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2016-30/1376/en_head.json.gz/8498

Plum Creek Timber Company, Inc. Captures the Value of 454,000 Acres of Southern Timberland Plum Creek Timber Company, Inc. (NYSE: PCL) today announced it will form a joint venture with The Campbell Group LLC (Campbell Group) that will allow Plum Creek to capture the value of approximately 454,000 acres of investment grade Southern timberlands. The transaction values these timberlands at $783 million, or approximately $1,725 per acre. Plum Creek will contribute the timberlands to the joint venture and an investment fund sponsored by Campbell Group will contribute $783 million in cash. Campbell Group, a timber investment management organization based in Portland, Ore., will manage the joint venture lands for continued timber production. The timberlands are located in six states including Oklahoma, Arkansas, Mississippi, North Carolina, South Carolina and Georgia. "This transaction highlights the value of our Southern timberlands and is both earnings and cash flow accretive for Plum Creek. The formation of this joint venture allows Plum Creek to immediately capture substantially all of the value of these timberlands and to maintain an ongoing interest in their continuing cash flow and potential for growth," said Rick Holley, president and chief executive officer of Plum Creek. John Gilleland, president of Campbell Group, said, "On behalf of our investors, we are extremely pleased to enter into this joint venture with Plum Creek. The 454,000 acres are strategically located in well-established log markets and provide for management efficiencies with the Campbell Group's nearly 2 million acres of Southern timberland assets currently under management. We look forward to continuing to manage these lands responsibly and under the requirements of the Sustainable Forestry Initiative(R) Standard." Under the terms of the agreement, Plum Creek will receive a $705 million preferred interest in the joint venture. The preferred interest establishes the economic returns with respect to 90 percent of Plum Creek's investment. Additionally, Plum Creek will receive a $78 million common interest, representing the balance of its investment. Separately, Plum Creek will receive cash of $783 million through a loan from the joint venture. Campbell Group's investors will receive a common interest in the joint venture, representing approximately 91 percent of the joint venture's common equity. The joint venture's results will include income from timber operations as well as interest income from its loan to Plum Creek. The joint venture will make periodic distributions of cash from operations to both partners in accordance with their ownership interests. "Capital allocation remains Plum Creek's most important task. We expect to utilize half of the proceeds from this transaction to retire existing debt. The remaining proceeds will be used for general corporate purposes, including continued repurchase of the company's stock," concluded Holley. The agreement is expected to become effective during the fourth quarter of 2008. Further terms of the joint venture agreement are set forth in the agreements filed with the Securities and Exchange Commission. Supporting information providing additional details for this transaction is available in the "Investors" information section of Plum Creek's Web site at www.plumcreek.com. Goldman, Sachs & Co. served as financial advisor and Heller Ehrman LLP served as legal advisor to Plum Creek. Morrison & Foerster LLP and Schwabe, Williamson & Wyatt served as legal advisors to The Campbell Group in connection with the joint venture. Plum Creek is the largest and most geographically diverse private landowner in the nation with approximately 8 million acres of timberlands in major timber producing regions of the United States and 10 wood products manufacturing facilities in the Northwest. The Campbell Group, LLC (www.campbellgroup.com) is a full-service timberland investment management company headquartered in Portland, Oregon. The company is focused on investing in and managing high quality, investment grade forestland on behalf of institutional investors to produce superior risk-adjusted returns. Campbell Group currently manages approximately 2.4 million acres of investment grade timberlands in 13 states. Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Litigation Reform Act of 1995 as amended. Some of these forward-looking statements can be identified by the use of forward-looking words such as "believes,""expects,""may,""will,""should,""seek,""approximately,""intends,""plans,""estimates," or "anticipates," or the negative of those words or other comparable terminology. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions including, but not limited to, the cyclical nature of the forest products industry, our ability to harvest our timber, our ability to execute our acquisition or disposition strategy, the market for and our ability to sell or exchange non-strategic timberlands and timberland properties that have higher and better uses and various regulatory constraints. These and other risks, uncertainties and assumptions are detailed from time to time in our filings with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and the Securities Act of 1933, as amended. It is likely that if one or more of the risks materializes, or if one or more assumptions prove to be incorrect, the current expectations of Plum Creek and its management will not be realized. Forward-looking statements are not guarantees of performance, and speak only as of the date made, and neither Plum Creek nor its management undertakes any obligation to update or revise any forward-looking statements.

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2016-30/1376/en_head.json.gz/8683

Turners loses IAG contract WILLIAM MACE Turners Auctions has lost a contract with New Zealand's largest insurer IAG which is worth 15 per cent of its bottom-line profit. The listed auctioneer told the NZX this morning that its contract to sell damaged vehicles on behalf of IAG - which includes insurance brands State, AMI and NZI - was not being renewed. Turners said the contract generated "in excess of 15 per cent" of its net profit, which the company recently declared as $4.2 million for the year to the end of December 2012. It said the contract would finish within the next few months and would have a negative impact on the second half of the 2013 year "and beyond". Last week the company announced its seven-year chief executive Graham Roberts had "left the company's employ", with chairman Michael Dossor taking over initially. Chief operating officer Todd Hunter was later promoted to the CEO role. As recently as February 12, Roberts was giving investor presentations for the company which showed an outlook for volume in the damaged vehicles market would be "similar to last year". It said almost 25,000 vehicles were written off by insurers in New Zealand last year, down 5 per cent on the previous year. However the company commented that new customer wins in the damaged car market had given it "sound growth". Turners' annual profit was up 14 per cent from $3.7m the previous year.

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2016-30/1376/en_head.json.gz/8741

Currency Wars, What Are They Good For? Absolutely Ending Depressions Whether it's the 1930s or the 2010s, depressions are the only casualties in a currency war(Reuters)I don't know how it compares to peeing in your bed, as one anonymous senior Fed official put it, but a currency war is one of the surest ways to end a global slump. Despite what you may have heard, it was a big part of what stopped the vicious circle of the Great Depression.Currency wars are the best type of wars. Nobody dies, and everybody can recover, as long as everybody plays along. Here's how it works. One country devalues its currency -- in other words, prints money -- which, in a time of weak global demand, puts pressure on other countries to do the same, lest they lose out on trade. Then another country devalues, and so on, in a cascade of looser money. It's the invisible hand pushing for expansionary monetary policy when it's needed most. But there are a few caveats. For one, a currency war only makes sense during a global depression when short-term interest rates are mostly stuck at zero. It's about boosting monetary stimulus when conventional methods are out of ammo. For another, devaluing forever (a là China) is not a sustainable growth strategy. It might make sense for developing nations to subsidize export industries early on, but, eventually, this will only cause imbalances to build up, while robbing the domestic population of purchasing power. And finally, there's a risk that a currency war could turn into a trade war. In other words, countries will retaliate to expansionary monetary policy not with expansionary monetary policy of their own, but with tariffs. Presumably that's what our silver-tongued senior Fed official was getting at with this head-scratcher of a quote:Devaluing a currency is like peeing in bed. It feels good at first, but pretty soon it becomes a real mess.This fear of a currency war begetting a trade war is certainly serious, but it's made to sound more serious thanks to some bad history. Here's the erroneous story you might have heard (especially now that Japan's talk of more aggressive easing has revived fears of a currency war):After the Great Crash of 1929, countries abandoned the gold standard and devalued their currencies in a beggar-thy-neighbor battle to the bottom. This currency war turned into a trade war, with countries eventually resorting to tariffs and counter-tariffs, as they tried to grab a hold on an ever-shrinking pie of demand. The consequent collapse in world trade is what made the Great Depression so great, and set the stage for the trade war to turn into an actual one.Scary stuff. But not quite true. The reality is the trade war started before the currency war, and the latter jump-started recovery wherever it was tried. The infamous Smoot-Hawley tariff in the U.S., the first salvo in the trade war to come, was actually passed in June 1930, more than a full year before any country devalued its currency. It wasn't until September 1931 that Britain abandoned the gold standard ... and that's when things get a bit complicated. It's hard to accuse Britain of "competitive" devaluation here, because it had no choice but devaluation; it had simply run out of gold. Nonetheless, other countries responded to Britain's increased competitiveness by increasing their trade barriers; in this case, the currency war, such as it was, did exacerbate the ongoing trade war, as Gavyn Davies of the Financial Times points out.But then a funny thing happened. The punishment for Britain's economic weakness was a recovery. Ditching gold gave Britain (and everybody else who did so) the freedom to pursue more aggressive monetary and fiscal policies than the "rules of the game" of the gold standard had allowed.* As you can see in the chart below (via Brad DeLong) from Barry Eichengreen's magisterial work on the depression, Golden Fetters, recovery followed devaluation everywhere. There was no reward for financial orthodoxy in the 1930s. The countries that stayed with the gold standard the longest, the so-called Gold Bloc of France, Belgium, and Poland, were the last to begin growing again. In other words, the currency war didn't deepen the depression; it ended it.And that brings us to one last, stupid question. How did beggar-thy-neighbor policies kickstart growth even after world trade had already collapsed? In other words, how did stealing a trade advantage help so much when there wasn't much trade to steal? Well, it's not entirely, or even mostly, about stealing trade. Indeed, as Scott Sumner points out, the U.S. trade balance actually worsened in 1933 after FDR took us off gold, even as the economy quickly reversed its death-spiral and began a virtuous cycle. It's easiest to frame devaluation as grabbing demand from abroad, but it's really about increasing demand at home. Devaluation means printing money, and more money during a liquidity trap means more demand, period. It also allows more stimulus spending than a fixed-exchange rate system (like the gold standard) would. The next time you hear someone lamenting the "destructive devaluations that followed the Great Depression," remember to ask them -- what was so destructive about ending the most destructive depression in modern history? The only thing we have to fear is fear of currency wars itself. Depressions are the only casualties in these kind of conflicts.------------------------* There were two exceptions. The gold standard did not constrain looser monetary policy in the U.S. and France in the early years of the depression, as both had more than enough gold to back more credit growth, but chose instead to sterilize their gold inflows out of fear of nonexistent inflation in the face of actual deflation. This stockpiling drained everybody else of gold, and consequently made staying on the gold standard impossible. Even the U.S. and France had to eventually abandon it to reverse years of deflation. Matthew O'Brien is a former senior associate editor at The Atlantic. previousThe Better Team Lost the Super BowlnextJust Because Mexicans Can Become U.S. Citizens Doesn't Mean They Will

