Regulators Warnings Weren't Act On

WASHINGTON — Federal regulators warned offshore rig operators more than a decade ago that they needed to install backup systems to control the giant undersea valves known as blowout preventers, used to cut off the flow of oil from a well in an emergency.

The warnings were repeated in 2004 and 2009. Yet the Minerals Management Service, the Interior Department agency charged both with regulating the oil industry and collecting royalties from it, never took steps to address the issue comprehensively, relying instead on industry assurances that it was on top of the problem, a review of documents shows.

In the intervening years, numerous blowout preventers and their control systems have failed, though none as catastrophically as those on the well the Deepwater Horizon drilling rig was preparing when it blew up on April 20, leaving tens of thousands of gallons of oil a day spewing into the Gulf of Mexico.

Agency records show that from 2001 to 2007, there were 1,443 serious drilling accidents in offshore operations, leading to 41 deaths, 302 injuries and 356 oil spills. Yet the federal agency continues to allow the industry largely to police itself, saying that the best technical experts work for industry, not for the government.
Critics say that, then and now, the minerals service has been crippled by this dependence on industry and by a climate of regulatory indulgence.
“Everything that’s done by the oil industry is done for profit,” said Senator Bill Nelson, Democrat of Florida, who demanded this week that the Interior Department investigate these backup safety systems. “Throw in the fact that regulators have taken a lax attitude toward overseeing their operations, and you have a recipe for catastrophe.”

Last year, BP, the owner of the well that blew up in the gulf, teamed with other offshore operators to oppose a proposed rule that would have required stricter safety and environmental standards and more frequent inspections. BP said that “extensive, prescriptive” regulations were not needed for offshore drilling, and urged the minerals service to allow operators to define the steps they would take to ensure safety largely on their own.

Bills Would Set Limits on Financial Companies to Alleviate Risk

President Franklin D. Roosevelt signed the Glass-Steagall Act, passed in 1933, separating commercial and investment banking.

Wall Street Journal  -  Democrats are advancing proposals in Congress designed to limit the size and complexity of financial companies so that any collapse wouldn't damage the broader economy, a sign that lawmakers are responding to anti-Wall Street sentiment by toughening the administration's rewrite of finance rules.

The proposals would allow the government to break up healthy financial companies, and in some cases, would reassert rigid demarcations within finance that were cleared away in 1999, such as barring commercial banking firms and investment banking firms from merging.

Large financial companies, and even some Obama administration officials, are nervously watching the debate. Lobbyists for large financial-services companies, including J. P. Morgan Chase & Co., Bank of America Corp., Prudential Financial Inc., and MetLife Inc. scrambled in recent days to reach out to Capitol Hill aides, people familiar with the matter said.

Is the U.S. Going Socialist?

Credit-Card Fees Curbed

The Wall Street Journal - Sweeping new restrictions on credit-card companies would ban extra fees and fluctuating rates and arm tens of millions of consumers with more information on their debts.

Starting in February 2010, a Senate bill passed Tuesday would ban practices such as charging consumers to pay by phone and sudden surges in interest rates. Payments above the minimum due would be applied to balances with the highest interest rates. Information once relegated to tiny print must be made clearer, and consumers will soon be told how long it would take to pay off a balance if they pay only the minimum due.

The credit-card overhaul is set to become the first major legislative change to financial regulation outside housing since the emergency bank bailout enacted last fall, and it's not the last expected this year. Tuesday's 90-5 vote followed pressure from the White House on card issuers to improve fairness and transparency for the three-fourths of U.S. households that use credit cards. The measure is likely to pass the House in the coming days, and President Barack Obama is expected to sign it into law next week.

For consumers, the legislation aims to change habits -- perhaps leading them to make fewer big-ticket purchases with credit cards -- by clarifying the cost of using card debt. Several provisions in the legislation are geared toward forcing consumers to recognize how much they're paying in interest. Card issuers would also have to provide information on consumer-counseling and debt-management services.

Consumers also wouldn't face a retroactive interest-rate increase on existing balances unless payments are 60 days overdue. Even after that rate increase, a consumer could get the old rate reinstated by paying on time for six months.

The legislation bans a practice known as double-cycle billing, in which a late-paying consumer is assessed interest on a prior month's balance that had been paid in full, in addition to the late balance. Issuers also will have to send bills 21 days before the due date and provide at least 45 days' notice before changing any significant terms on a card.http://online.wsj.com/article/SB124272801896734045.html#mod=testMod

The Chill of Protectionism

The Wall Street Journal - DAVOS, Switzerland --The chill at last week's global economic conference wasn't from the Alpine air but from the threat of financial protectionism.

Public officials and business leaders warned that the global recession could sharply reduce lending across borders and lead to more subsidies tucked away in economic-stimulus plans. Investment of private capital to emerging markets this year is expected to be 82% lower than it was in 2007. The Institute of International Finance, an association of the world's largest banks, said that in emerging European countries, which had been engines of growth, the volume of flow is expected to be $30 billion in 2009, down from $254 billion in 2008.

"If you go around the world, then what you are seeing is the withdrawal of banks from a number of emerging-market countries with a pretty weak domestic-banking system," British Prime Minister Gordon Brown said in an interview with The Wall Street Journal. "What you've got then is a form of financial mercantilism. What you've got is people retreating to their home-based banking systems. It's the first stage of a financial protectionism that will lead eventually to the kind of trade protectionism that we've seen in the past."

A repeat of 1930s-style tariff wars is remote, but the new form of protectionism could play out in Depression-era style. If a few major nations favor their own industries at the expense of foreigners, invariably so will others, producing rounds of retaliation. That could choke off trade further -- the International Monetary Fund already predicts a 2.8% decline in trade in 2009 -- and clog a global engine of growth.http://online.wsj.com/article/SB123351377581636947.html

House Passes FAA Safety Legislation

WASHINGTON -- The House passed legislation that would overhaul the Federal Aviation Administration's approach to airline safety, following disclosures of lax oversight by agency inspectors.http://online.wsj.com/article/SB121677609061675827.html?mod=hps_us_whats_news

White House Refused to Open E-Mail on Pollutants

The New York Times - The White House in December refused to accept the Environmental Protection Agency’s conclusion that greenhouse gases are pollutants that must be controlled, telling agency officials that an e-mail message containing the document would not be opened, senior E.P.A. officials said last week.

The document, which ended up in e-mail limbo, without official status, was the E.P.A.’s answer to a 2007 Supreme Court ruling that required it to determine whether greenhouse gases represent a danger to health or the environment, the officials said.

This week, more than six months later, the E.P.A. is set to respond to that order by releasing a watered-down version of the original proposal that offers no conclusion. Instead, the document reviews the legal and economic issues presented by declaring greenhouse gases a pollutant. http://www.nytimes.com/2008/06/25/washington/25epa.html?ex=1372132800&en=b1495bebcccefc51&ei=5124&partner=permalink&exprod=permalink