks themselves.

Over the following months and years, each of the firms would take advantage of the looser rules. At Bear Stearns, the leverage ratio — a measurement of how much the firm was borrowing compared to its total assets — rose sharply, to 33 to 1. In other words, for every dollar in equity, it had $33 of debt. The ratios at the other firms also rose significantly.

The 2004 decision for the first time gave the S.E.C. a window on the banks’ increasingly risky investments in mortgage-related securities.

But the agency never took true advantage of that part of the bargain. The supervisory program under Mr. Cox, who arrived at the agency a year later, was a low priority.

The commission assigned seven people to examine the parent companies — which last year controlled financial empires with combined assets of more than $4 trillion. Since March 2007, the office has not had a director. And as of last month, the office had not completed a single inspection since it was reshuffled by Mr. Cox more than a year and a half ago.

The few problems the examiners preliminarily uncovered about the riskiness of the firms’ investments and their increased reliance on debt — clear signs of trouble — were all but ignored.

The commission’s division of trading and markets “became aware of numerous potential red flags prior to Bear Stearns’s collapse, regarding its concentration of mortgage securities, high leverage, shortcomings of risk management in mortgage-backed securities and lack of compliance with the spirit of certain” capital standards, said an inspector general’s report issued last Friday. But the division “did not take actions to limit these risk factors.”

Drive to Deregulate

The commission’s decision effectively to outsource its oversight to the firms themselves fit squarely in the broader Washington culture of the last eight years under President Bush.

A similar closeness to industry and laissez-faire philosophy has driven a push for deregulation throughout the government, from the Consumer Product Safety Commission and the Environmental Protection Agency to worker safety and transportation agencies.

“It’s a fair criticism of the Bush administration that regulators have relied on many voluntary regulatory programs,” said Roderick M. Hills, a Republican who was chairman of the S.E.C. under President Gerald R. Ford. “The problem with such voluntary programs is that, as we’ve seen throughout history, they often don’t work.”

As was the case with other agencies, the commission’s decision was motivated by industry complaints of excessive regulation at a time of growing competition from overseas. The 2004 decision was aimed at easing regulatory burdens that the European Union was about to impose on the foreign operations of United States investment banks.

The Europeans said they would agree not to regulate the foreign subsidiaries of the investment banks on one condition — that the commission regulate the parent companies, along with the brokerage units that the S.E.C. already oversaw.

A 1999 law, however, had left a gap that did not give the commission explicit oversight of the parent companies. To get around that problem, and in exchange for the relaxed capital rules, the banks volunteered to let the commission examine the books of their parent companies and subsidiaries.

The 2004 decision also reflected a faith that Wall Street’s financial interests coincided with Washington’s regulatory interests.

“We foolishly believed that the firms had a strong culture of self-preservation and responsibility and would have the discipline not to be excessively borrowing,” said Professor James D. Cox, an expert on securities law and accounting at Duke School of Law (and no relationship to Christopher Cox).

“Letting the firms police themselves made sense to me because I didn’t think the S.E.C. had the staff and wherewithal to impose its own standards and I foolishly thought the market would impose its own self-discipline. We’ve all learned a terrible lesson,” he added.

In letters to the commissioners, senior executives at the five investment banks complained about what they called unnecessary regulation and oversight by both American and European authorities. A lone voice of dissent in the 2004 proceeding came from a software consultant from Valparaiso, Ind., who said the computer models run by the firms — which the regulators would be relying on — could not anticipate moments of severe market turbulence.

“With the stroke of a pen, capital requirements are removed!” the consultant, Leonard D. Bole, wrote to the commission on Jan. 22, 2004. “Has the trading environment changed sufficiently since 1997, when the current requirements were enacted, that the commission is confident that current requirements in examples such as these can be disregarded?”

He said that similar computer standards had failed to protect Long-Term Capital Management, the hedge fund that collapsed in 1998, and could not protect companies from the market plunge of October 1987.

Mr. Bole, who earned a master’s degree in business administration at the University of Chicago, helps write computer programs that financial institutions use to meet capital requirements.

He said in a recent interview that he was never called by anyone from the commission.

“I’m a little guy in the land of giants,” he said. “I thought that the reduction in capital was rather dramatic.”

