Saturday, August 01, 2009

“Everything—including the flagship Macquarie Infrastructure Group—is now up for grabs.”

Toll-road lease tumbles in value

Ailing operator denies talk that it might sell its stake


Peter Schnitzler
Indiana Business Journal
Copyright 2009

Gov. Mitch Daniels expected his unprecedented $3.8 billion Indiana Toll Road lease to last 75 years. It may be tested after just three.

The foreign companies that privatized the property haven’t escaped the global economic downturn. As a result, the value of their investments has plummeted. Now, as they labor to shed enormous debt loads, analysts and the financial media are abuzz that the Indiana Toll Road lease could change hands.

In June 2006, Indiana struck a deal with Australia-based Macquarie Group Ltd. and Spain-based Cintra Concesiones de Infraestructuras de Transporte SA. Indiana got $3.8 billion upfront, money it’s used across the state to fund the Major Moves highway improvement initiative.

In exchange, the investors bought the right to collect tolls, with the obligation they manage, maintain and upgrade the road.

If the companies sell the lease, the new owners would take over that duty. Or if Macquarie and Cintra retain the lease but fail to live up to its terms, Indiana gets its toll road back.

The outlook for the state of Indiana might be least favorable under the status quo. That’s because the companies could try to dig themselves out of their financial hole by continuing to aggressively raise tolls.

Getting the road back, on the other hand, wouldn’t necessarily be an unfavorable turn of events for the state. Indiana would be on the hook for future improvements, but also would receive the toll revenue—which totaled $155 million last year.

Retaining ownership might be the most appealing option for Macquarie and Cintra, since any sale likely would reap a fraction of what they paid. Recent write-downs by Macquarie suggest the same lease deal today could fetch as little as $445 million.

Both companies have been exiting investments across the globe to reduce debt, and some Australian stock analysts say Macquarie is likely to do the same with its stake in the Indiana Toll Road, since vehicle traffic hasn’t met expectations.
Macquarie flatly denies that possibility.

“[Macquarie] is not in the market pursuing a sales process for any of its U.S. assets, including the Indiana Toll Road,” wrote Macquarie spokesman Alex Doughty in an e-mail. “Speculation suggesting otherwise is simply incorrect.”

The private operators, who thought they bought a cash cow, have already proven aggressive in hiking tolls. With so much invested, the companies have an incentive to milk the lease, taking advantage of language in the agreement that could permit annual toll increases of 5 percent or higher.

That’s exactly what House Speaker Pat Bauer, D-South Bend, an outspoken critic of the Indiana Toll Road lease, feared from the start.

“It was never meant to be a profit center or to make money,” he said of the highway, which opened in the mid-1950s. “It was meant to be low tolls for maintenance and, eventually, a free road.”

Unbreakable lease?

The Indiana Toll Road lease is hundreds of pages long, all legal screed. It details the operators’ duties and every other obligation a legal team led by locally based Ice Miller LLP and Chicago-based Mayer Brown LLP could negotiate. State officials consider it unbreakable. And they say it anticipates every conceivable risk, including operator bankruptcy.

“No question there are financial challenges out there for both [Macquarie and Cintra]. But that’s the nature of the economy,” said Leigh Morris, the Indiana Department of Transportation’s deputy commissioner for toll road oversight. “I have every confidence this is not going to turn out to be a problem for the state of Indiana.”

The lease mandates $4.5 billion in improvements over its seven-and-a-half decades. The companies already have made good on $191 million worth of upgrades, mainly by adding electronic tolling and widening congested stretches of the road. Another $157 million in projects are scheduled by the end of 2010.

The partnership is funding improvements through a $660 million bank loan, which Cintra spokesman Patrick Rhode said is scheduled to remain in place until 2014.

“The Indiana Toll Road is a long-term lease and during that term there will be peaks and valleys,” Rhode wrote via e-mail in response to IBJ’s questions.

“This is a valley, but the economy will recover and in the future we will be talking about the ITR and its performance peaks, not the valleys.”

Analysts’ main concern today is that weak tolling traffic could drain cash reserves used for debt service on the bank loan before 2014.

In a June 2009 report on the state of U.S. toll roads, Moody’s Investors Service gave the industry a negative outlook for the next year to 18 months, noting weak economic conditions have flattened traffic growth. On July 17, Macquarie reported revenue fell 5.1 percent on three of its four U.S. toll roads last year. The company also holds stakes in Chicago’s Skyway and Virginia’s Dulles Greenway. The exception was the South Bay Expressway in San Diego. Its traffic fell just 2.3 percent.

“For the most part, toll roads have demonstrated pricing power and financial stability through aggressive toll increases, or the reduction or elimination of discounts,” according to Moody’s report. “Careful budgetary management, the deferral of some capital projects, and lower construction costs have allowed most toll roads to maintain solid cash flows and credit metrics.”

The report adds: “We are concerned that accelerated traffic declines and toll increases (needed to support increased debt issuance) could soften financial ratios and cause more ratings downgrades.”

But Ian Myles, an equity analyst for Macquarie Securities—a unit of the Australian financial giant—downplayed the possibility of an Indiana Toll Road cash crunch.

“ITR has significant cash reserves. The purpose of those reserves is to ensure they meet their debt obligations during periods of weak traffic,” he said in an e-mail from Australia.

“Whilst they may never have forecast the extent of the weakness, there is significant cash on the balance sheet to meet the interest obligations. We estimate reserves of $110 [million]. … We do not believe the road is at risk of default.”

Unwinding portfolios

The Indiana Toll Road is just one of many infrastructure properties Macquarie and Cintra hold stakes in around the world, acquired in deals mostly funded with debt.

In the recession, both companies became over-leveraged and now are unwinding their portfolios. One of the Macquarie properties on the block is downtown’s Chase Tower, the state’s tallest building. The company listed it in January, with an asking price of $180 million.

“No matter how you look at it, Macquarie Group is in the process of unraveling itself from the tangled web of funds that once catapulted its executives into the salary stratosphere but now shackle every attempt to resurrect its tarnished image,” Ian Verrender, a columnist for the Sydney Morning Herald, wrote in June.
“Everything—including the flagship Macquarie Infrastructure Group—is now up for grabs.”

On July 17, Macquarie subsidiary Macquarie CountryWide Trust agreed to sell its 75-percent interest in 86 U.S. grocery-anchored shopping malls for $1.3 billion. Macquarie Communications Infrastructure Group is nearing completion of a $1.3 billion takeover by the Canada Pension Plan Investment Board.

Cintra has had its own problems. A March 24 analyst’s report by Credit Suisse called the Indiana Toll Road “Cintra’s most risky major asset,” pointing out disappointing traffic has led the company to curtail dividends. It also says refinancing Indiana Toll Road’s debt will be tough.

On July 27, Cintra sold its parking lot division for $634 million. The next day, Bloomberg News reported that Macquarie may sell its leases on the Chicago Skyway and Indiana Toll Road to raise cash.