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2016-30/1376/en_head.json.gz/8767

(Hemera Technologies/Getty Images) FINANCE FEBRUARY Got $400,000 to invest? It's time to consider a broker DAVID ASTON Wednesday, Feb. 19, 2014 7:53PM EST Wednesday, Mar. 19, 2014 12:25PM EDT David Aston, CFA, MA, is a freelance writer specializing in financial topics.If you have an investment portfolio worth about $400,000 and you want advice on how to manage it, it's time to consider moving beyond mutual funds to a full-service broker.Brokers can help you with a far wider choice of investments than the typical mutual fund rep, and often for lower fees. Minister of Finance Jim Flaherty speaks at a post-budget event in Ottawa on Wednesday, February 12, 2014. THE CANADIAN PRESS/Fred Chartrand Video: Why most Canadians won't benefit from income splitting In this Jan. 30, 2013, file photo, Arun Kumar, a senior product manager for BlackBerry, shows off the new BlackBerry Z10 during the global launch of the company's new smartphones in Toronto. BlackBerry says the number of large business and government clients that have installed or are testing its mobile device management service has risen about 20 per cent over the past six months. Video: Why BlackBerry's CEO is seeing red over T-Mobile's new iPhone offer “Mutual funds are great things. But as my account grows, they charge me too much for it,” says Gordon Stockman, vice-president of financial planning at Efficient Wealth Management Inc.Mutual funds generally charge you a percentage fee, regardless of the size of your portfolio, while brokers typically charge less for larger accounts. By the time your account reaches $400,000, mutual funds purchased through an adviser will typically cost you 2 per cent or more per year in fees for a balanced account, while a broker typically charges 1 ¼ per cent to 1 ¾ per cent per year for a portfolio of individual stocks and bonds.Some brokers will still let you use the traditional method of paying them a commission for each trade, which could save you money if you’re a buy-and-hold investor.Brokers have largely outgrown their old reputation as fast-talking salesmen touting the latest hot stock tip. These days, they’re more likely better-qualified and focused on helping you manage all aspects of your wealth. They typically refer to themselves as “investment advisers.” They work with investment dealers affiliated with the major banks such as CIBC Wood Gundy and RBC Dominion Securities or with independent firms such as Canaccord Genuity and Raymond James. These firms typically support their brokers with extensive research and client services like financial, tax, and estate planning.While someone with just a mutual fund licence is pretty much limited to selling you mutual funds, a broker can provide you with more choices, offering individual stocks and bonds, exchange-traded funds (ETFs), other types of funds and fund-like investments such as pooled funds and segregated accounts, as well as hedge funds and structured products. (Pooled funds are like mutual funds except they have high minimum account sizes and tend to have lower fees. Segregated accounts are managed much like pooled funds, except you actually own the individual securities instead of units of the fund.)While most brokers are “advisers” only, some have acquired additional credentials to manage your money on a “discretionary” basis, meaning they decide what individual investments to buy and sell, subject to your overall direction.Choose a broker carefully, for quality is critical and varies widely. They have considerable independence within the overall firm to serve their clients as they see fit.“It’s the integrity, skill and experience of the individual that’s more important than the firm,” says former broker Warren MacKenzie, founder of financial-planning firm Weigh House Investor Services, now owned by portfolio manager HighView Financial Group. “There are some really good brokers at all the firms and there are some scallywags that don’t know anything.”Says Eric Kirzner, professor of finance at the Rotman School of Management, University of Toronto: “There is the occasional rogue out there and you need to do your due diligence.”Also, as Mr. Stockman points out, the sheer diversity of a traditional broker’s accounts makes it difficult to properly monitor and service them all. “He’s not getting up in the morning and checking your account because he probably has more than a couple hundred clients and every one owns something different,” Mr. Stockman says.To counter that problem, many brokers make good use of their well-staffed research departments and follow “focus lists” of recommended securities, which tends to result in clients holding similar portfolios.Make sure there’s a good fit between your needs and their approach. They should thoroughly understand your objectives, risk tolerance, time horizon and knowledge level and accordingly help set your asset allocation.They should do a detailed review of portfolio performance, including calculating returns at least once a year, ideally comparing returns to an appropriate benchmark, says Prof. Kirzner. “You don’t see it a lot but I think it is absolutely essential.” Then, they should help you rebalance and adjust as circumstances change.Get a referral from someone you know who is knowledgeable about investing, advises Prof. Kirzner. Then interview your candidate carefully.“This is a very personal thing,” he says. “You’ve got to convince yourself that you have someone that really has your interests at heart.” David Aston, CFA, MA, is a freelance writer specializing in financial topics. Special to The Globe and Mail Follow us on Twitter: @GlobeInvestor How to invest your first $100,000 Retirement and RRSPs How Rob Carrick would invest $10,000 Unless you can predict the future, stick to your portfolio strategy

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2016-30/1376/en_head.json.gz/8811

Wealthy Blacks Have Sunnier Outlook Than Most Black business owners focus on boosting revenue, survey finds Wealthy black Americans feel better off than they did five years ago, and think the country is better off as well, according to research released last week by Northern Trust. Black respondents to Northern Trust’s Wealth in America survey of people with $250,000 or more in investable assets attributed their positive outlook to market stability and the re-election of President Barack Obama. Sixty-two percent said they felt better about their personal finances than they did five years ago, compared with 29% of overall survey respondents who felt this way. Half of blacks surveyed also thought the U.S. was better off, compared with just 18% of total respondents who shared this sentiment. Black entrepreneurs surveyed also expressed optimism about the future growth of the economy. Respondents noted these plans for the next 18 to 24 months: 47% will hire more workers 37% anticipate keeping staff levels stable 34% intend to invest in information technology Sixty percent of black business owners identified increasing revenue as their main focus. Planning for higher taxes and investing in the future growth of the business were of key importance to about a third of respondents. Twenty-one percent were focused on succession planning. The majority of wealthy black survey participants said 63% of their total household assets came from earned income, while 11% came from investment returns. This compares with 44% and 22%, respectively, in the general population. “Wealthy black Americans are often first-generation stewards of wealth,” Linda Nolan, a Northern Trust managing director, said in a statement. “Many are business owners who consider their hard work as a key to achieving their financial goals. While many want to grow their wealth, just a small group reports actually having an established financial plan to help ensure they are on track to meet their goals.” Fifty-one percent of high-net-worth black respondents said their primary investment objective was to grow wealth, compared with 16% who said their main goal was to preserve capital. The survey found that 27% believed it was important to have a written financial plan, but only 11% had established such a plan. Respondents reported taking these steps to achieve their goals: Save more—32% Diversify investments—28% Work with a financial advisor—18% Eighty percent of black respondents said they involved their spouse or partner in household financial decisions and at least monthly discussed such financial matters as goals, business planning and charitable contributions. Sixty-five percent said it was important to speak to their children about their wealth, and 72% reported they had already done so. The survey found wealthy black Americans continued to contribute to charitable causes, donating an average of 87 hours in 2011. Ninety-four percent cited helping the less fortunate and 93% said contributing to a cause in which they personally believed were the most important reasons for giving. The top recipients of their donations were human services organizations, educational institutions and religious organizations. In addition, 83% said it was very important to them to help their children develop an appreciation for giving. Researchers conducted 1,700 online interviews from Nov. 16 to Dec. 17. Thirteen percent of survey respondents were black. Read Black Caucus Members Balk at DOL Fiduciary Rule on AdvisorOne. Please enable JavaScript to view the comments powered by Disqus. By Michael S. Fischer Selling Fiduciary Advice to Confused Investors More The Client

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2016-30/1376/en_head.json.gz/9015

Sound of Silence From Citi on Pay David Reilly Corporate America's annual-meeting season has come and gone. But a question lingers: What is Citigroup going to do about pay for its top executives, in particular chief Vikram Pandit? In April, Citi's shareholders voted 55% to 45% to oppose the compensation plan for the bank's top executive. More than two months later, there is still silence from the bank on how it will respond. The compensation plan called for Mr. Pandit, who...