Policing Wall Street

A once-proud agency with a rich history at the intersection of Washington and Wall Street, the Securities and Exchange Commission was created during the Great Depression as part of the broader effort to restore confidence to battered investors. It was led in its formative years by heavyweight New Dealers, including James Landis and William O. Douglas. When President Franklin D. Roosevelt was asked in 1934 why he appointed Joseph P. Kennedy, a spectacularly successful stock speculator, as the agency’s first chairman, Roosevelt replied: “Set a thief to catch a thief.”

The commission’s most public role in policing Wall Street is its enforcement efforts. But critics say that in recent years it has failed to deter market problems. “It seems to me the enforcement effort in recent years has fallen short of what one Supreme Court justice once called the fear of the shotgun behind the door,” said Arthur Levitt Jr., who was S.E.C. chairman in the Clinton administration. “With this commission, the shotgun too rarely came out from behind the door.”

Christopher Cox had been a close ally of business groups in his 17 years as a House member from one of the most conservative districts in Southern California. Mr. Cox had led the effort to rewrite securities laws to make investor lawsuits harder to file. He also fought against accounting rules that would give less favorable treatment to executive stock options.

Under Mr. Cox, the commission responded to complaints by some businesses by making it more difficult for the enforcement staff to investigate and bring cases against companies. The commission has repeatedly reversed or reduced proposed settlements that companies had tentatively agreed upon. While the number of enforcement cases has risen, the number of cases involving significant players or large amounts of money has declined.

Mr. Cox dismantled a risk management office created by Mr. Donaldson that was assigned to watch for future problems. While other financial regulatory agencies criticized a blueprint by Mr. Paulson, the Treasury secretary, that proposed to reduce their stature — and that of the S.E.C. — Mr. Cox did not challenge the plan, leaving it to three former Democratic and Republican commission chairmen to complain that the blueprint would neuter the agency.

In the process, Mr. Cox has surrounded himself with conservative lawyers, economists and accountants who, before the market turmoil of recent months, had embraced a far more limited vision for the commission than many of his predecessors.

‘Stakes in the Ground’

Last Friday, the commission formally ended the 2004 program, acknowledging that it had failed to anticipate the problems at Bear Stearns and the four other major investment banks.

“The last six months have made it abundantly clear that voluntary regulation does not work,” Mr. Cox said.

The decision to shutter the program came after Mr. Cox was blamed by Senator John McCain, the Republican presidential candidate, for the crisis. Mr. McCain has demanded Mr. Cox’s resignation.

Mr. Cox has said that the 2004 program was flawed from its inception. But former officials as well as the inspector general’s report have suggested that a major reason for its failure was Mr. Cox’s use of it.

“In retrospect, the tragedy is that the 2004 rule making gave us the ability to get information that would have been critical to sensible monitoring, and yet the S.E.C. didn’t oversee well enough,” Mr. Goldschmid said in an interview. He and Mr. Donaldson left the commission in 2005.

Mr. Cox declined requests for an interview. In response to written questions, including whether he or the commission had made any mistakes over the last three years that contributed to the current crisis, he said, “There will be no shortage of retrospective analyses about what happened and what should have happened.” He said that by last March he had concluded that the monitoring program’s “metrics were inadequate.”

He said that because the commission did not have the authority to curtail the heavy borrowing at Bear Stearns and the other firms, he and the commission were powerless to stop it.

“Implementing a purely voluntary program was very difficult because the commission’s regulations shouldn’t be suggestions,” he said. “The fact these companies could withdraw from voluntary supervision at their discretion diminished the mandate of the program and weakened its effectiveness. Experience has shown that the S.E.C. could not bootstrap itself into authority it didn’t have.”

But critics say that the commission could have done more, and that the agency’s effectiveness comes from the tone set at the top by the chairman, or what Mr. Levitt, the longest-serving S.E.C. chairman in history, calls “stakes in the ground.”

“If you go back to the chairmen in recent years, you will see that each spoke about a variety of issues that were important to them,” Mr. Levitt said. “This commission placed very few stakes in the ground.”

© 2008 The New York

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE


If the public followed examples set by Travis County employees, few would bother paying citiations mailed by the state of Texas or the city of Austin.

Texas City Goes After County for Not Paying Tickets

Travis County, Texas commissioners prohibit staff from using toll roads after county employees caught not paying toll, red light and parking tickets.