But if either Cintra or Macquarie sold now, they would be locking in huge losses. Macquarie subsidiary Macquarie Infrastructure Group has written down its stake repeatedly in the past year, most recently in July. The valuation for its stake is 61-percent less than it was a year ago and suggests the entire lease may be worth just $445 million on the open market.

If either Macquarie or Cintra decided to sell their stakes, they’d need the state’s approval, said Ryan Kitchell, director of Indiana’s Office of Management and Budget.

Enforcing the lease

Before the deal, Indiana had been spending about $35 million annually on maintenance, INDOT’s Morris said. If the state got the road back, it would be on the hook for the billions of dollars in improvements the private partnership promised to make over the life of the lease.

But Indiana already has its $3.8 billion, noted University of Indianapolis finance professor Matt Will. If it repossessed the toll road, it might even be able to enter a fresh lease with somebody else, creating another payday.

“This is why it was such a genius deal, because of the upfront payment,” Will said. “It’s a no-lose situation for the state.”

For the state, the biggest challenge could be ensuring the current leaseholders live up to all aspects of their agreement despite their financial problems.

There’s a lot of middle ground between failure to meet the standards of one of the lease’s sub-clauses and complete default. INDOT’s Morris said the contract lays out a series of steps on the way to repossessing the road if the partnership fails to keep it up properly, each requiring 90 days’ notice. So far, he said, the companies have been in complete compliance.

“They have met every obligation they assumed under the lease,” Morris said. “They have been very good business partners.”

But Hoosiers, long used to low tolls, still are getting used to having the Indiana Toll Road run with a business mindset. In 2005, the year before the lease, state records show the Indiana Toll Road generated $96 million in revenue, almost entirely from tolls. By 2008, the private partnership had boosted the road’s revenue 62 percent, to $155 million.

From 1985 to 2006, the state kept the price for driving a car with two axles across the Indiana Toll Road’s 157 miles constant at $4.65. Today, the toll is $8 for the trip. And the price is far higher for larger vehicles. A truck with seven axles pays $69.75.

Those prices will rise. The lease allows operators, starting in 2011, to hike tolls every year by the percentage increase in the U.S. gross domestic product or by 2 percent, whichever is greater.

Over the last 25 years, U.S. Department of Commerce records show that U.S. GDP has risen an average of 5.7 percent a year. In 1984, when the United States came out of its last deep recession, GDP grew 11.2 percent.

“It is impossible to pinpoint future rates,” wrote Cintra’s Rhode. “But rest assured any adjustment will be within the provided parameters.” •

© 2009 Indiana Business Journal:

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Special interests still drive Texas Legislature

Friday, July 31, 2009

TARP Syndrome: "Goldman Sachs is now effectively a hedge fund subsidized by taxpayers."

Dead banks walking

More about Goldman's role in speculative toll road investments: [HERE]

Zombie Bankers


By John Browne
Asia Times
Copyright 2009

In recent weeks, the financial world has been dazzled by strikingly high earnings reported by our leading investment banks, or at least what we used to call investment banks. The numbers are reminiscent of another era, the one that came to a crashing end last September.

The euphoria is keyed to the record US$3.44 billion second-quarter profit announced by that branch office of the Treasury Department also known as Goldman Sachs. Wells Fargo, JP Morgan Chase, and State Street also chipped in with strong numbers.

The seeming health of these institutions, which are often referred to as the "backbone" of the US economy, is being cited as strong proof that economic recovery is at hand. This conclusion is based on selective memory and dubious logic.

The more immediate question hinges on whether this rise in bank and corporate earnings can be sustained in the face of increased commercial real estate mortgage defaults, rising unemployment, and increased savings? Would it then be likely that the broad stock market can continue to rally while the financial sector sputters? If not, a serious correction in US equity prices is a foregone conclusion.

In the early years of this century, major money-center banks and shadow banks incurred irrational risks and paid themselves unimaginably large bonuses. They were termed "gambling casinos" and deservedly drew fire when their bets went south. But instead of forcing these irresponsible firms to pay for their bad behavior, the federal government forced the general public to rescue them.

The Treasury and Federal Reserve instituted four key measures intended to boost the banks' earnings, which in turn, would boost their share prices, improve their capital ratios and force their share prices upward.

First, Congress was pressured into giving instant approval to the $750 billion Troubled Asset Relief Program (TARP). This massive sum of public money was designed to buy toxic assets from the banks. However, the government soon realized that buying some toxic assets would create a real price and thereby threaten the inflated value of other toxic assets held by financial institutions worldwide. The initial TARP plan was dropped in favor of injecting billions of dollars into certain banks, leaving the toxic assets on their books. Meanwhile, the true values of these toxic assets were officially camouflaged by the initiation of "exceptional" accounting changes.

The injection of free TARP funds enabled the recipient banks to enter a charred landscape that was, nevertheless, bristling with easy profits. For example, $10 billion of TARP funds enabled Goldman Sachs to make leveraged trades during the bear market rally of the last four months. Though this is the same activity that caused its downfall, Goldman now assumes a government guarantee on its risk-taking. With no limits on their appetite for risk, record profits are theirs for the taking.

Second, some of the shadow banks, such as Goldman Sachs and Morgan Stanley, were allowed to become bank holding companies. This change allowed them access to the Fed Window to borrow at zero percent interest. This greatly increased the profit margins of the banks day-to-day lending operations.

Third, the reduction of Fed rates to below 1% has steepened the yield curve, enabling banks to take 6% to 8%-plus spreads in lending to boost earnings.

Fourth, for the first time, the Fed is paying interest on bank reserves. This means that all banks can borrow at zero and lend back to the Fed at an interest rate spread of some 3%, thus boosting earnings further. The downside is that banks are discouraged from lending to risky companies and individuals while they can lend at no risk to the Fed. Therefore, despite political pressure for banks to lend, credit remains tight.

With the great privileges listed above, and with the competitive landscape improved by the disappearance of Lehman Brothers and the absorption of Bear Stearns and Merrill, it is little wonder that the surviving banks earned more. A firm like Goldman Sachs, with its stellar earnings, is now effectively a hedge fund subsidized by taxpayers.

However, toxic assets remain on the books of the banks. In addition, problems in the commercial property and consumer lending field loom menacingly.

The Fed has also acknowledged that, eventually, it will need to sharply increase interest rates to "mop up" all the liquidity its pouring into the world economy. This action alone, if the Fed ever has the nerve to execute it, could bankrupt every financial firm that survived the initial crisis.

Should earnings falter and banks stumble for a second time in the face of a looming $3.4 trillion commercial mortgage problem, the entire US stock market could follow suit.

That would be the crisis we've been predicting. Better be prepared.

