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January 16, 2009
THE AIG CREDIT FACILITY TRUST
The Federal Reserve Bank of New York announced today, with the full support of the Treasury Department, the formation of the AIG Credit Facility Trust. The Trust is being established for the sole benefit of the United States Treasury to hold the 77.9 percent equity interest in American International Group, Inc. (AIG) that will be issued in connection with the previously announced credit facility extended to AIG.
Three independent trustees have been selected by the New York Fed, in close consultation with the Treasury Department, to oversee this equity interest in the best interests of the U.S. Treasury. They are Jill M. Considine, former chairman of the Depository Trust & Clearing Corporation; Chester B. Feldberg, former chairman of Barclays Americas; and Douglas L. Foshee, president and chief executive officer of El Paso Corporation.
Pursuant to the terms of the Trust Agreement, the trustees will have absolute discretion and control over the AIG stock, subject only to the terms of the Trust Agreement, and will exercise all rights, powers and privileges of a shareholder of AIG. The trustees will not sit on the board of directors of AIG. Day-to-day management of AIG will remain with the persons charged with such management.
To avoid possible conflicts with the New York Fed’s supervisory and monetary policy functions, the Trust has been structured so that the New York Fed cannot exercise any discretion or control over the voting and consent rights associated with the equity interest in AIG. The New York Fed will, however, continue to monitor closely the financial operations of AIG in connection with its role as lender....
Calvin A. Mitchell III
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Jill M. Considine
Jill Considine served as senior advisor of The Depository Trust & Clearing Corporation (DTCC) and its subsidiaries (securities depository and clearing house) from August 2007 to May 2008, having served as chairman since August 2006, and as both chairman and chief executive officer from January 1999 to August 2006.
Prior to joining DTCC, Ms. Considine served as the president of the New York Clearing House Association, L.L.C. from 1993 to 1998. Ms. Considine served as a managing director, chief administrative officer and as a member of the Board of Directors of American Express Bank Ltd., from 1991 to 1993. Prior to that, Ms. Considine served as the New York State Superintendent of Banks from 1985 to 1991. Ms. Considine also serves as a director of the Atlantic Mutual Insurance Companies, The Interpublic Group of Companies, Inc., Ambac Financial Group, Inc. and is chairman of Butterfield FulcrumGroup, Limited.
Ms. Considine recently completed a six-year term as a member of the Board of the Federal Reserve Bank of New York where she served as chairman of the Audit and Operational Risk Committee.Ms. Considine is a member of the Council on Foreign Relations and the Economics Club of New York. She served on the Group of Thirty Steering Committee on global clearance and settlement and as a member and speaker at the World Economic Forum in Davos. Ms. Considine was a Presidential appointee to the Advisory Committee for Trade Policy and Negotiations from 2003-2004. She was named Six Sigma CEO of the Year Award in 2006 and one of Crain’s New York Business 100 Most Influential Women in Business.
Ms. Considine earned a Bachelor of Science degree, with honors, from St. John’s University and a Master of Business Administration degree, with honors, from Columbia University. She also attended Bryn Mawr College.
Chester B. (Chet) Feldberg
Chester B. Feldberg served as Chairman of Barclays Americas from 2000 until his retirement in 2008. Prior to joining Barclays Americas, Mr. Feldberg had been executive vice president in charge of the Bank Supervision Group at the Federal Reserve Bank of New York from 1991 through 2000. In total, Mr. Feldberg was an employee of the New York Fed for 36 years, starting as a lawyer in the Bank’s Legal Department before moving to the Credit and Capital Markets Group and then the Bank Supervision Group. He was also a member of the Basle Committee on Banking Supervision from 1993 through 2000.
Mr. Feldberg serves on the Board of Directors and Audit Committee of Mizuho Securities USA, a subsidiary of the Mizuho Financial Group. Mr. Feldberg earned a Bachelor of Laws degree in 1963 from the Harvard Law School and a Bachelor of Arts degree in economics in 1960 from Union College. He also attended the advanced management program at the Harvard Business School in 1974.
Douglas L. Foshee
Douglas L. Foshee is president, chief executive officer and a director of El Paso Corporation, which owns North America’s largest natural gas pipeline system and one of North America’s largest natural gas producers.
Prior to joining El Paso in 2003, Mr. Foshee served as executive vice president and chief operating officer for Halliburton. He joined Halliburton in 2001 as executive vice president and chief financial officer. Prior to that, Mr. Foshee was president, chief executive officer and chairman of the board at Nuevo Energy Company. From 1993 to 1997, Mr. Foshee served Torch Energy Advisors Inc. in various capacities, including chief operating officer and chief executive officer. He held various positions in finance and new business ventures with ARCO International Oil and Gas Company and spent seven years in commercial banking, primarily as an energy lender.