Copyright 2008

For jurisdictions that treat all red light camera tickets, toll violations and parking citations as civil penalties, it does not matter who was behind the wheel when the alleged infraction occurred. Under civil procedures, the vehicle's registered owner is automatically responsible for paying once an accusation is made, regardless of individual guilt.

But if the general public were to follow the example set by Travis County employees as revealed on Tuesday, fewer motorists would bother paying citations mailed by the state of Texas or the city of Austin.

"There are some employees using county vehicles on a toll road and they are not paying the tolls themselves," the county's executive manager for transportation, Joe Gieselman, said. "Therefore the toll agency sends the county the bill because they go search the license plate and sure enough Travis County is the title holder and, voila, we have the toll is not being paid. And none of these departments have budgets or authorization to pay tolls."

The problem, however, extends far beyond toll skipping. Over the past four years, county employees have been blowing through red lights and parking in handicapped zones. County law enforcement vehicles have been nabbed for parking in tow-away zones. In total, the county has racked up $10,000 in unpaid parking fines with Austin, and that city now wants its money. After the city began booting county vehicles to encourage those officials to pay up, the county commissioners court scheduled a meeting to discuss the issue.

"We have three pages of unpaid fines from the city of Austin," Alicia Perez, the county's executive manager for administration, explained. "Some are just expired meters, but others are parking in handicapped zones, parking in loading zones, clearly illegal parking going on with county vehicles."

When the county receives these tickets from cities like Austin, they are randomly forwarded to different offices within the government building, including the purchasing office and the county auditor.

County commissioners complained that the citation notices contained little information that could be helpful in identifying the actual driver of the vehicle. Although most government agencies shrug when an individual vehicle owner complains after receiving a photo ticket in the mail without any way to know who may have been driving the car, Travis County claimed the process created a massive burden on the county officials who want to pass the cost of the fines and penalties to the actual driver.

"There is an administrative expense to doing this because you have to complete an affidavit for each one of these violations that occur," purchasing manager Syd Grimes complained. "-- track down who was driving, who parked the vehicle. Complete the affidavit that is submitted to either the toll authority or the city of Austin or whichever city. So there's an administrative function involved there.

To address the issue of tolls, the commissioners recommended banning any county employee from ever using a toll road on duty.

"And each should start off with basically a prohibition against using those methods [using toll roads] to perform county jobs," County Judge Samuel T. Biscoe said.

Judge Sam Biscoe DWI Arrest Photo
[LINK: The Muckraker]

"You may need to use it as an emergency matter, but the emergency vehicle is exempted. Otherwise we expect you to use free roads the same way you've used them historically... There needs to be a prohibition against using tolls on county business. Then if you use tolls to carry out your job, you are responsible for paying the toll or any resulting fines, penalties, et cetera."

Commissioners will vote on a set of formal policy recommendations to address the issue on October 14.

© 2008

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE


"What TxDOT did is tantamount to fraud and collusion to break federal law."

TxDOT violates law, forced to pull plug on 281 toll road

TxDOT asks feds to pull clearance due to damaging evidence of rigged study and subsequent cover-up


Terri Hall
Texans Uniting for Reform and Freedom
Copyright 2008

San Antonio, TX, October 1, 2008 – Today, the Texas Department of Transportation (TxDOT) announced it is asking the Federal Highway Administration (FHWA) to withdraw its environmental clearance for the US 281 toll project in Bexar County.

Plaintiffs in a lawsuit to halt the toll project and advance an overpass plan, Texans Uniting for Reform and Freedom (TURF) and Aquifer Guardians in Urban Areas (AGUA), believe TxDOT’s move is in response to an email they obtained from a TxDOT whistleblower showing a biologist at TxDOT hired her own husband to "fix" the environmental study for 281 in order to get federal clearance for tolling an existing freeway.

She did this at the direction of top management at TxDOT, like David Casteel, the former San Antonio District Engineer now promoted to a position as the right hand man to TxDOT Executive Director Amadeo Saenz in Austin. TURF recently uncovered even more damaging emails. In its recent motion to compel TxDOT to hand over other key documents, TxDOT was put on notice that TURF knew about this illegal behavior and were about to depose witnesses under oath about it. Rather than come clean, TxDOT is again trying to hide their wrongdoing blaming the halt on a “technicality” and procurement “irregularities.”

Law enforcement to step in?