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2016-30/1376/en_head.json.gz/9115

Home > About FDIC > Financial Reports > 2010 Annual Report Highlights 2010 annual report Highlights Enacted on July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act ("the Dodd-Frank Act" or "the Act") provides the most comprehensive legislative reform of the U.S. financial sector since the 1930s. Aimed at addressing the causes of the financial crisis of the last few years, the Act, among other things, provides for a more comprehensive, macro perspective for identifying and taking action in response to emerging risks in financial sectors and closing regulatory gaps; heightened prudential supervision of systemically important nonbank financial companies and large, interconnected bank holding companies; orderly liquidation of systemically important nonbank financial companies and bank holding companies; elimination of open assistance to preserve a failing insured depository institution; improved consumer financial protections and mortgage lending practices; and enhanced transparency and supervision of over-the-counter derivatives, swaps, and securities activities; and other investor protections. The Act significantly impacts the FDIC in its roles as supervisor, receiver, and deposit insurer, as well as making changes to the FDIC�s corporate structure. The Dodd-Frank Act creates a new risk oversight umbrella group, the Financial Stability Oversight Council (FSOC). In an effort to mitigate potential systemic risks, the FSOC is empowered to designate certain nonbank financial companies for supervision by the Board of Governors of the Federal Reserve System (Federal Reserve) and to make recommendations for heightened prudential supervision of those nonbank financial companies and bank holding companies with total consolidated assets of $50 billion or more. The FSOC also may designate systemically important financial market utilities or payment, clearing or settlement activities. The FDIC is one of ten voting members of the FSOC. The Act requires the FDIC and the Federal Reserve to issue joint regulations implementing the requirement that these systemically important financial companies develop plans for their rapid and orderly resolution in the event of material financial distress or failure. It also gives the FDIC backup examination authority over these systemically important financial companies. The Dodd-Frank Act abolishes the Office of Thrift Supervision (OTS) and transfers responsibility for thrift supervision to the Office of the Comptroller of the Currency (OCC) and the FDIC, as of the statutory �transfer date� (i.e., July 21, 2011). The FDIC will be responsible for the supervision of state chartered thrifts, while the OCC will supervise federal thrifts. The Federal Reserve will supervise thrift holding companies and their non-depository institution subsidiaries. The Dodd-Frank Act also creates a new Consumer Financial Protection Bureau (CFPB) within the Federal Reserve System. The CFPB will have exclusive rulemaking authority for specified federal consumer protection laws and will also have examination and primary enforcement authority for many nonbank financial service providers and insured depository institutions (IDIs) and credit unions with total assets of over $10 billion (and any affiliated IDIs). With regard to IDIs over $10 billion otherwise in its jurisdiction, the FDIC will have backup enforcement authority for laws over which the CFPB has primary authority. The FDIC retains its current authority and programs under the Community Reinvestment Act and other consumer related laws not specified for all IDIs within its jurisdiction. It also retains all examination and enforcement authorities over IDIs with total assets of $10 billion or less within its jurisdiction. Examination coordination and information sharing with the new CFPB is required. As noted, the FDIC may be appointed as receiver for a failed systemically significant nonbank financial company or large, interconnected bank holding company. The orderly liquidation authority is similar to the resolution authority for IDIs under the Federal Deposit Insurance Act. However, no monies from the DIF may be used in connection with an orderly liquidation under Title II of the Act. Those resolutions will be funded initially by borrowing against the assets of the failed financial company, with the borrowings to be repaid from asset sales and, if necessary, from "clawbacks" of certain additional payments and from additional risk-based assessments against large financial companies. The Act expressly prohibits the use of taxpayer funds to prevent the liquidation of any financial company under Title II, and taxpayers shall bear no losses from the exercise of any authority under Title II. The Dodd-Frank Act permanently increases the standard maximum deposit insurance amount to $250,000, and made the increase retroactive to January 1, 2008. The Act also provides temporary unlimited deposit insurance coverage for noninterest-bearing transaction accounts for two years from December 31, 2010, through December 31, 2012. During this time, all noninterest-bearing transaction accounts are fully insured, regardless of the balance in the account and the ownership capacity of the funds. This coverage is available to all depositors, including consumers, businesses, and government entities. The unlimited coverage is separate from, and in addition to, the standard insurance coverage provided for a depositor�s other accounts held at an FDIC-insured bank. The Act directs the FDIC to amend its regulations to define �assessment base� as average consolidated total assets minus average tangible equity. For custodial banks and banker�s banks, the FDIC may subtract an additional amount as necessary to ensure that the assessment appropriately reflects the risk posed by such institutions. The Act eliminates the maximum limitation on the designated reserve ratio (DRR) and raises the minimum DRR from 1.15 percent to 1.35 percent of estimated insured deposits. It requires the FDIC to take such steps as may be necessary for the reserve ratio of the DIF to reach 1.35 percent of estimated insured deposits by September 30, 2020. The FDIC must offset the effect on IDIs with total consolidated assets of less than $10 billion of this one-time requirement to reach 1.35 percent by that date rather than 1.15 percent by the end of 2016. The Act also eliminates the payment of dividends from the DIF when the reserve ratio is between 1.35 percent and 1.50 percent and provides the FDIC sole discretion to limit or suspend dividends when the reserve ratio exceeds 1.50 percent. FDIC Corporate Structure The Dodd-Frank Act places the Director of the CFPB on the FDIC Board in lieu of the Director of the OTS. In addition, the Act requires the FDIC to establish by January 21, 2011, an Office of Minority and Women Inclusion (OMWI) to develop standards for equal employment opportunity and the racial, ethnic, and gender diversity of the agency�s workforce and senior management; increase participation of minority- and women-owned businesses in agency programs and contracts; and assess the diversity policies and practices of entities regulated by the agency. The OMWI is also to advise the agency on the impact of policies and regulations on minority- and women-owned businesses. The FDIC transferred the responsibilities of the Office of Diversity and Economic Opportunity to OMWI, effective January 21, 2011. Other Financial Regulatory Reforms The Act also makes a number of other reforms, including: Requiring that minimum leverage and risk-based capital requirements for IDIs, depository institution holding companies and nonbank financial companies supervised by the Federal Reserve can be no lower than the generally applicable requirements in effect on July 21, 2010 (the "Collins Amendment"); Prohibiting bank holding companies and their affiliates from engaging in proprietary trading or sponsoring or investing in a hedge fund or private equity fund (the so-called "Volcker Rule"); Requiring greater transparency and regulation of over-the-counter derivatives, asset-backed securities (including risk retention requirements), hedge funds, mortgage brokers and payday lenders; Requiring the financial regulators to prohibit incentive compensation at financial institutions that encourages excessive risk taking; Providing new rules for transparency and accountability for credit rating agencies and requiring regulators to eliminate regulatory reliance on credit ratings; and Establishing a Federal Insurance Office to, among other things, participate in the FSOC and monitor issues in the insurance industry.

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2016-30/1376/en_head.json.gz/9138

Home Economics and Finance The Role of Annuity Markets in Financing Retirement Buying Options Hardcover | Out of Print | ISBN: 9780262025096 | 240 pp. | 6 x 9 in | 3 illus. | November 2001Paperback | $24.00 Short | £17.95 | ISBN: 9780262529136 | 240 pp. | 6 x 9 in | 3 illus. | November 2001 Also by these Authors Retirement, Pensions, and Social SecurityTax Policy and the EconomyRetirement Income The Role of Annuity Markets in Financing Retirement By Jeffrey R. Brown, Olivia S. Mitchell, James M. Poterba and Mark J. Warshawsky Overview Dramatic advances in life expectancy mean that today's retirees must plan on living into their eighties, their nineties, and even beyond. Longer life expectancies are the symbol of a prosperous society, but this progress also means that some retirees will need to plan conservatively and cut back substantially on their living standards or risk living so long that they exhaust their resources. This book examines the role that life annuities can play in helping people protect themselves against such outcomes.A life annuity is an insurance product that pays out a periodic amount for as long as the annuitant is alive, in exchange for a premium. The book begins with a history of life annuity markets during the twentieth century in the United States and elsewhere. It then explores recent trends in annuity pricing and money's worth, as well as the economic value generated for purchasers of these products. The book explains the potential importance of inflation-protected annuities and stock-market-linked variable annuities in providing more complete retirement security. The concluding chapters examine life annuities in various institutional settings and the tax treatment of annuity products. About the Authors Jeffrey R. Brown is Assistant Professor of Public Policy in the John F. Kennedy School of Government at Harvard University.Olivia S. Mitchell is IFEBP Professor of Insurance and Risk Management in the Wharton School at the University of Pennsylvania.James M. Poterba is Mitsui Professor in the Department of Economics at MIT. He has been Director of the NBER Public Economics Research Program since 1991 and has edited volumes 6-20 of Tax Policy and the Economy.Mark J. Warshawsky is Director of Retirement Research at Towers Watson, former member of the Social Security Advisory Board, and coauthor of The Role of Annuity Markets in Financing Retirement (MIT Press). Endorsements “This book is an outstanding contribution to our knowledge base about the role of annuities in assisting households to finance their retirements. It's the first book I've seen to cover these topics.”—Laurence J. Kotlikoff, Department of Economics, Boston University“I warmly welcome the publication of this book. The authors provide both a good descriptive view of the US private annuity system and a thorough analysis of the factors influencing the value individuals attach to annuity payout streams.”—Alain Jousten, Department of Economics, Université de Liège“Well-written and thorough; this is high-quality research on an important public policy issue. The book collects the results of an impressive research agenda in one place.”—William M. Gentry, Graduate School of Business, Columbia University“Life annuities can be extremely valuable and useful financial products. They can make retirement planning easier and more efficient. At the same time, they are not widely understood. The four authors of this book have produced the most authoritative and comprehensive examination of life annuities ever written. One can literally learn all there is to know about life annuities by reading this book. I recommend it to financial planners, academics, public policy makers, and anyone trying to understand theseimportant financial contracts. This book is a tour de force.”—John B. Shoven, Charles R. Schwab Professor of Economics, Stanford University US