John Browne is senior market strategist, Euro Pacific Capital. Euro Pacific Capital commentary and market news is available at It has a free on-line investment newsletter

© 2009 Asia Times Online:

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Thursday, July 30, 2009

"Although the hot topics discussed at San Angelo affect Central Texas, the meeting was held hundreds of miles away in San Angelo."

Transportation Commission passes toll road amnesty


News 8 Austin
Copyright 2009

The Texas Transportation Commission passed a proposed toll amnesty provision allowing for fine, fee, and penalty forgiveness at a meeting in San Angelo Thursday.

Toll amnesty and the future of at least one Central Texas project were topics on the plate at a special state transportation meeting, Thursday in San Angelo. At stake: The spending of millions of tax dollars.

Based on a final draft, the Texas Transportation Commission passed a toll amnesty provision that will allow people that have been delinquent in their toll road payments a chance to make good on those charges and possibly be forgiven a portion or all of their fines, fees and penalties.

While details pertaining to the amnesty are not finalized, the commission is taking into account the following considerations regarding the amnesty provision:
  • The recommended time period for the one-time amnesty is 60 days
  • The amnesty provision may be implemented by Sept. 1, 2009
  • Those who take advantage of the amnesty provision would have 90 percent of fees and fines waived but they would have to pay the remaining 10 percent plus the tolls
  • Payment of tolls is required by law.
Those who take advantage of the amnesty provision would have to sign up for a TxTag.

Toll amnesty would apply to roads operated by TxDOT only. Central Texas Regional Mobility Authority (CTRMA) roads, including U.S. 183-A would not fall under toll amnesty.

According to the Texas Transportation Commission, there are approximately 3 million delinquent tolls owed totaling approximately $50 million in fees and fines owed. The total amount of delinquent transactions that fall under this is 2.9 million.

The amnesty provision has sparked a heated debate.

Some people contend that this provision is unfair for all the people who have abided by the law and paid the toll road charges from the beginning.

Still, others say that the Texas Department of Transportation has been billing citizens unfairly, and this amnesty provision is reparation.

At a later date, the commission may also consider publishing in newspapers those people who are delinquent and don't take advantage of amnesty. The commission believes this would serve as a deterrent, essentially getting the people to pay through embarrassment.

The other controversial issue discussed at the meeting revolved around a nearly $32 million loan TxDOT would make to the CTRMA for the U.S. 290 East (Manor Expressway) Project.

The commission gave final approval for the loan to CTRMA for right-of-way and design of the project.

Several rights organizations have filed complaints with the Federal Highway Administration, saying the project unfairly impacts low income people and minorities who live in that area.

CTRMA disagrees with civil rights groups who filed a complaint with the Federal Highway Administration in regards to the Manor Expressway. CTRMA said there will be plenty of free lanes for those who don't want to use the toll road.

CTRMA commits to paying off that loan within two years.

CTRMA and the financier for TxDOT would have to work out the final terms.

Although the hot bed topics discussed at the San Angelo Convention Center affect Central Texas, the meeting was held hundreds of miles away in San Angelo.

As noted, the toll road amnesty is based on a final draft, but the commission approved the passing at Thursday’s meeting.

For more information click on the link to access the Transportation Commission's meeting schedule and agendas.

News 8's Bob Robuck will bring you more information from San Angelo later today.

© 2009 News 8 Austin:

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Goldman Sachs and other investment banks subpoenaed in fraud investigation

Senate Probes Banks for Meltdown Fraud



The Wall Street journal
Copyright 2009

WASHINGTON -- A Senate panel has subpoenaed financial institutions, including Goldman Sachs Group Inc. and Deutsche Bank AG, seeking evidence of fraud in last year's mortgage-market meltdown, according to people familiar with the situation.

The worst may not yet be over for some of America's biggest banks. As John McKinnon reports, some of the country's biggest lenders, including Goldman Sachs, have been subpoenaed by a Senate committee as part of a fraud investigation.

The congressional investigation appears to focus on whether internal communications, such as email, show bankers had private doubts about whether mortgage-related securities they were putting together were as financially sound as their public pronouncements suggested. Collapsing values for many of those securities played a big role in precipitating last year's financial crisis.

According to people familiar with the matter, the Senate Permanent Subcommittee on Investigations also has issued a subpoena to Washington Mutual Inc., a Seattle thrift that was seized by regulators in last year's financial crisis and is now largely owned by J.P. Morgan Chase & Co. It appears likely that several other financial institutions also have received subpoenas. Subcommittee investigators declined to comment. A Goldman Sachs spokesman declined to comment on the subpoena. Deutsche Bank declined a request for comment.

J.P. Morgan Chase spokesman Thomas Kelly declined to comment on whether the firm, which acquired the banking assets of Washington Mutual last September, had received any subpoenas, saying only "we cooperate with government agencies."

A subpoena from the subcommittee raises a number of factual questions and asks for various company correspondence, according to a person who reviewed it.

A Senate panel subpoenaed financial firms, including Goldman, seeking evidence of fraud in the mortgage market meltdown.

The subpoenas are the latest in a series of moves by Congress to trace the roots of the financial crisis. Goldman has been a favorite target for criticism in Washington.

A House panel voted this week to allow regulators to bar banks from offering executive-pay plans that encourage too much risk. The move came after Goldman Sachs reported record profits for the second quarter and said it has set aside $11.4 billion during the first half of the year to compensate employees.

Earlier this week, a bipartisan group of 10 members of Congress sent a letter to Federal Reserve Chairman Ben Bernanke, questioning whether Goldman Sachs is being too lightly regulated and too generously backed by taxpayers.
An idea for taxing high-value health insurance plans has even become known on Capitol Hill as the "Goldman Sachs tax," after criticisms of its executives' $40,000 health plans. A Goldman Sachs spokesman declined to comment on the criticisms from Congress.

The subcommittee is headed by Sen. Carl Levin (D., Mich.), who has been a driving force behind many of its probes.

© 2009 The Wall Street Journal:

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Another $10.9 billion of debt will boost TxDOT toll road plans for the next two years

Borrowing, stimulus boost TxDOT road plans

Agency expects a record $5.9 billion in construction and maintenance spending in coming fiscal year.



By Ben Wear
Austin American-Statesman
Copyright 2009

The rags-to-riches-to-rags trajectory of state highway spending is about to zag upward again, officials said Wednesday, thanks to a cobbling together of federal stimulus funds, massive new borrowing and some help from the Legislature this spring.

But the surge from the federal stimulus plan and the borrowing will be mostly exhausted over the next two years, leaving the Texas Department of Transportation debt-ridden, once again dependent on flat-to-ebbing gas tax revenue and in need of more help from the Legislature in 2011.

In the 2003-06 period, TxDOT spent $4 billion to $5 billion annually building and maintaining roads. That dropped to $3 billion last year.

But the agency now estimates it will spend a record $5.9 billion on projects in the fiscal year beginning Sept. 1 and $5 billion in the 2010-11 fiscal year, TxDOT Chief Financial Officer James Bass said Wednesday.