“We need law enforcement to get inside TxDOT and confiscate all of these email records and shine the light on this corrupt organization. What we know is likely just the tip of the iceberg,” urged TURF Founder Terri Hall.

"Calling this ‘irregularities’ is their way of covering-up the fact that they broke the law to pre-determine the outcome of the environmental work on 281 (see page 3 of this document) and deliberately suppressed a study (read it here and here) that warned of the potential damage the aquifer. What TxDOT did is tantamount to fraud and collusion to break federal law. TxDOT has conducted itself illegally and shamefully, and you can bet we'll take them to task for this and so must law enforcement and the Legislature,” insists Hall.

TxDOT’s Spin

TxDOT’s Jefferson Grimes, Deputy Director of the Government and Public Affairs Division of TxDOT sent out an email stating:

“This week, the Texas Department of Transportation requested that the Federal Highway Administration withdraw its Finding of No Significant Impact on the U.S. 281 project in Bexar County.

“TxDOT recently discovered possible irregularities in the procurement of a scientific services contract that was utilized in the preparation of the Environmental Assessment. TxDOT is currently conducting an internal audit to establish relevant facts and will release the audit when it is complete. Following the conclusion of the audit, TxDOT will take necessary corrective actions and will work to prevent similar issues from delaying future projects.”

Looking forward

TURF recently launched a new campaign to inform citizens about the 281 toll road debacle and the non-toll plan promised by TxDOT in public hearings in 2001 and paid for with gas taxes since 2003 called TURF’s battle cry continues to be: “Give us the overpasses NOW! We don’t need toll taxes, just overpasses.”

Background on the litigation

On August 7, 2008, TxDOT asked a Bexar County federal district court for a 60 day delay in the TURF/AGUA 281 toll road lawsuit so they could beg the Federal Highway Administration (FHWA) NOT to yank their environmental clearance for the US 281 toll project. Through the discovery process of the lawsuit, Judge Fred Biery required TxDOT to hand over the complete administrative record for US 281, including all the financials and the documents from when the improvements were funded with gas taxes that would keep US 281 a FREEway. It was discovered that TxDOT withheld key documents not only from the public and TURF attorneys, but also the FHWA!

There is an email record that shows TxDOT tried to "fix" the environmental work for US 281 to pre-determine a "Finding of No Significant Impact" (or FONSI) BEFORE the environmental study was even conducted.

"They rigged it! That is a DIRECT VIOLATION OF FEDERAL LAW," says Hall.

TxDOT then hired a company, HNTB, to do the so-called "independent" environmental study even though HNTB has a MAJOR conflict of interest, in that, the Alamo Regional Mobility Authority (ARMA) also hired HNTB to do the preliminary engineering for all their toll projects. So HNTB had a vested interest in a "Finding of No Significant Impact" (or FONSI).

(Note: HNTB is lead consultant for the Trans-Texas Corridor: CLICK HERE)

Then, it's also been discovered that TxDOT purposely withheld a key study from a geologist they hired that stated the potential “severe” harmful effects of the toll road on the Edwards Aquifer. Such a study didn't conclude what TxDOT wanted it to in order to get clearance from the feds, so they intentionally hid the report and failed to submit it to the FHWA who uses that crucial information in their decision on whether or not to give federal approval for the project.

TxDOT submitted these documents to the feds who completely re-examined its previous approval of the US 281 toll road. It's likely the feds were set to yank their environmental clearance for the toll road in light of this deception by TxDOT. As damage control, TxDOT beat them to it before the FHWA or the court did it for them. Of course, TxDOT and the RMA blame the citizens who brought TxDOT's deception to light for killing the toll project instead of their own willful dishonesty.

“They were FORCED to come clean through a lawsuit brought by concerned citizens, not by them being forthcoming," notes an outraged Hall.

TURF is seeking to have law enforcement get involved to prosecute the willful violation of federal law by TxDOT.

For more information on the TURF/AGUA US 281 lawsuit, go here and here.

More information on the history of the 281 freeway to tollway plan:

© 2008

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE


Fraudulent 'scientific study' stating giant 281 tollway would not damage the Edwards Aquifer derails 'fast tracked' plans

Toll Dreams Very Much in Doubt Following Stunning Defeat

Plans for network of toll roads across the county may be crushed


By Jim Forsyth
WOAI (San Antonio, TX)
Coptright 2008

Anti toll road activists are vowing to pursue criminal indictments against local and state transportation planners, and ambitious dreams of a wide network of toll roads across Bexar County are in shambles, following Wednesday's stunning decision by the Texas Department of Transportation to pull its approval for new toll lanes on U.S. 281, 1200 WOAI news reports.

