New Drill Ban as Oil Still Spews

BP is facing a slew of lawsuits and a criminal investigation as oil still gushes from their ruptured well in the Gulf of Mexico. Top Obama administration officials are also telling lawmakers in Washington that initial findings are showing definite “reckless conduct” leading up to the initial April 20th explosion.

Reuters.com reports the latest lawsuit will most likely be by investors, specifically the New York State pension fund—these investors are angry about the drop of the BP stock price. All the while, scientists estimate the oil leak is spewing up to 60,000 barrels a day!

According to reuters.com, Interior Secretary Ken Salazar said he would soon issue a new ban on deepwater drilling off the U.S. coast that would be more flexible than the suspension overturned a day earlier by a federal judge. He would like the new ban to include: when the ban would end and that it might allow oil companies to drill in certain low-risk areas. However there was no word on when Salazar would reissue this ban.

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The Latest on FICO’s Lawsuit and What it Means to Consumers

Earlier today the Wall Street Journal posted a new story on Fair Isaac, or as they refer to the company, the “keepers of your credit history.” For those of you who may not know, Fair Isaac maintains the FICO scores most lenders use to determine your eligibility for a loan and potential interest rates. The lawsuit surrounds the difference between what the company calls bono fide FICO scores, and non-FICO scores, sometimes called “FAKO” scores. Check out the following article on the development courtesy of the Wall Street Journal.

In a suit filed in October 2006, FICO alleged that Experian and TransUnion deliberately marketed VantageScore to customers as the bona fide FICO score, when they are actually purchasing access to Experian or TransUnion’s proprietary score.

There’s argument over how credit scoring played into the current financial crisis, but there’s little argument that credit scores have become a fundamental part of our consumer economy in the past decade. The FICO score is comprised of information submitted by all three major credit-reporting agencies, Experian, TransUnion and Equifax.

However, all three agencies sell additional products, like credit monitoring services and their own scores. Although some consumers like seeing these separate scores, these scores aren’t what most lenders consult when deciding whether to extend credit. Sometimes, these scores can be very different from a FICO score — which FICO says causes confusion and error should a consumer apply for a loan.

“There’s been some confusion in the marketplace,” said FICO CEO Mark Greene. (Anyone who has seen one of those freecreditreport.com ads knows this.) Credit score ads online have proven particularly problematic, he says.

It poses a company challenge for FICO, which has to work with credit reporting agencies Experian and TransUnion to gather information from credit reports to formulate its scores.

In Twist, AIG Sues Its Benefactor Over Taxes

From The Wall Street Journal:

In the midst of its negotiation with the federal government over revised terms of its bailout, American International Group Inc. sued the U.S. on Friday over a disputed $306 million in taxes, interest and penalties.

The suit steps up a battle with the Internal Revenue Service largely over AIG's use of a controversial type of "tax arbitrage" transaction that authorities are challenging across the world.

With the company essentially suing its owner, the suit highlights the awkwardness of national control of AIG, which the government rescued from potential bankruptcy in September. If through litigation "you're moving money from one pocket to another, why should we be paying lawyers to do that?" says David Weisbach, a tax law professor at the University of Chicago.

"AIG is taking this action to ensure that it is not required to pay more than its fair share of taxes," said a company spokeswoman. An IRS spokesman declined to comment.

In its lawsuit, filed in U.S. District Court in Manhattan, AIG for the first time laid out significant details about its role in the so-called "foreign tax generators" in dispute with the IRS. The general nature of the disagreement was previously disclosed in company securities filings and reported by The Wall Street Journal in May.

The foreign tax credit transactions detailed in the lawsuit took place in 1997, but AIG said in a securities filing that it also expects the IRS to challenge similar deals from more-recent years. The company paid the amounts in dispute and is now suing for a refund.

IRS Announces OPR Settlement

Earlier in the week, the IRS’s Office of Professional Responsibility (OPR) announced a settlement agreement with three attorneys in connection to a $31 million municipal bond issuance involving River Park Square in Spokane, Washington in 1998 handled by the former firm of Preston, Gates & Ellis LLP. However, the IRS and the attorneys both agreed that the settlement does not constitute any admission of wrongdoing. According to the IRS, the ORP is pleased to have reached this agreement because it demonstrates their commitment to ensuring bond lawyers comply with Circular 230 when involved in tax-exempt municipal bond issuances.