Central Texas will benefit along with the rest of the state from TxDOT's financial recovery, temporary though it could be, including:

TxDOT has reaffirmed its commitment to spend about $200 million to complete the Interstate 35/Ben White Boulevard interchange by adding four flyover bridges and also to widen Texas 195 from north of Georgetown to the Bell County line. A contract for the I-35 project should be awarded in October, said Carlos Lopez, TxDOT's Austin district engineer, and the Texas 195 work is expected to occur in 2010 and 2011.

"We all breathed a sigh of relief" when the commission in June decided to borrow another $3 billion of gas-tax-backed bonds, Lopez said, allowing the two projects to proceed.

The Central Texas Regional Mobility Authority is expecting to receive $90 million in stimulus funds and expects an additional $31 million today when the Texas Transportation Commission acts on a state infrastructure bank loan, The authority would use the money to begin the U.S. 290 East tollway project in the coming months.

The area also has been promised another $95 million in stimulus funds for various road and rail projects.

The commission, taking advantage of what have been lower-than-expected contract bids, probably will approve seven more maintenance projects at its meeting today. The additional $6 million in stimulus-funded projects will be used to resurface highways from Llano to Austin to Caldwell County

TxDOT finances have been on a roller coaster this decade.

When Gov. Rick Perry took office in early 2001, the agency was using the pay-as-you-go financial model it had employed since its 1917 founding, using a combination of gas tax and vehicle fees to pay for projects as money became available.

But Perry, aided by the late Ric Williamson as chairman of the Transportation Commission, pushed through changes in state law that will allow the state to borrow about $17 billion for roads.

In addition, Perry and Williamson enlisted private companies to build, operate and profit from building state-owned toll roads, bringing in a handful of large upfront payments.

That private toll road initiative, however, ran into public and legislative resistance in 2007 and has mostly stalled out as public policy. But the financial vestiges — principally a $3.2 billion payment from the North Texas Tollway Authority when it outbid a private group on the Texas 121 toll road — will allow TxDOT to build a number of large projects over the next two years.

The Legislature this spring also authorized TxDOT to borrow $2 billion and pay it back with the state's general tax revenue, rather than with gas taxes.

And it stopped the "diversion" to nontransportation purposes of about $365 million of gas tax revenue every two years, added money for TxDOT that will allow it to borrow an additional $3 billion — it already has sold about $2.9 billion in gas tax bonds earlier this decade — and pay it back over 20 or so years.

All that money, along with $2.25 billion of federal stimulus funds that the agency has already begun spending, will underwrite the gusher of road spending the next two years.

But the agency would need an additional $120 million in the 2012-13 biennium and years to come to make the debt payments on that new $3 billion of gas tax-backed borrowing. And agency officials say they hope that the Legislature in 2011 will authorize another $2 billion of borrowing against the general fund that voters authorized in 2007.

If not, Bass, the agency's chief financial officer, said the squeeze will resume by 2012.

"We're thankful we'll be able to deliver all these projects sooner," Bass said. "But we're also looking at years three, four, five and six and wondering how we'll be able to pay for projects."; 445-3698

© 2009 Austin American-Statesman:

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Wednesday, July 29, 2009

"I’m not available for possession by anybody.”

Drive time


San Antonio Current
Copyright 2009

All roads seem to lead to toll roads these days for the Metropolitan Planning Organization. How else to explain the contentiousness we’re seeing at the local agency, which controls the purse strings to more than $200 million in federal and state transportation funding?

Two years ago, the 19-member MPO passed over outspoken toll-road nemesis (and County Commissioner) Tommy Adkisson for chair, despite his clear seniority, in favor of let-’em-eat-tolls Councilwoman (and MPO newcomer) Sheila McNeil.

This year, the MPO couldn’t help but give the nod to Adkisson, given the fact that the chair position generally alternates between City and County reps, and with McNeil’s surprise selection in 2007, the City had controlled the seat for two consecutive cycles. Adkisson also credits new Mayor Julián Castro for getting behind his bid for the chairmanship.

While MPO’s toll-road boosters couldn’t keep Adkisson out of the chairman’s seat, they seem determined to limit the power that he’ll be able to wield. County Commissioner Kevin Wolff, one of the MPO’s most vocal toll-road boosters, pushed this week to change the agency’s bylaws to limit the chairman’s power to set the MPO’s agenda. At the July 27 meeting, Adkisson maintained his agenda-setting authority, but agreed to appoint a committee that will explore the suggested bylaws change.

Adkisson says he has an “excellent” relationship with Wolff, but he’s convinced that the drive to limit the chairman’s power is directly connected to the toll-road issue. And it’s true that MPO’s toll-road advocates never challenged McNeil’s agenda-setting ability, but suddenly expressed concern when Adkisson assumed leadership.

“We’ve never had an agenda-setting problem, except once, and that was under Councilwoman McNeil,” Adkisson says. “Other than that, we collaborate, we coordinate, we communicate, we cooperate. Why would I force somebody to go through all kinds of artificial contortions to have some measure brought forth? I think we ought to be a free forum for open minds and ideas that address the best interests of our transportation policy.

“I think this is coming from the highway lobby, many of whom are my friends,” Adkisson adds. “But they want to possess you. I’m not available for possession by anybody.”

Adkisson sees light rail as a viable transportation option for San Antonio to pursue, and says he wants to make MPO’s decision-making process more transparent. Or as he puts it, “I would like to put the jelly on the lower shelf.”

We hope he means grape.

© 2009 San Antonio Current:

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"The crisis may seem to be over because the major banks of Wall Street are speculating well with government subsidies. That's a dangerous conclusion."

How You Finance Goldman Sachs’ Profits

An insider’s view of Wall Street’s rebound.

You too can replicate Goldman Sachs' path to riches!


By Nomi Prins
Mother Jones
Copyright 2009

This is perhaps the most important thing I learned over my years working on Wall Street, including as a managing director at Goldman Sachs: Numbers lie.

In a normal time, the fact that the numbers generated by the nation's biggest banks can't be trusted might not matter very much to the rest of us. But since the record bank profits we're now hearing about are essentially created by massive federal funding, perhaps it behooves us to dig beneath their data.

On July 27, 10 congressmen, led by Rep. Alan Grayson (D-Fla.), did just that, writing a letter to Federal Reserve Chairman Ben Bernanke questioning the Fed's role in Goldman's rapid return to the top of Wall Street.

To understand this particular giveaway, look back to September 21, 2008.

It was a frenzied night for Goldman Sachs and the only other remaining major investment bank, Morgan Stanley. Their three main competitors were gone. Bear Stearns had been taken over by JPMorgan Chase in March, 2008, Lehman Brothers had just declared bankruptcy due to lack of capital, and Bank of America had been pushed to acquire Merrill Lynch because the firm didn't have enough cash to survive on its own.