E-mails obtained by 1200 WOAI news indicate the approval for the $1.3 billion project was yanked after 'TxDOT uncovered possible irregularities in the procurement of a scientific services contract that was utilized in the preparation of the environmental assessment.'

That means the scientific study which led officials to determine that the project would not damage the environment, or the Edwards Aquifer, was flawed, and the result could be that no toll lanes will ever be allowed in that area.

"Our reaction is that we are absolutely pleased," said Terri Hall of Texans Uniting for Reform and Freedom. "The grass roots have been waiting for this for a long time."

Henry Munoz III of the Regional Mobility Authority says officials have no choice but to put a halt to the project.

"The project is dead for now, and as appointed officials our job has been and continues to be to safeguard the interests of the citizens of Bexar County. Today that means we have to place a project on hold that we still believe is incredibly important to the future of our community."

Hall says anti toll groups will now push officials to move forward with a long-shelved proposal to build overpasses on US 281 at Encino Rio, Evans Road, and Stone Oak Parkway, a project which she says would cost far less and would have the same effect, to eliminate the rush hour congestion on 281 which they say is caused by the poorly calibrated traffic lights at the three intersections.

"The citizens from day one have been asking them to put in the freeway overpasses which have been funded and paid for with our gas taxes since 2003," Hall said.

At one point, RMA leaders had bold plans for a network of toll roads which would radiate out from 281 to include new toll lanes on Loop 1604, and Interstates 10 and 35 across the length and width of Bexar County. The 281 project, in fact, had been labeled as the 'starter project' by ambitious RMA engineers, who spoke of a time line in which toll roads would be in place across the county as soon as 2020. Today, those dreams have been derailed, and may not materialize in the coming generation, if at all.

"Even if this thing can move forward, it clearly is not a process which will be able to proceed any time soon," Munoz said.

He says the losers in the stunning decision are the motorists of north Bexar county.

"Congestion remains a serious problem, this decision does not eliminate any of that congestion, and the congestion will continue to grow," Munoz said.

Hall says her effort will continue past lobbying for the construction of overpasses on 281. She wants to see the RMA abolished.

"We don't think we need a tolling authority," she said. "We have never thought that toll roads were the best thing for San Antonio. And they have never given the citizens any kind of vote or even a say in this process."

Hall has long claimed that the drive to build toll roads in Bexar County has been 'fast tracked' by the RMA, the Metropolitan Planning Organization, and other unelected groups, which have ignored the comments of the citizens and have been determined from the beginning to 'shove toll roads down the throats of the people.

And Hall says she will also call on the Texas Attorney General and other prosecutors to investigate the officials who pushed forward with the toll plans.

"This was not a technicality," she said. "They got caught breaking the law. And that word they used, 'irregularity,' is a spin for having submitted a fraudulent study to the federal highway department."

She says she has documentation detailing the extent of the fraud, and will be presenting that documentation to prosecutors.

© 2008

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE


"The U.S. 281 tollway project has been brought to its knees."

Legal roadblock halts 281 tollway


Patrick Driscoll
San Antonio Express-News
Copyright 2008

For the second time in 2 1/2 years, the U.S. 281 tollway project has been brought to its knees, and officials say it could take up to two years to get back up.

Federal officials pulled the project's environmental clearance after the Texas Department of Transportation, reviewing records as part of a lawsuit filed in February, found problems with contracts to study endangered species.

Alamo Regional Mobility Authority officials, who had taken over the project from TxDOT, heard the news Wednesday.

“The 281 North toll project is stalled,” board member Henry Muñoz announced. “We don't know what the future of that project might be. There will be no projects moving forward on 281 North in the foreseeable future.”

As a somber Muñoz talked at the TransGuide center, agency Chairman Bill Thornton and Director Terry Brechtel were rushing to Austin to meet with Texas Transportation Commission Chairwoman Deirdre Delisi “to discuss the future of the 281 North Tollway and the future of the RMA.”