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2016-30/1376/en_head.json.gz/9453

China snubs foreign investment After years of courting foreign investors, Beijing may be losing its ardor for capital, reports Fortune's Clay Chandler. By Clay Chandler, Fortune senior writer October 3 2006: 6:10 AM EDT (Fortune Magazine) -- Henry Paulson got a warm welcome when he returned to China last month in his new role as U.S. Treasury Secretary. But even as Beijing prepared to roll out the red carpet for the former Goldman Sachs (Charts) CEO, it was yanking the rug from under some of his old investment banking buddies. The week before Paulson's visit, China's securities regulator declared a moratorium on all foreign acquisitions of Chinese brokerages, making official a de facto ban that's been in effect for months. Chinese authorities billed the suspension as a temporary measure to help domestic financial institutions gird for increased competition. But among foreign businessmen in China, the move was widely interpreted as further evidence of a backlash against outside investment in an economy that has eagerly sought it for more than a decade. China's stock boom The economy is red-hot, and a flurry of blockbuster IPOs is fueling interest. Here's the smart way to cash in. (more) Since the beginning of the year, officials have scuttled Citigroup's bid for an 85% stake in Guangdong Development Bank, an insolvent state-owned lender, and rebuffed U.S. private-equity firm Carlyle Group's $375 million bid for an 85% stake in Xugong Construction Machinery, a state-owned heavy-equipment manufacturer. Beijing has also dialed up pressure on foreign firms to allow their Chinese workers to be organized into state-controlled labor unions, forcing even Wal-Mart, notorious for resisting unions in the U.S., to accept them in China. Finally, in August, China introduced new rules requiring foreign investors to register with the Ministry of Commerce any transactions resulting in foreign control over companies in vaguely defined "key industries" or sectors that could influence state security. With their economy growing at an annual rate of 10%, China's leaders feel they can afford to turn up their nose at foreign investment these days. As exports surge - China racked up a record $202 billion trade surplus with the U.S. last year - the country is awash in dollars. Indeed, Beijing's stack of foreign currency reserves, already the world's largest, is expected to top the $1 trillion mark within the next few months. China remains Asia's No. 1 destination for outside investment by a wide margin. From January to August, China drew $37.2 billion in foreign direct investment (FDI), down 2.1% from the same period last year, according to the Ministry of Commerce. In August alone, FDI into China slumped 8.5% compared with the same month in 2005. But Arthur Kroeber, managing editor of China Economic Quarterly, urges keeping the downturn in perspective: "Clearly, there's new concern about M&A deals and foreign takeovers. But they're still quite happy to have you come and build a factory." Even so, the new ambivalence marks an important shift in Chinese thinking, with economic and political impact. Deng Xiaoping's endorsement of foreign-invested ventures in the early 1990s delivered China from decades of Maoist isolation and poverty; he shrugged off questions about social disruption, inequality, and corruption with the observation that "open windows let in flies." Deng's successors courted foreign investors with gusto, eagerly receiving Global 500 executives for face-to-face chats. But foreign business leaders are almost never granted an audience with China's current President, Hu Jintao, who has shrewdly consolidated his power base inside the party by positioning himself as a populist, attentive to the plight of ordinary folk buffeted by unruly markets and keen to prevent foreigners from wresting control of the economy. Last month's sacking of Chen Liangyu, the Communist Party boss in Shanghai, is an unmistakable rebuke to former President Jiang Zemin, who rose to power in Shanghai, and the freewheeling, money-mad ethos for which his city has come to stand. Tsinghua University economist David Li argues that opposition to foreign investment is, in part, a sign of economic maturity. China, he says, now has a cohort of homegrown companies strong enough to compete with foreign giants and ample incentive to keep them at bay. Increasingly, the penchant of local governments to woo foreign investors with tax breaks and subsidies fuels a sense of grievance among these domestic upstarts. That outrage could be counterproductive. MIT political scientist Yasheng Huang, whose 2003 book, "Selling China," questioned China's dependence on foreign investment and was widely debated in China, now fears an FDI backlash that will only make things worse. The key to improving China's competitiveness, he contends, isn't to slap more restrictions on foreign capital but to scale back restrictions on China's homegrown companies. One of the benefactors of the current slowdown is Paulson's old firm. Since 2004, Goldman has enjoyed Beijing's blessing on its complicated union with Gaohua Securities, a domestic brokerage it helped bankroll. Goldman's rivals - among them Morgan Stanley (Charts), Citigroup (Charts), and Merrill Lynch (Charts) - are eager to secure their own footholds in China's potentially lucrative domestic capital market. For now, they'll have to wait. Morgan Stanley buys China's Nan Tung Bank Four Futures for China Inc. Paulson: U.S., China agree on economic goals Yuan-way ticket: Paulson goes to China From the October 16, 2006 issue