Mr. Foshee earned a Master of Business Administration degree from the Jesse H. Jones School at Rice University in 1992 and a Bachelor of Business Administration degree from Southwest Texas State University in 1982. He is also a graduate of the Southwestern Graduate School of Banking and Southern Methodist University.
Mr. Foshee serves on the boards of Cameron International Corporation, Children’s Museum of Houston, Texas Business Hall of Fame Foundation and Greater Houston Partnership. He also chairs the board of directors of the Federal Reserve Bank of Dallas, Houston Branch, and Central Houston, Inc. He is a member of the Independent Petroleum Association of America, Houston Producers’ Forum, 25 Year Club of the Petroleum Industry, National Petroleum Council, the Council of Overseers for the Jesse H. Jones Graduate School of Management at Rice University, Rice University’s board of trustees and KIPP’s board of trustees. Mr. Foshee is a recipient of the 2007 Ellis Island Medal of Honor for his commitment to helping children succeed and his leadership role in the business community.
In 2008, Mr. Foshee was named Distinguished Alumni at Texas State University.
December 31, 2004
Gas Price Scheme Alleged
State official seeks damages from Reliant
By John G. Edwards, Las Vegas Review-Journal
Outgoing consumer advocate Tim Hay, who negotiated a $48 million settlement for Nevada in a natural gas conspiracy case against El Paso Corp., filed a class-action lawsuit Thursday against Reliant Energy over an alleged anti-competitive gas trading scheme with Enron Corp.
The lawsuit accuses Houston-based Reliant of conspiring with and unidentified Enron official in a trading scheme to drive natural gas prices first up then down at Topock, a key trading point near Needles, Calif. It doesn’t see a specified amount of damages but Hay expects it will be in the billion-dollar range....
The lawsuit complains that Reliant and Enron employees used a technique called “churning” to increase the volume of gas traded. Reliant bought from and sold to Enron large quantities of gas, which made it appear demand was increasing. The gas was sold through the Enron Online trading platform between November 2000 and March 2001, according to the lawsuit....
For more, GO TO > > > I Sing the Hawaiian Electric; The Story of Enron
April 18, 2003
Wise leaves El Paso with bountiful booty
Former leader took home $50 million during last three years, could get $840,000 annually in retirement
by Jim Greer, Houston Business Journal
New filings with the Securities and Exchange Commission hardly mince words about the hastened exit of longtime El Paso Corp. leader William Wise, but they also outline some handsome parting perks and note that three of Wise's relatives have been on the company payroll.
"El Paso terminated the employment of William A. Wise" as chairman and CEO last month, the Houston energy company says in new SEC documents. Wise's previously announced departure as leader of the revamping company had previously not been described in such blunt terms. But Wise leaves anything but empty-handed, according to filings made late last week.
Also in the SEC documents, the company reveals that one of Wise's sons-in-law last year received $170,531 as an employee for El Paso or one of its subsidiaries. Joining him on the El Paso payroll was another of Wise's unnamed sons-in-law, who in 2002 was paid $74,174. And the filings mention that a Wise sister-in-law also was an employee, earning $62,779 from the company last year.
While his three relatives were averaging a combined salary in the low six figures in 2002, Wise's salary topped $1.4 million. Wise also received about $485,000 in additional compensation last year.
Although it cracks seven figures, the 2002 compensation package marks a pay cut for Wise. For the stretch from 1999 through 2001, excluding stock options, Wise's three years at the helm landed him a combined kitty well over $50 million. Thanks largely to an incentive payment, he earned over $33 million just in 1999.
But El Paso's fortunes have changed dramatically in the new millennium.
The company's stock hit a low of $3.33 on Feb. 13 of this year. Two days before the shares scraped bottom, El Paso announced that Wise would retire by the end of this year. On March 12, the timetable was accelerated.
As the CEO since 1990, Wise led El Paso's transformation from a pipeline operator into a sprawling, diversified energy company. But, Morningstar analyst Paul Larson notes, Wise stepped down "amid a rash of controversy."
A highly publicized industry meltdown decimated El Paso's energy trading business, notes Larson. The company is now winding down the money-losing trading operation.
And last month, El Paso finally settled some sticky regulatory issues, but only after agreeing to pay hundreds of millions of dollars to various parties in the western United States. RBC Capital Markets analyst Mark Easterbrook points out that as part of the settlement, El Paso recently took a hefty charge.