Anxious to avoid a similar fate, hat in hand, they came to the Fed for access to desperately needed capital. All they had to do was become bank holding companies to get it. So, without so much as clearing the standard five-day antitrust waiting period for such a change, the Fed granted their wish.

Bank holding companies (which all the biggest financial firms now are) come under the regulatory purview of the Fed, the Office of the Comptroller of the Currency, and the FDIC. The capital they keep in reserve in case of emergency (like, say, toxic assets hemorrhaging on their books, or credit derivatives trades not being paid) is supposed to be greater than investment banks'. That's the trade-off. You get access to federal assistance, you pony up more capital, and you take less risk. Goldman didn't like the last part. It makes most of its money speculating, or trading. So it asked the Fed to be exempt from what's called the Market Risk Rules that bank holding companies adhere to when computing their risk.

There was the $10 billion it got from TARP (which it repaid), the Keep in mind that by virtue of becoming a bank holding company, Goldman received a total of $63.6 billion in federal subsidies (that we know about—probably more if the Fed were ever forced to disclose its $7.6 trillion of borrower details).$12.9 billion it grabbed from AIG's spoils—even though Goldman had stated beforehand that it was protected from losses incurred by AIG's free fall, and if that were the case, would not have needed that money, let alone deserved it. Then, there's the $29.7 billion it's used so far out of the $35 billion it has available, backed by the FDIC's Temporary Liquidity Guarantee Program, and finally, there's the $11 billion available under the Fed's Commercial Paper Funding Facility.

Tactically, after bagging this bounty, Goldman asked the Fed, its new regulator, if it could use its old risk model to determine capital reserves. It wanted to use the model that its old investment bank regulator, the SEC, was fine with, called VaR, or value at risk. VaR pretty much allows banks to plug in their own parameters, and based on these, calculate how much risk they have, and thus how much capital they need to hold against it. VaR was the same lax SEC-approved risk model that investment banks such as Bear Stearns and Lehman Brothers used, with the aforementioned results.

On February 5, 2009, the Fed granted Goldman's request. This meant that not only was Goldman getting big federal subsidies, but also that it could keep betting big without saving aside as much capital as the other banks. Using VaR gave Goldman more leeway to, well, accentuate the positive. Yes, Goldman is a more risk-prone firm now than it was before it got to play with our money.

Which brings us back to these recent quarterly earnings. Goldman posted record profits of $3.4 billion on revenues of $13.76 billion. More than 78 precent of those revenues came from its most risky division, the one that requires the most capital to operate, Trading and Principal Investments. Of those, the Fixed Income, Currency and Commodities (FICC) area within that division brought in a record $6.8 billion in revenues. That's the division, by the way, that I worked in and that Lloyd Blankfein managed on his way up the Goldman totem pole. (It's also the division that would stand to gain the most if Waxman's cap-and-trade bill passes.)

Since Goldman is trading big with our money, why not also use it to pay big bonuses? It's not like there are any strings attached. For the first half of 2009, Goldman set aside $11.4 billion for compensation—34 percent more than for the first half of 2008, keeping them on target for a record bonus year—even though they still owe the federal government $53.6 billion, a sum more than four times that bonus amount.

But capital is still key. Capital is the lifeblood that pumps through a financial organization. You can't trade without it. As of June 26, 2009, Goldman's total capital was $254 billion, but that included $191 billion in unsecured long-term borrowing (meaning money it had borrowed without putting up any collateral for it). On November 28, 2008 (4Q 2008), it had only $168 billion in unsecured long-term borrowing. Thus, its long-term unsecured debt jumped 14 percent. Though Goldman doesn't disclose exactly where all this debt comes from, given the $23 billion jump, we can only wonder whether some of it has come from government subsidies or the Fed's secret facilities.

Not only that, by virtue of how it's set up, most of Goldman's unsecured funding comes in through its parent company, Group Inc. (Think the top point of an umbrella with each spoke being a subsidiary.) This parent parcels that money out to Goldman's subsidiaries, some of which are regulated, some of which aren't. This means that even though Goldman is supposed to be regulated by the Fed and other agencies, it has unregulated elements receiving unsecured funding—just like before the crisis, but with more of our money involved.

As for JPMorgan Chase, its profit of $2.7 billion was up 36 percent for the second quarter of 2009 vs. the same quarter last year, but a lot of that also came from trading revenues, meaning its speculative endeavors are driving its profits. Over on the consumer side, the firm had to set aside nearly $30 billion in reserve for credit-related losses. Riding on its trading laurels, when its consumer business is still in deterioration mode, is not a recipe for stability, no matter how much cheering JPMorgan Chase's results got from Wall Street. Betting is betting.

Let's pause for some reflection: The bank "stars" made most of their money on speculation, got nearly $124 billion in government guarantees and subsidies between them over the past year and a half, yet saw continued losses in the credit products most affected by consumer credit problems. Both are setting aside top-dollar bonuses. JPMorgan Chase CEO Jamie Dimon mentioned that he's concerned about attracting talent, a translation for wanting to pay investment bankers big bucks—because, after all, they suffered so terribly last year, and he needs to stay competitive with his friends at Goldman. This doesn't add up to a really healthy scenario. It's more like bad déjà vu.

As a recent New York Times article (and many other publications in different words) said, "For the most part, the worst of the financial crisis seems to be over." Sure, the crisis may appear to be over because the major banks of Wall Street are speculating well with government subsidies. But that's a dangerous conclusion. It doesn't mean that finance firms could thrive without the artificial, public-funded assistance. And it certainly doesn't mean that consumers are any better off than they were before the crisis emerged. It's just that they didn't get the same generous subsidies.

Additional research by Clark Merrefield.

Nomi Prins is an economist and frequent contributor for Mother Jones. Her most recent book is It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street. To read more articles by Nomi Prins, click here.

© 2009 Mother Jones:

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Tuesday, July 28, 2009

"The pro-tollers attempted to change the rules in the middle of the game, and because they failed to FOLLOW THE RULES, it was defeated. "

Adkisson becomes Chair, declares war on toll roads


Terri Hall
San Antonio Express-News
Copyright 2009

After four years of relentless battles between taxpayers and an unresponsive MPO Board stacked with TxDOT votes (and close to 50% un-elected appointees), the grassroots can declare MAJOR VICTORY as toll opponent Bexar County Commissioner Tommy Adkisson became the MPO Chair by unanimous vote.

Adkisson gave an inspiring speech about turning the MPO in a new direction, one responsive to the PEOPLE. He declared war on bureaucratic, unintelligible gobbledy-gook that the MPO has been accustomed to doing to keep the public in the dark, pledged support for 21st century mass transit, and for restoring our highways (fix it first) before the rush to pave over Texas. But it wasn't without more relentless power plays, including a tie vote, pulling down agenda items containing toll roads, and points of order to overrule the Chair elsewhere in the meeting. The meeting agenda was prepared by staff and parts of it were not approved by Adkisson in advance. The agenda was rife with errors that didn't comply with the Open Meetings Act and multiple requirements in the MPO's own bylaws. Adkisson challenged the items as he sought to clean-up the MPO's act.