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PokieAct The Campaign to Make Pokie Places Kid Free Saturday, 4 December 2010 Jenny Macklin's Jupiter Casino Speech As much has been written about the Minister for Families, Housing, Community Services and Indigenous Affairs speech, everyone should read the issued text and make up their own minds as to its meaning and impact reconfirming the government's resolve to implement mandatory full pre-committment. It was delivered on 1 December 2010 at the 20th Annual Conference of the National Association for Gambling Studies. There is a terrific shift in language. See if you spot the omitted expression."I would like to acknowledge the traditional owners of the land on which we are meeting, the Kombumerri people, and pay my respects to their Elders both past and present. In particular, I pay my respects to Mr Graham Dillon, an Elder from the Kombumerri people who I understand is here today.It’s great to be here today.I’m told the NAGS conference really is the who’s who of gambling. Including industry, government officials, regulators and of course, academics and researchers in this field.As I’m sure everyone in this room is aware, the Australian Government has embarked on some major reforms to tackle problem gambling. Our reforms are primarily targeted at improving the safety of poker machines for players.Some of you may think this is a new area for the Australian Government to be moving in. And it’s absolutely correct that the regulation of gambling and poker machines has predominately been a state responsibility. But we have been working on this issue for some time.In 2008, in our first term, the Australian Government, together with the states and territories, asked the Productivity Commission to conduct an independent inquiry into gambling, with a specific focus on problem gambling and harm-reduction measures. This inquiry was a follow-up to the Productivity Commission’s comprehensive investigation into gambling in Australia in 1999. This was a major piece of work.The report - released in June this year - found that gambling is an important industry that is valued by many Australians. The gambling industry plays a significant role in our economy, including by supporting the hospitality and tourism industries. More than 145,000 people are employed in the industry, many in our regional cities and towns. Most Australians like to gamble, whether it’s the occasional flutter at the races, buying a lottery ticket, playing the pokies or a night out at the casino. Clubs and pubs are popular, friendly venues where Australians like to get together. For many people, gambling is an enjoyable thing to do while socialising with friends and family. And when they gamble Australians spend a lot of money – between 2008 and 2009 Australians spent $19 billion on gambling, almost $12 billion of it playing poker machines.For most, gambling is an enjoyable form of recreation. Yet for a significant minority it is a highly destructive problem. There are between 80,000 and 160,000 Australians with a serious gambling problem.Many of these people are gambling away their entire income – destroying their own lives and their family’s lives. They suffer mental and physical health problems, find it difficult to hold down jobs, are often in debt to support their gambling and can barely maintain relationships. And what is more distressing is that problem gambling disproportionately affects people who are already financially vulnerable. Australian studies have found that the highest rates of problem gambling are among 18-24 year olds.And a high proportion of adult problem gamblers report they developed gambling problems during their teenage years.We also know that gambling is becoming more attractive to women. Before the introduction of poker machines, women accounted for one in ten problem gamblers. Now it’s one in three.At its worst problem gambling destroys lives.In a horrific case, a young Northern Territory teenager died from an abscess on her leg because her foster carer – her great-aunt who had a severe gambling problem - neglected her. In the month of her niece’s death, the carer withdrew more than $13,000 from the ATM at the Darwin Casino, and was a frequent visitor. On the night before her niece died she stayed at the casino until 12.30 am. Her lack of care for her niece on that day and before her death was inexcusable but was in some part due to her gambling problem. It wasn’t until after the girl’s death that police found that the woman had lost $1.6 million over four and half years playing the pokies.Problem gambling can be life absorbing. It takes up people’s time, uses their money and distracts them from responsibilities such as caring for their children or work.There is persuasive evidence that poker machines need to be made safer.Forty per cent of all money spent on Australian poker machines is spent by problem gamblers, even though they only make up 15 per cent of players. Problem gamblers spend an average of $21,000 a year on gambling. That’s a lot of money by anyone’s standards – money that isn’t being spent on food, the mortgage or paying off bills. This is not acceptable. We want gambling to be safe and enjoyable for everyone who wants to play.The Productivity Commission’s advice is that the best way to make gambling safer is to focus on people playing regularly on riskier forms of gambling. That means focusing on people who regularly bet on poker machines, because it is people in this group who are at the highest risk of developing a gambling problem. Three-quarters of people classified as severe problem gamblers play poker machines. And other regular poker machine players, not necessarily categorised as problem gamblers, may be at risk.A New South Wales study found that people who play the pokies regularly – at least once a week - are estimated to lose on average between $7000 and $8000 a year on poker machines. These people face the highest risk of developing a gambling problem. Effective measures to reduce the harm for problem gamblers can also make poker machines a safer product for all players.The accessibility of poker machines in Australia rapidly increased in the 1990s. But, the Productivity Commission found that our protections for players remain inadequate. Poker machines are easy to use and even easier to find – we have nearly 200,000 poker machines in pubs, clubs and casinos across the country. We know that people often start playing poker machines because they are located in safe, friendly places like clubs and pubs where people like to get together to socialise. These also happen to be places that are open for long hours.The machines are also a lot more sophisticated than they used to be. It is now possible to play them with extraordinary intensity, so people can bet faster and more frequently. At high intensity it’s easy to lose $1500 or more in an hour.In June when the Government released our initial response to the Productivity Commission report, I indicated that our first priority would be to progress a nationally consistent pre-commitment model for poker machines. This is based on the Productivity Commission’s recommendations that pre-commitment is a strong, feasible and effective approach to reduce the harm from problem gambling. I also announced then that we would approach the states and territories to establish a new high-level Council of Australian Governments (COAG) Select Council of Ministers on Gambling Reform.Our support for poker machine reform including pre-commitment has not changed. Neither has our determination to work with industry, the states and territories, researchers and the community, to get it right.Central to our reforms is our support for a full pre-commitment scheme on all machines that is uniform across all states and territories. As agreed between the Prime Minister and the Independent Member for Denison, Andrew Wilkie, we will be working with the states and territories to begin bringing in pre-commitment arrangements in 2012, with the full scheme commencing in 2014.We also support the Productivity Commission recommendations on dynamic warning and cost of play displays on poker machines. And we have committed to implementing a $250 daily withdrawal limit for ATMs in venues with poker machines, except casinos.Each of these three commitments is evidence based, and recommended by the Productivity Commission.The Government is well aware that a full pre-commitment scheme across all states and territories is a challenging reform, and I want to focus on this reform today. The Government supports pre-commitment because we agree with the Productivity Commission that this is the most targeted and effective measure to help problem gamblers and those at risk, without adversely impacting on recreational gamblers.The idea behind pre-commitment is that we can use technology to give people a tool, at the beginning of a gambling session, to think about how much they want to spend, set limits and stick to them. This is not about taking away people’s responsibility for their own behaviour, or the Government controlling people’s money. In fact, it’s the exact opposite. It’s about providing a tool to help people make informed decisions to better manage their own money and exercise personal responsibility.The Productivity Commission recognised that a well designed system is critical to its effectiveness. A well-designed pre-commitment scheme should give problem gamblers and those at risk greater control, while letting other players continue to enjoy playing the pokies. The design of the scheme is also critical to ensuring that clubs, pubs and casinos continue to make a significant contribution to community life, and Australia’s economy.The Commonwealth supports a full pre-commitment system based on the recommendations of the Productivity Commission. Under the model recommended by the Productivity Commission, players can set the limit as high or low as they like. Players could of course change their limits periodically, but would not be able to revoke or increase them within their agreed set period. And players could choose no limit at all if they prefer.We also want to minimise the impact on occasional players and overseas visitors. The Productivity Commission’s model would allow occasional gamblers to play outside the pre-commitment system, by purchasing a pre-paid card for example.We support a full pre-commitment scheme because all the evidence shows that voluntary schemes aren’t as effective.Much has been made in the media of pre-commitment technology and how it would work. Pre-commitment requires some form of technology to identify the player and their chosen limits and preferences. This can take a number of forms, however, most of the Australian trials so far have used a card system. This would require players to register, just like they do now for loyalty programs in gaming venues.Some have suggested this would spoil the fun of everyone who wants to play the machines whether they have a gambling problem or not. I’m not convinced of this.Requirements for identification are widespread in gambling industries already. Many venues, such as clubs, already require players to be members or sign in at the venue before they can play poker machines. I’ve recently visited a large regional club and a casino that both are already using card readers on their poker machines as part of their loyalty programs. People have cards for all sorts of things, including for their club membership or to borrow a book from the library, or rent a DVD from the video store. Pre-commitment would be no different.The Government will be working with industry and gaming machine manufacturers to identify options that are practical, cost-effective and easy for players to use. I’m going to visit one of the pre-commitment trials in Queensland tomorrow.We will also ensure that the pre-commitment system has very strong privacy arrangements for the data that is collected. The Australian Government has strict privacy legislation to protect people. These are issues that have been successfully resolved in a wide range of areas and we will be applying the highest standards to our gambling reforms.Of course, how a uniform pre-commitment scheme would work depends a lot on the states and territories. While the impacts of problem gambling ripple across the whole nation, the regulation of gaming machines in Australia is a state and territory responsibility.The Commonwealth is committed to working with the states and territories to deliver these reforms. I co-chair the COAG Select Council on Gambling Reform with my colleague the Assistant Treasurer, Bill Shorten. The state and territory ministers on the council represent portfolios with responsibility for gambling regulation, treasuries, and community and human services, and we had our first meeting in Melbourne in October.There are very different arrangements at the moment across all the jurisdictions in almost every area where we wish to act. Some states, such as Victoria, Queensland and South Australia, have already made significant progress on pre-commitment, and others have removed ATMs from gambling venues entirely.I do not underestimate the task of achieving a consistent response across Australia. And as I’m sure you are aware, the Australian Government has committed to bring in our own legislation if there is no agreement with the states and territories by the end of May next year. The Productivity Commission recommended that the Commonwealth intervene if states did not agree to implement these changes Australia-wide.There are also important issues to be considered by all governments related to online gambling; and states and territories are also keen to work together in developing responses to issues relating to online wagering and racing.These issues are now on the COAG Select Council agenda and the Minister for Communications, Senator Conroy, who has responsibility for this area, has been invited to our next meeting. We are also making sure that we get the advice we need from those on the ground – from both the industry and community sector, as well as from academics and researchers specialising in this field.We want our reforms to be practical, feasible and balanced. We want our reforms to work, and we want to anticipate and address any unintended consequences before we move to implementation.That’s why the Assistant Treasurer and I have established a Ministerial Expert Advisory Group, chaired by Professor Peter Shergold. We have asked the Advisory Group to provide us with specialist and technical advice on implementing the reforms, and to keep us informed about the views of all interested parties. It will surprise no one that there is a range of strongly held, and in many cases conflicting views, among those on the advisory group. The Government genuinely welcomes a mature, and evidence-based debate on how to best implement these important reforms. The group met for the first time in early November, and will be meeting again in a week or two to look particularly at the issues associated with implementing a full pre-commitment scheme. I understand you will be hearing from a number of the advisory group members at this conference, and I’d like to thank those of you who are in the audience for your contributions.The Government recognises that gambling is not only an important industry but a celebrated part of Australian culture. We have the horse race that stops the nation, and on one of our most sacred days, Anzac Day, many Australians like to play two-up. Millions of Australians enjoy a flutter each and every year, but for some Australians excessive gambling can leave a trail of destruction. We have a responsibility to implement effective reforms to tackle problem gambling.We want people to be able to safely enjoy gambling and in particular, playing the pokies. We also want a vibrant industry that continues to provide entertainment and employment for many Australians, and makes a significant contribution to our economy.Our reforms will make poker machines a safer product for all players.Steering a path to a good policy outcome will be challenging. But we are committed to working with you all - state and territory governments, industry and community advocates, to introduce these reforms."The missing expression is "EGM" signifying "Electronic Gaming Machines". The Minister refers to them as "poker machines". Pokie gambling is not a game. It's dangerous gambling. There are people's lives at stake. Reform now seems inevitable.For the benefit of his members, ClubsNSW CEO Anthony Ball should be leading his members down a pathway that eases them into this new world where the inherent harm of the machines is addressed. Failure to do so will result in a crashed transition and possible losses for his members should their machines and systems not be compliant within the agreed timetables.Mr Ball, that would be irresponsible. You would be failing your members. PokieWatch ClubsNSW, Jenny Macklin, Pokie, Pokies, pre-commitment, The Truth About Pre-Commitment Reform Advertisemen... Dazed and Confused Victorian Liberals Losses Disguised As Wins Subscribe to PokieAct news PokieAct Links PokieAct.org