Heavy debt also has been weighing on Houston's largest company, which is aggressively selling assets to offset that burden.
"Leverage is still well above a comfortable level," notes Easterbrook.
Still, debt levels appear manageable for 2003, Easterbrook adds.
Looking for a leader
Another overhang that could continue to pressure El Paso shares in the near term is a proxy fight that dissident shareholders have waged for control of the company's board.
And there's the El Paso regime change.
Director Ronald Kuehn took the helm when Wise stepped down last month. With help from an executive search firm, El Paso is looking for a permanent CEO.
"One of El Paso's key challenges is restoring management credibility," according to a Goldman Sachs equity analyst.
Such a restoration could improve the company's access to the capital markets, the analyst adds.
The Goldman analyst also believes that a new CEO's strategy and performance could significantly impact El Paso shares, "positively or negatively."
Amid the tumult, the Houston energy company's stock has dropped more than 85 percent from above $50 a share in 2001 to about $7 this week. In less than a year, about $10 billion in market value has disappeared from El Paso shares, leaving the stock with a recent market capitalization just above $4 billion.
The stock's extensive tumble increasingly fueled shareholder cries for a change at the top.
For his part, Kuehn gets a salary of $100,000 -- per month -- while he serves as El Paso chairman and CEO. His bonus could double his salary. And SEC filings show that El Paso will maintain a Houston apartment for Kuehn, who has a residence in Birmingham, Ala.
Still, any corporate apartment occupied by Kuehn likely does not compare to the Houston residence that Wise purchased with El Paso's help. In 1997, El Paso loaned Wise more than $1.5 million to purchase the Houston residence, according to the SEC documents.
A month ago, Wise repaid El Paso the more than $1.5 million in principal, along with about $617,000 in interest, the SEC filings indicate.
But there's another part of the agreement. El Paso says it will purchase the Houston residence at Wise's request within two years of his termination. Such a purchase would come "at the greater of" the home's appraised value or the amount of Wise's investment in the residence, according to the SEC documents. Wise, perhaps temporarily, is apparently out of pocket over $2 million for the residence.
As El Paso's former chairman, CEO and onetime president, Wise also appears poised to receive estimated retirement benefits of $842,452 per year.
Last fall, Wise gave up one of his three titles in the initial stages of the management shuffle. He retained the top two posts at El Paso, but only for a few months.
Meanwhile, Wise will not stand for re-election as a company director at the El Paso annual meeting in June.
His diminishing role in the company is a far cry from his standing just two years ago.
In 2001, El Paso senior management received a financial pat on the back for completing the acquisition of Houston-based Coastal Corp. Separate from more than $5 million in other compensation landed by Wise in 2001, he received $3.5 million as a "special retention payment" awarded "in connection with the completion of the Coastal transaction and successful integration of the organizations."
September 24, 2002
Judge rules gas company
State now looking to recoup $4 billion from El Paso Corp.
The New York Times
WASHINGTON – An administrative law judge concluded yesterday that the El Paso Corp. illegally drove up prices for natural gas in California during the state’s power crisis in 2000 and 2001, the first time any federal regulatory official has determined there was widespread manipulation of energy supplies.
In the ruling, Curtis L. Wagner Jr., the chief administrative law judge at the Federal Energy Regulatory Commission, essentially validates the suspicions of California officials that El Paso, the nation’s largest natural gas company, withheld natural gas from the state, driving up the cost of electricity generated by gas-fired turbines.
“El Paso Pipeline withheld extremely large amounts of capacity that it could have flowed to its California delivery points,” Wagner said in the ruling. El Paso’s actions significantly increased the price of natural gas flowing to California, he added...
The ruling sent shares in El Paso down 36 percent, falling to $7.51, down $4.16.
California officials and one of the state’s major utilities, which argued the case in hearings at the energy commission, said they would seek to recover nearly $4 billion in what they contend were higher power and gas prices caused by El Paso’s actions.
The company also faces a number of lawsuits, which will be aided if the ruling is upheld....
El Paso predicted that the ruling would be reversed. In a statement, the chairman and chief executive of El Paso, William A. Wise, said: “We are disappointed that today’s proposed decision does not recognize the substantial record evidence supporting El Paso Natural Gas’ position that the pipeline was operated properly. . ”
In March 2001, The New York Times, as part of a reporting project with the PBS program, “Frontline,” disclosed that internal El Paso documents showed senior executives discussing a plan to give them more control of gas markets, including the “ability to influence the physical markets” to benefit the company....
Birds on the Power Lines
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Originally posted: May 23, 2009
Last Update May 25, 2009, by The Catbird
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