Good Guy State Rep. David Leibowitz stepped up to the plate to aid in defeating a proposed coup to effectively neuter the Chair's power to set the agenda by a pro-toll faction on the Board led by Commissioner Kevin Wolff.

Wolff in sheep's clothing

Wolff led the Nominating Committee, whose charge by the Board was to recommend candidates for Chair and Vice Chair, and the Committee acted outside the scope of its authority to recommend a change to the bylaws that would give the Executive Committee (formed under pro-toll Sheila McNeil in 2008) the authority to approve agendas, not the Chair. Changes to the bylaws did not appear on the agenda, and therefore were not an actionable item without violating the Open Meetings Act, so it ultimately torpedoed Wolff's coup d'etat.

A Bylaws Committee was formed to study the issues further and make recommendations to the Board, so as usual, the power grab will come up again. But the grassroots will be ready!

The pro-tollers attempted to change the rules in the middle of the game, and because they failed to FOLLOW THE RULES, it was defeated. The timing is obviously spurious given the fact that the Chair of the MPO has set the agenda throughout its nearly 40-year history. Only now, when a toll opponent assumes leadership of the MPO, does Wolff et al, feign concern over the Chair having "too much power."

I pinned Wolff down when he left mid-meeting and asked about the suspicious timing. He said he has problems with the Mayor and County Judge having sole authority to set the agenda at the City and County as well. My advice? Start there first. After he successfully strips the agenda-setting power from his pro-toll Dad, County Judge Nelson Wolff, and Mayor Julian Castro (which is never gonna happen), then Wolff may have a shred of credibility with this challenge to the MPO Chair. But until then, no deal.

Even today, Wolff's staff is telling angry constituents that he opposes tolls on existing roads. Well, Wolff must be a wolf in sheep's clothing, judging by his attack on his own colleague who he claims to agree with.


The media left after the Chair battle, thinking it was the end of the fireworks, only to have a flame ignite later in the meeting over the REAL crux of the issue before the MPO...the attempt to keep improvements to 281 & 1604 marked as toll roads in the MPO short-range plan. The MPO bylaws require the changes to the short-range be explicitly listed on the agenda in two meetings, and it failed to do so.

So Adkisson went to the mat and tried to pull down the agenda item, refusing to advance ANY plan that contained toll projects and that violated the MPO bylaws, but pro-toll, State Senator Jeff Wentworth, joined by Councilman John Clamp, led the charge to overrule the Chair (can't imagine why Wolff sees any need to worry about the Chair having too much power after today when they overruled the Chair on several votes - tollers continue to wield plenty of power, thanks to the un-elected staffers and TxDOT's two reliable votes).

So Wentworth conveniently invoked Robert Rules in order to approve a plan that had violated the MPO's rules (its own bylaws!). See how the other side only follows the rules when it advances their agenda?

Ultimately, the short range plan was approved, keeping 281 & 1604 toll projects for now, but Adkisson has called a work session within the next 30 days to dig into the various projects and pots of money, and vowed to find a way to get these projects paid for without tolling them.

Kudos to Chairman Adkisson! We FINALLY have a tireless advocate leading the MPO. The next major update of the short-range plan will happen in 3 months. The grassroots will remain vigilant to see to it that the 281 & 1604 toll projects get NIXED, and that 281 & 1604 get FIXED, and stay FREEways!

So for now, today's battle ended in a draw.


(19 Board members, 17 present, 2 absent - Commissioner Chico Rodriguez, Mayor Chris Riley)

Who voted to give TxDOT more say over the MPO's agenda?

Sen. Jeff Wentworth
Com. Kevin Wolff
Councilman John Clamp
Councilwoman Jennifer Ramos (who later corrected the record to say she was in favor of Adkisson)
Two TxDOT employees
Three City appointees (capital improvement director, public works, and the City's Via appointee, OUTRAGEOUS given the fact Via has NO greater advocate than Adkisson) These are ALL pro-toll Mayor Hardberger Mayor Castro (or call at 210-207-7060) & tell him these guys HAVE TO GO!

Who voted to overrule Adkisson to approve the short-term plan that violated the MPO bylaws and kept 281 & 1604 toll roads?

(Out of 15 present, Wolff, Leibowitz, absent for this vote - Rodriguez, Riley absent from meeting)

Sen. Jeff Wentworth
Councilman John Clamp
Councilwoman Jennifer Ramos
Two County appointees (including one Via appointee) WHAT GIVES?
Two TxDOT employees
Three City appointees (capital improvement director, public works, and the City's Via appointee, OUTRAGEOUS given the fact Via has NO greater advocate than Adkisson) These are ALL pro-toll Mayor Hardberger Mayor Castro (or call at 210-207-7060) & tell him these guys HAVE TO GO!

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"Sub-regional planning commissions remain in existence along the I-69 route despite recent legislative efforts to disband them. "

Grass roots group remains concerned about highway planning

Related Link: Trans-Texas Corruption


By Donna McCollum
KTRE-TV (Lufkin - Nacodoches)
Copyright 2009

NACOGDOCHES, TX - Thursday night a half a million dollars was approved by the U.S. House for I-69 Texas. The funds will be used to expedite the U.S. Transportation's environmental review to advance I-69. Today the I-69 Alliance publicly praised the legislation. The funding level for I-69 FY 2010 will be determined later this fall when the Senate spending bill is determined.

Meanwhile, the issue remains a topic in national, state and local politics. Tuesday night in Nacogdoches, another group is talking transportation issues with State Representative Jim McReynolds. The Piney Woods Sub-Regional Planning Commission (PWSRPC) is keeping a close watch on future transportation issues, includiing a loop by-pass around Nacogdoches, Lufkin and as far south as Diboll.

It's a good idea for moving people quickly, but could be a bad one if the route hampers accessibility to other roadways and towns. "Say on South Street, here in Nacogdoches, where you've already got a lot of businesses and you've got a lot of hotels," Nacogdoches County Judge Joe English began. "Are they going to try to move it (roadway) over a little bit either one side to the left or the right because they don't want the expense of having to replace all those businesses?," the judge questioned. "And so when they start moving it we've got the same issues we had before and that's taking the grass roots mom and pop property."

Sub-regional planning commissions remain in existence along the I-69 route despite recent legislative efforts to disband them. Members are determined to have their voices heard before the Texas Department of Transportation. "We want them to know that we're still looking at it and we're still addressing it and when the planning and the meetings are put together we want to be a part of them," English said.

The commission is gathering information for a rural transportation plan. Members have gatherings planned in Garrison and Chireno. "We'll develop a plan for each community and what their needs and concerns are for transportation in their community," Jan Tracy, a PWSRPC volunteer explained. "And then we'll come back and compile all that together and present that to TxDOT."