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Supplementary resources by topic. GDP is one of 51 key economics concepts identified by the National Council on Economic Education (NCEE) for high school classes. | High School Economics Topics | GDP Definitions and Basics In the News and Examples A Little History: Primary Sources and References Advanced Resources National Income Accounts, from the Concise Encyclopedia of Economics The broadest and most widely used measure of national income is gross domestic product (GDP), the value of expenditures on final goods and services at market prices produced by domestic factors of production (labor, capital, materials) during the year. It is also the market value of these domestic-based factors (adjusted for indirect business taxes and subsidies) entering into production of final goods and services. "Gross" implies that no deduction for the reduction in the stock of plant and equipment due to wear and tear has been applied to the measurements and survey-based estimates. "Domestic" means that the GDP includes only production by factors located in the country--whether home or foreign owned. GDP includes the production and income of foreigners and foreign-owned property in the home country and excludes the production and incomes of the country's own citizens or their property located abroad. "Product" refers to the measurement of output at final prices as observed in market transactions or of the market value of factors (inclusive of taxes less subsidies) used in their creation. Only newly produced goods--including those that increase inventories--are counted in GDP. Gross Domestic Product (GDP), from the Concise Encyclopedia of Economics For the United States, GDP replaces gross national product (GNP) as the main measure of production. GDP measures the output of all labor and capital within the U.S. geographical boundary regardless of the residence of that labor or owner of capital. GNP measures the output supplied by residents of the United States regardless of where they live and work or where they own capital. Conceptually, the GDP measure emphasizes production in the United States, while GNP emphasizes U.S. income resulting from production. GDP is one measure, but not a perfect measure, of the well-being of the citizens of a country. For example, homemaker income is not traded in markets, and so is not included in GDP. (Because stay-at-home moms are not paid salaries, there are no government records for how much output they produce for their families.) Economic Indicators, from the Social Studies Help Center. The Gross National Product (GNP) is a nation's total output of goods and services produced BY a country in one year. In obtaining the value of the GNP, only the final value of a product is counted (e.g. homes but not the construction materials they were built with). The three major components of GNP are consumer purchases, government spending, private investment and exports. The formula is thus: C + G + I + X = GNP ... The fourth factor is the exclusion of non market activities. Non market activities are those activities that do not take place in the market, and most of them are not accounted for because of measurement problems. Such activities include services people provide for themselves like home maintenance, and the service homemakers provide. U.S. Gross Domestic Product (GDP), from the U.S. National Economic Accounts. Bureau of Economic Analysis (BEA, a division of the U.S. Department of Commerce). The latest GDP data, definitions, interactive tables for finding data from previous years and quarters, and more. Gapminder World, at Google.com Interactive graphic showing correlation between GNP and life expectancy, population, phone use, and much more, by country over a period of years. Select your choice of variables, display styles, and watch the changes over time! First measurements of GNP: Simon Kuznets, biography from the Concise Encyclopedia of Economics Simon Kuznets is best known for his studies of national income and its components. Prior to World War I, measures of GNP were rough guesses at best. No government agency collected data to compute GNP, and no private economic researcher did so systematically, either. Kuznets changed all that. With work that began in the thirties and stretched over decades, Kuznets computed national income back to 1869. He broke it down by industry, by final product, and by use. He also measured the distribution of income between rich and poor. Advanced Resources Real vs. Nominal Liberty Fund, Inc.