After the meeting, Brechtel said all is not lost, but it could take a year to fix the environmental study and up to another year to get another federal clearance and fight off another possible lawsuit.

“It will eventually come back to the community,” she said of the toll plan.

Toll-road critics and environmentalists, who filed the lawsuit to demand a more detailed environmental study, claimed yet another victory, a refrain to a similar lawsuit that stopped the project in early 2006.

“It's a huge victory for the taxpayers and the citizens who have worked tirelessly to get TxDOT and the RMA to come clean,” said Terri Hall, founder of Texans Uniting for Reform and Freedom.

Plaintiff attorneys said the tainted contracts are just some of several problems uncovered by the lawsuit.

“They're waving the white flag,” said Bill Bunch of Save Our Springs Alliance. “That's what it seems like.”

Thornton said in a statement that everybody lost.

“Today is a sad day,” he said. “Anyone celebrating the end of this project, at this time, is also celebrating a stay in the status quo, a stay of congested roadways, of increasing frustrations and increased wastes of fuel.”

A $328 million construction contract for the toll road includes up to $60,000 a day for inflation, Brechtel said.

Officials had hoped to resolve the lawsuit and start work early next year, but the delay means the contract will have to be renegotiated or bid again.

Total project costs, including design, engineering and land acquisition, is expected to top $470 million.

The agency so far has spent about $6 million on plans for toll lanes along both U.S. 281 and Loop 1604. And TxDOT spent $2 million and a year updating the environmental study after the first lawsuit.

Hall and others say toll officials are to blame for refusing to scrap the 8-mile tollway and instead build a 3-mile freeway plus some overpasses as first planned.

They say the environmental studies never seriously considered impacts to motorists or the Edward's Aquifer.

Portions © 2008 KENS 5 and the San Antonio

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE


Wednesday, October 01, 2008

TxDOT "technicality" breaks federal law. Massive 281 toll road is yanked to avoid embarassment at the hands of the Feds and in the courts

Anti-Toll Groups Victorious Over 281N Toll Road Death

TURF President says "irregularities" are actually broken laws


By Berit Mason
WOAI (San Antonio, TX)
Copyright 2008

Terri Hall says the news that a planned toll road along a stretch of 281N is
dead in the water is the sweet victory she’s been fighting for.

Hall is president of TURF, a group which has been against toll roads.

“ ‘Irregularities’ is their way of covering over the fact that they broke the law to pre-determine the outcome of the environmental work on 281 despite knowing it would damage the aquifer and have severe economic impacts,” stated Hall Wednesday, on the afternoon of the announcement.

The Alamo Regional Mobility Authority, the toll road planning group, told the press at 2:15pm that a technicality tripped up the project. Board member Henry Munoz III said that a TXDOT commissioned environmental study done by a consultant had been called into question over the weekend. Munoz said that meant that all conclusions drawn from the report would be suspect, enough of a problem to tank the entire plan.

Hall says it’s just desserts for violating federal law. She says the toll road was never needed. To tackle increasing congestion on that highway, she and her group want overpasses to be built. She says the focus of her group now is to push for their construction.

Hall says, “This is their way of pulling the clearance themselves before the feds and the courts do it for them. TxDOT has conducted themselves illegally and shamefully, and you bet we’ll take them to task for this and so must the Legislature.”

© 2008

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE


"Federal environmental clearance for 281 Toll Road Project project is being pulled."

US 281 Toll Road Stopped Again


By Patrick Driscoll
San Antonio Express-News
Copyright 2008

For the second time in 2 1/2 years, the U.S. 281 toll project has been brought to its knees.

The Alamo Regional Mobility Authority said it was informed by the Texas Department of Transportation that federal environmental clearance for the project is being pulled.

"The project's not going to happen," said RMA spokesman Leroy Alloway.

A lawsuit filed in February, backed by environmentalists and toll road opponents, demanded a more detailed environmental study, which could take another year or two or more.

TxDOT told RMA officials that clearance was pulled after irregularities were discovered in the procurement process for a scientific services contract for the environmental study that was cleared.

Following the announcement, RMA Chairman Bill Thornton, Director Terry Brechtel and board member Jim Reed rushed to Austin to discuss the situation with Texas Transportation Commission Chairwoman Deirdre Delisi.

However, Thornton said it appeared the government action could forestall the construction of additional lanes of any kind on U.S. 281 for years to come.