Another concern is the financing method chosen. The group questions toll roads and who will own the toll money.

It's a grass roots mission that remains even after the state says the Trans Texas Corridor has gone away.

© 2009 WorldNow and KTRE:

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“What happened here is wrong, stupid and probably illegal.”

How Firms Wooed a U.S. Agency With Billions to Invest

Wal Street


The New York Times
Copyright 2009

WASHINGTON — As a New York money manager and investment banker at four Wall Street firms, Charles E. F. Millard never reached superstar status. But he was treated like one when he arrived in Washington in May 2007, to run the Pension Benefit Guaranty Corporation, the federal agency that oversees $50 billion in retirement funds.

BlackRock, one of the world’s largest money-management firms, assigned a high school classmate of Mr. Millard’s to stay in close contact with him, and it made sure to place him next to its legendary founder, Laurence D. Fink, at a charity dinner at Chelsea Piers. A top executive at Goldman Sachs frequently called and sent e-mail messages, inviting Mr. Millard out to the Mandarin Oriental and the Ritz-Carlton in Washington, even helping him hunt for his next Wall Street job.

Both firms were hoping to win contracts to manage a chunk of that $50 billion. The extensive wooing paid off when a selection committee of three, including Mr. Millard, picked BlackRock and Goldman from among 16 bidders to manage nearly $1.6 billion and to advise the agency, which Mr. Millard ran until January.
But on July 20, the agency permanently revoked the contracts with BlackRock, Goldman and JPMorgan Chase, the third winner, nullifying the process. The decision was based on questions surrounding Mr. Millard’s actions during the formal bidding process. His actions have also drawn the scrutiny of Congressional investigators and the agency’s inspector general.

An examination of thousands of pages of e-mail messages and other internal documents obtained by The New York Times shows the other side of the story: the two firms aggressively courted Mr. Millard, so extensively that they may have compromised federal contracting rules or at least violated the spirit of the law, contracting experts said. The records also illustrate the clash between Washington’s by-the-letter rules on contracting and the culture of Wall Street, where deals are often struck over expensive meals.

“Both sides should have known better,” said Steven L. Schooner, co-director of the Government Procurement Law Program at the George Washington University, who reviewed some of the material for The Times. “What happened here is wrong, stupid and probably illegal.”

BlackRock and Goldman, as well as Mr. Millard, all said that nothing improper happened either before the formal competition for the contract started last July, or while the competition, which concluded in October, was under way.

“Among the reasons that Mr. Millard was selected to head the P.B.G.C. is his understanding of the industry, his extensive background and the quality of his professional relationships,” said Stanley M. Brand, a lawyer for Mr. Millard. “He correctly separated his personal relationships from his official actions.”

A review of the documents shows that the third winner, JPMorgan Chase, had contacts with Mr. Millard before and during the competition, but did not display the same intensity as the other two.

Goldman and BlackRock saw Mr. Millard’s selection as a major business opportunity, the records show. “This is a very big fish on the line,” one BlackRock executive wrote to another, discussing the government official.

Mr. Millard had at least seven meetings with Goldman executives in the year before the bidding started, and 163 phone contacts, the documents show. BlackRock had less frequent contact — 39 phone calls in that 12-month period. But one BlackRock executive told another that Mr. Millard had assured him in April, four months before the bidding, that he wanted to hire the company to help manage some of the money, company documents show.

“It sounds like we may have a tiger by the tail here,” one BlackRock executive wrote in an e-mail message.

The agency takes over pension programs when private companies go bankrupt. For years there was talk it might have to be bailed out by the government, and Mr. Millard, like many others, saw shifting from low-yield conservative investments like Treasury bonds to those with higher risks and higher potential returns as a way to solve the problem.

Before coming to Washington Mr. Millard had been a money manager for Prudential Securities and Lehman Brothers, a senior economic development official in New York City while Rudolph W. Giuliani was mayor, a member of the New York City Council and a Republican nominee for Congress.

Within weeks of his arrival at the agency, he told Goldman Sachs about his plans to shake up the agency’s portfolio.

“I just became head of the pension benefit guaranty corp in dc appointed by pres bush,” he wrote in a June 2007 e-mail message to John S. Weinberg, a vice chairman and a member of the family that has helped run Goldman since the 1930s. Mr. Millard told Mr. Weinberg, a longtime acquaintance, that he wanted to revamp the agency’s investment strategy.
“Is there a team at goldman that does this and that would be interested in pursuing this business?” “Yes, absolutely!” Mr. Weinberg wrote back.

Almost immediately, Goldman started to work informally for Mr. Millard by providing one of its top pension analysts at no charge to prepare at least six reports over the coming year, based on internal agency data, detailing possible investment strategies.

Goldman also coached Mr. Millard as he sought to sway skeptics in the Bush administration.

“Here is the sound bite we discussed in this morning’s meeting,” wrote Mark Evans, a Goldman managing director, in a January 2008 e-mail message to Mr. Millard, seven months before the formal competition would begin.

Mr. Millard consulted with other industry experts during this period, but none so much as Goldman. George Koklanaris, Mr. Millard’s chief of staff, said in retrospect that the detailed analytical work Goldman did for Mr. Millard, and the repeated contacts, might have created an appearance that Goldman had a competitive advantage. Even so, he says he believes Mr. Millard did nothing improper.

Mr. Millard’s lawyer and a Goldman spokeswoman disputed that the firm gained any advantage from this work. The spokeswoman, Andrea Raphael, said the firm had no way of knowing that Mr. Millard was giving them more attention than other prospective bidders and that it was the agency’s job to identify potential conflicts.

The most important player in BlackRock’s attempt to win the business was David Mullane, who had known Mr. Millard since the two attended the same high school. The friendship continues; they both live in Rye, N.Y., and attend the same church.

In his conversations and e-mail messages with the agency head, Mr. Mullane often mixed family and business, talking about his golf game, his vacations, their children, their church (“Great job at Mass again this week,” he wrote in one), invariably shifting into a discussion of his interest in the government work.

“Hope to see you at the Beefsteak Dinner tomorrow,” he wrote to Mr. Millard, referring to a Friday night gathering at Church of the Resurrection in Rye. “If you’re going perhaps we can catch up business for a few minutes before I thrash you in ping pong again.”

After a February meeting, months before the contract competition began, Mr. Mullane wrote his bosses: “Money in motion by February.”

There were more meetings through the winter and spring of 2008, as Mr. Millard prepared his plans. That April, there was a charity dinner at Chelsea Piers, along the Hudson River. One BlackRock executive wrote to another, “Try to get Larry seated next to Charles Millard,” referring to Mr. Fink, the company’s chairman and chief.

After the dinner, Mr. Millard wrote to Mr. Fink, “A pleasure meeting you. No need to respond. I will follow up with you briefly in future re our investment policy and with your team re other specifics.”