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The Big Money for Big Projects This isn't your father's venture capital. Amusement parks, satellite networks, oil fields, toll roads: HBS Professor Benjamin Esty studies financing of large projects. Q&A by Ann Cullen There is nothing small about the research practiced by Harvard Business School professor Benjamin Esty. He studies the financing of some of the largest projects in the world: the Eurotunnel, Hong Kong Disneyland, and the Airbus A380, to name three. Not only are the projects big, but so are the financing requirements—typically north of $500 million. Why study large projects? Because they offer clear examples into the process used by managers to make important financing and structuring decisions, he says. Another reason: Large projects can deliver significant financial, developmental, and social returns when they succeed. The problem, says Esty, is that many of the largest products have hit financial turbulence. Esty, whose new book Modern Project Finance: A Casebook, was published recently, teaches the "Large-Scale Investment" course on project finance, which analyzes how firms structure, value, and finance large, "Greenfield" projects. He also has created the Project Finance Portal. Perhaps fittingly, his HBS office is just a few miles down the road from one of the most expensive public works project undertaken in the United States, Boston's "Big Dig" road improvement project built through the heart of the city. Ann Cullen: The Big Dig in Boston is coming to completion. In terms of project financing, what are your thoughts on this project? Was there a better way to finance the project to avoid the tremendous cost overruns? Benjamin Esty: Boston's "Big Dig" is the largest public works project in American history (the official name is the "Central Artery/Tunnel Project"). Technically, however, the project was municipally financed, not project financed. The difference is that project-financed transactions have nonrecourse debt, which means the loan repayments must come from project cash flows only. In municipally financed or public financed projects, a government entity is the borrower or the debt is backed by a government guarantee. In the case of the Big Dig, the state and federal governments have provided the bulk of the funds—at the state level the Massachusetts Transportation Authority will issue revenue bonds to finance construction. While it is true the cost of the project has risen from $2.2 billion in 1983 (not indexed for inflation) to $14.6 billion today, it is very difficult to allocate blame for the cost and schedule overruns. In general, I think the project would have benefited from more "for-profit" incentives—if there's not clear incentives to be efficient and make profits, people won't. To address this concern in developing infrastructure projects, many countries, including the U.K., have adopted a hybrid approach known as the Private Finance Initiative (PFI), also known as "public-private partnerships" (PPP). Under this approach, private firms build and operate the infrastructure while the host government bears many of the residual risks such as market demand. Although involving the private sector has worked very well in many countries, one fact remains. Large projects, those costing $500 million or more, are extremely difficult to build successfully. In fact, one of the very interesting facts about large projects is that so many of them get into financial trouble: Iridium and Globalstar (two global telecommunications firms), Global Crossing, Eurotunnel, EuroDisney, and many others have all defaulted. The challenge of building and managing these projects is the focus of my ongoing research. Q: One of the key themes in your book is that structure matters in the investment decisions made in financing a project. Could you explain this further? A: Modigliani and Miller's (M&M) "irrelevance" proposition is one of the foundations of modern finance. It states that corporate financing decisions do not affect firm value under certain conditions. One of the key assumptions underlying this proposition is that financing and investment decisions are separable and independent. When this assumption holds, various financing decisions such as the firm's capital structure, its ownership structure, and its board structure do not affect firm values or investment decisions. In other words, financing structure does not matter. Yet much of the empirical research in the field of corporate finance over the last twenty-five years has attempted to show that financing structures do, indeed, matter. Creation of a new project company affects not only the decision to invest but also the subsequent value of the investment. Research on project finance turns out to provide some of the best examples of how and why financing structures matter (or why structure affects firm value). When a firm decides to use project finance for a new capital asset, it creates a legally independent project company and finances that company with nonrecourse debt (i.e., the debt must be repaid by cash flows from the project company only.) The relevant question is: Why would a firm choose to finance its assets separately in different companies rather than financing them jointly on a single balance sheet, especially when it is costly to set up project companies? The answer is that the creation of a new project company affects not only the decision to invest but also the subsequent value of the investment. A good example of the former is the managerial decision to invest in a very large and very risky project. If done as part of the corporate balance sheet, there is a possibility that the project could drag the parent or "sponsoring" company into default if the project gets into trouble. The potential for a failing project to drag down an otherwise healthy parent corporation can deter a manager from making the investment in the first place even if it is likely to have a positive net present value in expectation. As a result, the firm will suffer an opportunity cost of under-investment if the only option is to finance the project using corporate finance. A good example is Iridium, the $6 billion global satellite telecommunications firm that went bankrupt in August 1999. Had Motorola financed this investment on balance sheet or guaranteed all the debt, it might have dragged Motorola into bankruptcy, as well. In addition to affecting investment decisions, the use of project finance can also affect asset values. By using project finance, companies get the opportunity to create a project-specific governance system designed to optimize the value of the project. Thus, rather than using the corporation's existing governance system—its capital structure, board of directors, compensation schemes, etc.—which may or may not be appropriate for any particular asset, the firm can create an entirely different governance system that is ideally suited for the asset in question. Much the same way leveraged buyouts (LBOs) change the governance of companies in value-enhancing ways, the decision to use project finance changes the management of projects in value-enhancing ways. The dramatic increase in the use of project finance over the last ten years, from less than $30 billion in the early 1990s to over $200 billion in recent years, provides strong prima facie evidence that firms have recognized the value of financing capital assets through project companies. Even though it is very costly and time consuming to use project finance, the potential benefits far outweigh the costs for certain kinds of assets such as power plants, pipelines, toll roads, and mines. The key is to understand for which assets and in which settings the benefits are likely to be realized. Q: I found your point interesting: Given the high debt-to-total capitalization ratios (typically 70 percent!), leverage plays an important disciplinary role in preventing managers from wasting or misallocating free cash flow and deters related parties, including host governments, from trying to appropriate it. But is this always effective in preventing such misappropriation? A: It is true that the average project company has an initial debt-to-total capitalization ratio of 70 percent, though the ratios range from 50 percent to 90 percent or more. While high leverage provides several important benefits, these benefits come at a cost. First, high leverage provides managerial discipline on the use of free cash flow. Most projects involve large upfront capital costs, have very low operating (marginal) costs, and have few investment opportunities. As a result, projects generate large amounts of "free cash flow" (cash flow in excess of what is needed to finance all positive NPV investment opportunities). Large debt service requirements force managers to distribute these cash flows to capital providers, both debt and equity holders, rather than reinvesting it in the firm. As I mentioned before, project finance resembles LBOs in this respect. Second, the use of high leverage can also be a source of discipline on related parties such as key suppliers or host governments. High leverage prevents cash from accumulating inside project companies, thereby eliminating the temptation for related parties to seize the cash. It also helps enforce contracts by, somewhat paradoxically, increasing the risk of bankruptcy. With low leverage, a related party can expropriate a large fraction of the profits before default becomes likely; with high leverage, even small acts of expropriate can cause the project to default and, at least temporarily, cease operations. Because most projects have going concern value only, a shutdown can be very costly particularly a very public one. But high leverage does its disadvantages. Obviously, it can increase the probability of bankruptcy. It can also create incentive problems. When equity holders have too little "skin in the game," moral hazard (the idea that people drive rental cars more recklessly than they drive their own cars) becomes a real danger. Project sponsors may take excessive amounts of risk knowing the debt holders will bear most of the downside, yet will share almost none of the upside. Infrastructure projects such as toll roads, telecommunications systems, and water projects are particularly prone to this problem because host governments are reluctant to let them fail. Knowing the host government is more likely to restructure the project (e.g., to allow unscheduled increases tariffs or tolls), sponsors of infrastructure projects have an incentive to minimize equity contributions knowing they are likely to get bailed out. For regulators and politicians, the challenge is to structure contracts that deter reckless behavior prior to default and ensure efficient operations after default. Q: Not much academic research has been done in the area of project finance. Why is that? A: You're right. There has been very little academic research done on project finance to date. In fact, there have been only a couple of articles directly on project finance published in the leading finance journals, and not more than fifteen articles in all finance journals over the past twenty years. Similarly, there is little coverage or discussion of project finance in the leading corporate finance textbooks. Only three of the five leading corporate finance textbooks even mention project finance in their latest editions, and they do so in a total of only six pages. In contrast, all of these textbooks discuss initial public offerings (IPOs), leasing, and venture capital for an average of 15, 10, and 4 pages each, respectively. This limited coverage is unfortunate from a research perspective given the potential for new insights on the relationships among financial structure, managerial incentives, and asset values. It is also unfortunate from a pedagogical perspective given the potential to teach advanced principles of corporate finance. One of the reasons why so little research has been done is that project finance, at least in its modern form, is a relatively new phenomenon—it did not really become popular until the early- to mid-1990s. A second reason is that it is difficult to uncover detailed information and conduct quantitative research. Because most project companies are private companies, very little information is available to the public. In terms of statistical analysis, there are relatively few projects (approximately 300 per year, but only 40 to 50 large ones costing more than $500 million). These projects tend to have long lives and many idiosyncratic features. As a result, statistical tests are weak and the lessons are not always applicable to other projects. Third, studying projects requires significant up-front investment to understand the institutional details. When equity holders have too little "skin in the game," moral hazard becomes a real danger. This combination of private information, few observations, and complex institutional details necessarily implies that the primary research methodology will be in depth and field based rather than broader and large sample statistical analysis. These barriers to research, however, have been falling in recent years. There is growing body of scholarly research on project finance, including numerous case studies, books (including the book I recently published), and related articles. I expect to see significantly more research in the coming years particularly given the fact project companies provide fertile and relatively unused territory for testing existing financial theories and developing new ones. Q: Professor Josh Lerner recently published an article ["Boom and Bust in the Venture Capital Industry and the Impact on Innovation," Josh Lerner, Economic Review, Federal Reserve Bank of Atlanta, October 2002, Volume 87, Issue 4] pointing to the cyclic nature of the use of venture capital investment. Do you think the use of project finance is affected by market cycles as well? And if so, what economic factors do you feel would influence a boost in interest in this sort of finance? A: The field of project finance has clearly been affected by macroeconomic conditions over the past few years, but not nearly to the extent that other financing vehicles such as venture capital or other financial transactions such as mergers and acquisitions have been affected. From a peak of almost $220 billion in 2001, total capital expenditures financed on a project basis fell by 38 percent to $135 billion in 2002. Nevertheless, it rebounded in 2003 to $172 billion. Based on mid-year statistics, volume in 2004 should be up again. In comparison, total IPO volume fell 85 percent from $66 billion in 2000 to $10 million in 2003, while announced M&A acquisitions of U.S. targets fell 70 percent from $1,789 billion in 2000 to $539 billion in 2003. The difference with project finance is that it is used to finance long-lived projects, many of which are in the infrastructure sector (power, water, telecom, and transportation). For many countries, these expenditures cannot be deferred for very many years; they need the infrastructure today. Moreover, it doesn't make sense to defer a project with a thirty- to fifty-year lifespan just because we are in a temporary economic downturn. The long-term demand is clear. For this reason, the decline in project finance has been about half as severe as in these other financing vehicles and transactions. The strong long-term demand stems from three underlying trends. First, globalization is increasing the minimum efficient scale for many industries, thereby forcing firms to make larger and riskier capital commitments. Second, depletion of existing natural resources means firms will have to develop resources in increasingly remote locations subject to higher levels of sovereign risk such as Chad and Azerbaijan. And finally, the combination of privatization and deregulation of key industrial sectors (e.g., telecommunications, power, water, etc.) will create new investment opportunities, not to mention lessons on what kinds of businesses should and should not be managed by the private sector. Demand for infrastructure investment is especially high in developing countries. According to the World Bank, Asia alone needs $2 trillion of infrastructure investment over the next ten years to maintain its current standard of living. Yet most developing countries lack the necessary capital and have little ability to borrow. The only way to fund much of this investment will be through project finance. We are, however, still in the early stages of learning how to use project finance effectively. While the use of project finance exploded in the late 1990s, the excitement over this new tool led to project finance being used in places where it probably should not have been used. For example, ten years ago, most power plants were financed with long-term fixed price contracts for both inputs (gas supply) and outputs (and electricity purchase). More recently, "merchant plants" were financed without the benefit of long-term contracts, leaving them exposed to competitive threats, volatile prices, and fluctuating demand. As highly leveraged companies, they could not withstand the large fluctuations in revenue. In the end, we have seen many power companies default in recent years. Similarly, many telecommunications firms have also defaulted over the past four or five years. But these events just reinforce the need for additional research on project finance. We need to know more about how to use this new, and potentially very valuable, financing tool. Ann Cullen is a business information librarian at Baker Library, Harvard Business School, with a specialty in finance. 06 Jul 2016Op-EdThe Truth About Authentic Leaders Benjamin C. Esty Benjamin C. Esty is Roy and Elizabeth Simmons Professor of Business Administration at Harvard Business School. Financial Services Industry

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8:00 am Consuelo Mack WealthTrack "Great Investors: Bruce Berkowitz" Guest: Bruce Berkowitz, Portfolio Manager, Fairholme Fund. This week's Consuelo Mack WealthTrack features a rare interview with Morningstar's Fund Manager of the Decade, "Great Investor" Bruce Berkowitz, who discusses Fairholme Fund's controversial concentration in financial stocks and other unloved securities. D 8:30 am Religion & Ethics NewsWeekly "Magic of the Snowy Owl" None of the Above: Who Are They? - Part One of a three-part series on the fast-growing number of Americans - now twenty percent of US adults - who have no affiliation with any religious organization. Host Bob Abernethy reports the results of a joint Pew Forum/Religion &Ethics NewsWeekly survey, released this week, on the characteristics of the unaffiliated, especially the one-third of young people 18 to 29 who describe themselves as atheists, agnostics or "nothing in particular." Why is this group growing so fast, and what are the implications of this growth for politics and religion? Minnesota Marriage Amendment - Minnesotans will vote in the upcoming election on a hotly contested amendment to the state constitution that would define marriage as the union of one man and one woman. D 9:00 am Frontline "The Choice 2012" More than 100 in-depth interviews with friends, family, authors and journalists contribute to this biography of the presidential candidates of America's two major parties - Mitt Romney and Barack Obama. Producer and former Idahoan Michael Kirk and his award-winning team take a fresh look at these men, attempting to reach the core within each of them to create a rich view of them personally and professionally.G 11:00 am Need to Know RAY SUAREZ ANCHORS. Anchor Ray Suarez hosts a round table discussion about the likelihood of going over the "fiscal cliff", the effect on the American economy, and possible solutions to avoiding another recession. Guests on the panel include economist Douglas Holtz-Eakin, a former Director of the Congressional Budget Office, former four-term Oklahoma Senator Don Nickles, economist Bo Cutter and Maya Rockeymore, Chair of the National Committee to Preserve Social Security and Medicare. D 11:30 am Inside Washington 12:00 pm Mystic Voices: The Story of the Pequot War 1:00 pm Mystic Voices: The Story of the Pequot War Romney's Appeal to Women: The GOP Presidential candidate is hopeful his recent comments on abortion will lure in more women voters. International Day of the Girl Child: As the UN marks the first international day of the girl child a 14 year old Pakistani girl fights for her life because of her dedication to educating girls worldwide. The UN also takes aim at ending child marriage. D "Justice Not Politics" On this week's Moyers & Company (check local listings), James Balog, one of the world's premier cinemaphotographers, explains how "the earth is having a fever." At tremendous risk to his own safety, Balog has been documenting the erosion of glaciers in Switzerland, Greenland, Iceland, and Alaska. He joins Bill to share his photos and discoveries, describing his process and transformation from climate change skeptic to true believer. D "Amy Waldman: Conversations from the Sun Valley Writers' Conference" The author-journalist discusses her work with host Marcia Franklin. Waldman's first novel, The Submission tells the story of a jury, in charge of selecting a ground zero-like memorial from among anonymous submissions, and the reactions when it chooses a design created by a Muslim-American architect.G 6:00 pm Need to Know 6:30 pm Inside Washington 11:00 pm McLaughlin Group 11:30 pm Need to Know