"No additional capacity, be it tolled or non-tolled, will be allowed to occur within the 281 North corridor in the foreseeable future," he said.

© 2008 San Antonio

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE


TxDOT will perform an internal audit of contractor-driven 'environmental study' to push massive 281 toll road project

Million Dollar 281 Toll Project Halted by Study Controversy


Aubrey Mika Chancellor
WOAI (San Antonio, TX)
Copyright 2008

Millions of dollars, including a lot of taxpayer money, has already gone toward road projects along Northbound US-281. Now everything, including toll road construction, is on hold.

The problem has to do with the environmental study that was done for the area along US-281. The study itself is not in question, but the Texas Department of Transportation is looking into whether the people hired to conduct the study had some type of conflict of interest.

"Anything that either appears to have tainted the process or would have tainted the process, calls into question the findings themselves," said Henry Munoz, III of the Alamo Regional Mobility Authority.

The A.R.M.A. has local control over developing the 281 North project. The group now wants nothing to do with construction until the environmental study controversy is resolved.

Whether you support the idea of toll roads or not, one thing everyone can agree on is that something needs to be done about the traffic along US-281 outside Loop 1604.

"The people who travel to their homes everyday, who are looking for relief from the congestion, will not find any until this situation is resolved," explained Munoz.

The bottom line for the time being is there will be no road projects on US-281 until an internal audit by TxDOT reveals if the environmental study was compromised.

"We don't know what the future of that project might be," Munoz added.

Everyone involved in the project is in Austin, meeting with the Texas Transportation Commission. We may have a better idea of what's to come.

TxDOT officials say following the conclusion of the audit, they'll take necessary corrective actions and will work to prevent similar issues from delaying future projects.

© 2008

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE


"Finest feckin toll system the world!"

Barrier-free toll system making 10,000 errors-a-day


Belfast Telegraph (Ireland)
Copyright 2008

The new barrier-free tolling system on Dublin's M50 motorway is reportedly operating incorrectly for about 10,000 vehicles-a-day.

Reports this morning say the system is making mistakes on around 10% of the traffic using the West-Link toll bridge.

The system is failing to read electronic tags and number plates, with some motorists wrongly receiving payment demands and fine warnings.

Motorists whose cars were not on the M50 are also reportedly receiving bills for journeys they did not make.

The National Roads Authority is continuing to insist that the system will be "the finest in the world" when it is bedded in.

© 2008 Belfast

Motorists urged not to pay incorrect toll bills


Irish Times
Copyright 2008

Motorists have been urged not to pay bills for barrier-free tolling on the Dublin’s M50 if they have been billed incorrectly.

AA Ireland said motorists the “length and breadth of the country” are receiving payment demands for journeys they did not make on the road.

According to Department of Transport figures released today, the electronic tolling system failed to operate correctly for about 20,000 vehicles a day in the first week of its introduction. The failure rate has dropped since then, but still stands at about 10,000 vehicles a day, or 10 per cent of all West-Link traffic.

The failure rate results from the system failing to read tags or misreading them, failures in reading number plates and human error in matching photos of number plates with registered tag holders.

Failures were also caused by "back office" systems. These included tags not being read by the new sensors on an overhead gantry about 500 metres north of the former toll plaza.

The National Roads Authority said it was “eliminating the errors all the time". The spokesman added that, when bedded in, the new electronic tolling system would be "the finest in the world".

Meanwhile, some motorists have been sent demands for payment of "second-round" €40 fines, in advance of the deadline for such a fine. These second-round fines, amounting to €40 in addition to the toll charges, should come into effect after 14 days.

“This is infuriating,” said AA Ireland’s public affairs manager Conor Faughnan. “The thing is taking on a life of its own.

“Reams of paper are being sent out, causing waves of phone calls to come in. Frankly, it’s a mess. We were told to expect teething problems but this is unacceptable and will have to be resolved soon.”

“Motorists do not deserve this. The mess is not of their making, and they should not be expected to be the ones to resolve it. It is not reasonable to expect people to queue for ages to get through to a call centre. We are all busy enough. The NRA needs to put its house in order.”

The AA advised motorists not to pay and not be alarmed at the threat of a €5,000 fine or 6 months imprisonment. The group also said motorists should keep records, to inform eFlow about the problem by email or by post.

© 2008 Irish

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE