Banks

Two Democratic senators have taken the Government Accountability Office (GAO) to task for failing to capture the extent of proprietary trading by banks, an oversight that they claim will make it difficult for regulators and policy makers to implement restrictions on proprietary trading, including trading of energy commodities.

Investment banks JP Morgan and Goldman Sachs Wednesday said they supported the Commodity Futures Trading Commission (CFTC) imposing federal position limits in the energy futures market to curb excessive speculation, but with one caveat — the limits should be on the ultimate holder of a contract, not the swap dealer when it acts as an intermediary between buyer and seller.

With $2 billion in debtor-in-possession (DIP) financing from two major banks, San Jose, CA-based Calpine Corp. as widely expected filed for voluntary Chapter 11 bankruptcy Tuesday in the same federal court in lower Manhattan in which Enron Corp. four years earlier made a similar filing.

Cheniere Energy Inc. announced that its wholly owned limited partnership, Sabine Pass LNG L.P. has signed agreements with HSBC Securities (USA) Inc. and SG Corporate & Investment Banking, an arm of Societe Generale, to arrange the $741 million debt component of the project financing for the construction of its liquefied natural gas (LNG) receiving terminal in Cameron Parish, LA (see Daily GPI, Sept. 7).

Cheniere Energy Inc. announced that its wholly owned limited partnership, Sabine Pass LNG L.P. has signed agreements with HSBC Securities (USA) Inc. and SG Corporate & Investment Banking, an arm of Societe Generale, to arrange the $741 million debt component of the project financing for the construction of its liquefied natural gas (LNG) receiving terminal in Cameron Parish, LA (see Daily GPI, Sept. 7).

One of bankrupt Enron Corp.’s federal examiners criticized Bank of America Corp., Royal Bank of Canada, KPMG LLP and PricewaterhouseCoopers LLP in yet another report on the corrupt company.

As the wholesale energy sector is rebuilt in the coming years, more financial institutions and more oil and gas producers are expected to lead the way, armed with strong balance sheets and investor goodwill. However, the new players will still need the expertise of energy merchants, and more partnerships are likely, experts believe.

‘Not so fast’ was the overwhelming message given Friday as the federal judge handling the Enron Corp. securities lawsuit ruled against several major financial institutions, law firms and Arthur Andersen, denying most defendants’ motions to be dismissed from the case. With the move, Enron shareholders will be able to begin the process of depositions and evidence discovery in the case, according to the University of California, which is lead plaintiff in the shareholders’ class action suit against the one-time energy giant.

CMS Energy Corp.’s immediate financial future was resting on the decisions of six banks late Friday as the Dearborn, MI-based company negotiated to have its $450 million credit line approved. Without approval by midnight Friday, CMS could be forced to default on a previous loan agreement and have to immediately repay a $300 million loan from the revolver. CMS also uses the credit line to operate and pay day-to-day expenses.