The e-mail messages show that Mr. Mullane, a managing director at BlackRock, understood that the firm needed to move quickly, before the presidential election.

“He is a lame duck political appointee as soon as the November election occurs,” he wrote to one BlackRock colleague last June, as the bidding was about to start. “When the new man comes in at P.B.G.C., all bets are off for us.”

As he prepared to open the competition, Mr. Millard, working with Mr. Mullane, sought to restrict the bidders to the biggest players by stipulating that the winner must have thousands of employees and a global operation, e-mail messages show. That decision cut out many boutique firms hoping to compete and gave BlackRock, Goldman and other large firms an advantage. "Neither the company nor any of its employees did anything improper or illegal," Bobbie Collins, a BlackRock spokeswoman, said.

Mr. Millard, through his lawyer, denied telling BlackRock that he wanted to select the company even before the competition started. Mr. Millard’s lawyer also said he told the agency about his friendship with Mr. Mullane. But Jeffrey Speicher, an agency spokesman, said in a written statement that Mr. Millard “did not disclose his relationship with the BlackRock executive.” While the competition was getting started, Mr. Millard began his job hunt.

He started by contacting Mr. Weinberg of Goldman Sachs, sending him his résumé after meeting with him in New York last June.

Mr. Millard’s e-mail messages show that, while the bidding was under way last fall, he also spoke with Rick Lazio, a former House Republican who is now a senior executive at JPMorgan Chase, to discuss career options.

In both cases, spokesmen for the executives said that while Mr. Millard was at the agency, they did not take actions to help him find a new job.

The e-mail messages show that within two weeks of the selection of the winners, Mr. Millard sought help from Karen Seitz, a Goldman executive involved throughout the process, in getting interviews with prominent industry players.

“I spoke with Dennis Kass after our meeting,” Ms. Seitz wrote last November, referring to the chief executive of a $60 billion asset management firm, one of half a dozen interviews she arranged. “He would love to meet with you in N.Y.”

To date, Mr. Millard remains unemployed. His lawyer noted that Mr. Millard had honored the one-year prohibition in federal law against negotiating a job with a firm that he helped select as a contractor. While still at the agency, his lawyer said, Mr. Millard also paid his own bill whenever he dined out with industry officials, including Ms. Seitz.

But Mr. Schooner, the government contracting expert from George Washington University, said even asking for career help from a company he had just picked as a contractor raised serious questions. “As a federal official you are not supposed to be discussing, bartering or leveraging a new job while you are involved with parties in a procurement,” he said. “It is a clear black-and-white rule.”

Senator Herb Kohl, Democrat of Wisconsin, plans to seek legislation to require more intense oversight of the agency by an expanded board.

“The whole process was flawed,” said Mr. Kohl, the chairman of the Senate Special Committee on Aging, which oversees the agency.

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Monday, July 27, 2009

Ports-to-Plains Toll Corridor: “It’s really connecting all the dots.”

Group promotes ports-to-plains highway


Amanda Casanova
Abiline Reporter-News
Copyright 2009

Duffy Hinkle, vice president of membership and marketing for the Ports-to-Plains Coalition, has a photo of a truck circling the Boise City, Okla., courthouse, carrying wind turbines and disrupting traffic. It is a common sight for the small town and others like it where heavy truck traffic causes congestion.

The coalition is hoping for congressional support for a highway expansion project it favors to construct a major freight roadway, better serve rural U.S. areas, and ease trade congestion.

“Everything that travels from south to north or north to south goes right through the middle of our town,” said Gloria McDonald, Big Spring City Council member and city representative for Ports-to-Plains. “We’re very interested in making a pathway.”

A 20-year plan would expand the highway between Laredo and Denver to four lanes at an estimated cost of $2.6 billion. The expansion would allow for an increase in the flow of goods from Mexico to Canada. It is also estimated that the roadwork would generate $4.5 billion in new jobs, sales taxes, lodging and manufacturing.

“Economic development has always followed transportation,” Hinkle said. “Enhanced infrastructure for transportation of goods and services will increase economic development opportunities in rural communities throughout the corridor.”

New Mexico, Oklahoma, Nebraska, Wyoming, Montana and North and South Dakota are encouraging regional projects, which together with the Texas-Colorado segment, would connect Laredo to the Canadian border, spanning a total distance of 2,300 miles.

Produce, livestock, petrochemicals and oil and gas equipment are transported on the roadway. Combined, the nine states accounted for about $43.2 billion in corridor truck exports to Mexico in 2007 and $38.2 billion in imports.

While the city of Big Spring, Howard County, Howard College, the chamber of commerce and the economic development board are all supporting the highway, the town’s 25,000 people were not as thrilled with the project in the beginning.

“Like anything new, people were bitterly opposed at first,” McDonald said. “Three years of town hall meetings, they’ve come to understand the kind of traffic we’re trying to get to go around is not the kind that is going to stop and buy barbecue or get gas.”
McDonald said she has assured residents that Big Spring visitors and travelers will not be affected by the road.

“We’ll still have the traffic that will stop and eat and buy gas,” she said. “The other road is not a shorter route, so we’ll tell travelers to go through town.”

Launched in 1997, the Lubbock-based coalition has worked with the project’s founder, U.S. Rep. Randy Neugebauer, and other state and federal officials to secure project funding.

“As far as opposition, we see very little,” Hinkle said. “People realize the potential of what the corridor can do for their communities.”

The multilane highway would connect with the Heartland Expressway and Theodore Roosevelt Highway, leading to the Canadian border.

In May, the Province of Alberta in Canada joined the coaltion in hopes to transport Canadian oil and agriculture.

“They can get the oil where it needs to be more quickly,” McDonald said. “It’s really connecting all the dots.”

In Big Spring, the McMahon-Wrinkle Airport could be used for moving shipments.

“If goods are moving from Colorado and somebody wants to switch, we have the area to store containers,” she said. “We’re probably also the only one on the route that has a truck-rail-air connection here.”

While Big Spring welcomes the route, McDonald said other parts of Texas should as well.

“This road is also a priority of Texas Department of Transportation because it will relieve the 1-35 corridor,” she said. “It’s much simpler to build roads in the wide open spaces than in the metro area.”

Within the next 25 years, Texas population is expected to balloon by 64 percent, with highway use estimated to increase 214 percent.

“According to a Ports-to-Plains study,” Hinkle said, “upon completion of the corridor, the number of accidents will be reduced by almost half in the state of Texas as well as a significant reduction of accidents in the other Ports-to-Plains states. Safety is just one of many benefits that will result from upgrading highways from two to four lanes along the corridor.”

Several highway projects along the corridor have been started. In mid-July, Eagle Pass broke ground for State Loop 480, while Dalhart and Texline, towns near the New Mexico-Texas state line, have also began construction for the highway.


When: Sept. 30 Oct. 2

Where: Overton Hotel & Conference Center, Lubbock, Texas

Cost : $199 registration fee

How to register: Go to

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