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This site contains information and press releases about Life Time Fitness. While this information was believed to be accurate as of the date prepared, Life Time Fitness disclaims any duty or obligation to update such information. To the extent that any information is deemed to be a “forward-looking statement” as defined in the rules and regulations of the Securities Act of 1933, as amended, such as information is intended to fit within the “safe harbor” for forward-looking statements and is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include those listed under Risk Factors in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission, which are also available on the SEC Filings page of this website.2014 LIFE TIME FITNESS, Inc. All rights reserved.Contact Us | Guest Policy | Terms of Use | Privacy Policy

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Parthenon Capital Partners Announces Investment in Envysion Parthenon Capital Partners (“Parthenon”), a growth oriented private equity firm with offices in San Francisco and Boston, announced today that it completed an investment in Envysion, a leading provider of managed video surveillance as a service (“MVaaS”) for QSR, retail, wireless, convenience store and cinema customers. Proceeds from the transaction will be used to provide growth capital for the Company and to provide liquidity to certain shareholders. Envysion is led by Chief Executive Officer, Matt Steinfort, who, with his highly accomplished team, has developed a cloud-based MVaaS solution providing powerful video-based business intelligence solutions to numerous retail end-markets. Mr. Steinfort, who co-invested alongside Parthenon in the transaction, said, “Since we first met the Parthenon team over a year ago, we have been consistently impressed with their deep understanding of our industry. They have dedicated significant time researching the industry and have come into the investment with a compelling thesis developed over that period. We have worked closely with the Parthenon team over the past year to develop a shared vision to continue the growth and innovation that has made Envysion an industry leader. We are confident that the resources and experience that Parthenon brings to the investment make it the right partner to help Envysion reach its full potential.” “We are thrilled to partner with Matt and the Envysion team,” said Andrew Dodson, Partner at Parthenon Capital Partners. “Having spent years in and around the security and video surveillance industries, we believe that video-driven business intelligence is revolutionizing how owners and operators manage retail and restaurant locations. With better access to broadband and affordable data storage, operators can utilize cloud-based solutions like Envysion’s to dramatically enhance their loss prevention efforts and improve operational efficiency by combining analytics with video. We believe Envysion is the clear industry leader providing these capabilities.” Headquartered in Louisville, CO, Envysion was founded in 2006 with the goal to provide sophisticated managed video surveillance solutions to customers who needed an easy-to-use solution to enhance their business intelligence capabilities and provide insight into their retail operations. Today, the Company’s solution is deployed in thousands of retail locations across the United States and Canada and has been proven to drive meaningful profitability improvements and prevent millions of dollars in potential losses. David Ament, a Managing Partner at Parthenon, added, “Since its founding, Envysion has partnered with some of the largest, most sophisticated operators within the retail, restaurant and cinema industries. By providing these customers with powerful, easy-to-use, cloud-based solutions, Envysion has substantially increased the profitability of these customers, reduced losses, increased operational efficiency, and driven the effectiveness of marketing campaigns. Parthenon is excited to partner with the Envysion team to build upon its track record of growth and lead the industry into its next phase of expansion.” ABOUT ENVYSION Envysion enables large, national retail, restaurant, cinema and convenience store operators to increase profitability 10-15% by putting easy-to-use, video-driven business intelligenceTM into the hands of the entire organization. Envysion created the Managed Video as a Service (MVaaS) model which transforms video surveillance into a strategic management tool that provides instant and unfiltered business insights to users across operations, loss prevention, marketing and human resources. The MVaaS model enables Envysion to accelerate innovation by rapidly responding to market opportunities and making new capabilities immediately available to all users. Envysion’s platform quickly scales to 1,000s of locations and 10,000s of users without straining the IT department or network. For more information about Envysion, please visit www.Envysion.com. ABOUT PARTHENON CAPITAL PARTNERS Parthenon Capital Partners is a leading mid-market private equity firm based in Boston and San Francisco. Parthenon utilizes niche industry expertise and a deep execution team to invest in growth companies in service industries. Parthenon seeks to be an active and aligned partner to management, either through recapitalization transactions or by backing new executives. Parthenon has particular expertise in business services, financial and insurance services and healthcare, but seeks any service, technology or delivery business with a strong value proposition and proprietary know-how. Parthenon's investment team has deep experience in corporate strategy, capital markets and operations, enabling the firm to pursue complex, multi-faceted value creation opportunities. For more information, visit www.parthenoncapitalpartners.com.

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FORTUNE Small Business: Funding sources for women and minoritiesDirect government loans don't exist, but a host of support programs exist to help you start or grow your business. EMAIL | PRINT | DIGG | RSS Subscribe to Top Stories feed://rss.cnn.com/rss/money_topstories.rss By Fahmida Y. RashidMarch 2 2008: 3:33 PM EST Ask FSB Get small-business intelligence from the experts. Here's a chance for YOU to ask your pressing small-business questions, and FSB editors will help you get answers from the appropriate experts. * Your e-mail address: * Your daytime phone #: * Your questions: More from FSB Help wanted for HR firm A CEO and rodeo queen King of the mountain bike (FORTUNE Small Business) -- Dear FSB: Way back when, there were low-interest rate loans from the government for women and minorities in small business. They no longer exist, business advisors say. Why is this? I am an older woman in business and find it all but impossible to get a loan. - Whetonia, Tonie's RVs Inc., Salem, Va.Dear Whetonia: While there are no actual loans from the government for small business owners, there are government agencies that help small business owners secure financing. These agencies don't actually make loans - they guarantee loans made by traditional lenders. Banks and other financial institutions provide loans to small business owners because the agencies guarantee repayment of the loan. The Small Business Administration and the Minority Business Development Agency provide small business owners with all kinds of assistance - financial as well as non-financial - such as help writing business plans and with financial planning to secure funding. While the MBDA was established to specifically assist minority-owned businesses, the SBA is theoretically color-blind. "In recent memory, the government has not offered or guaranteed loans that are specifically geared to women and minorities," said Deborah Kluger, an independent consultant for Proposal Writing and Government Contracting. Fed cuts pay off for small businesses However, in practice, minorities and women are not out of luck. Many SBA-certified lenders, such as Bank of America (BAC, Fortune 500), Wachovia (WB, Fortune 500) and Wells Fargo (WFC, Fortune 500), give special consideration to these small business owners. Wells Fargo, for one, which publicly pledged to lend $3 billion to Asian-American-led businesses by 2012, has four small business programs in place for minorities and women: Wells Fargo Asian American Business Services, Wells Fargo Women's Business Services, Wells Fargo Latino Business Services, and Wells Fargo African-American Business Services. Like the SBA, the MBDA doesn't offer any direct funding, but has relationships with local lenders through its national network of Minority Business Development Centers, Native-American Business Development Centers, and Business Resource Centers. While the SBA doesn't offer grants to start or expand small businesses, it does guarantee loans of up to $250,000. Once the small business owner has been approved for an SBA-guaranteed loan, the owner can apply for a loan from any SBA-certified lender. In addition to banks, there are privately owned and managed investment firms - Small Business Investment Companies - that offer venture capital and startup financing. The SBA has information about SBICs and certified banks on its web site. If you are having trouble getting loans for your business, one place to go for advice is the Small Business Development Centers (SBDCs), recommends Kluger. Associated with the SBA, there are SBDCs located in every state. The MBDA also has local development centers that can help. Many state and local governments also provide funding, incentives, and other assistance for small businesses, said Kluger. Information is usually available under the "Businesses" heading on the state's website. In Virginia, the Virginia Small Business Financing Authority provides assistance with direct, indirect, and conduit lending. While not specifically focused on minorities and women, peer-to-peer lending services such as Prosper.com and the new Virgin Money are a potential source of loans, said Kluger. In addition, there various firms and organizations provide micro-loans for small businesses, some of which specialize in loans to women or minorities. One of the largest, Accion USA, has branch offices nationwide and makes loans ranging from $500 to $25,000. There are also a number of non-profit organizations assisting minority owners, such as the National Minority Business Council's Micro-Loan Fund, the National Minority Supplier Development Council's Business Consortium Fund, and the National Urban League's Urban Entrepreneur Partnership. Have you experienced discrimination when applying for a loan? Talk about it here. Energy bill promises lower-cost biz loans Get loans without a financial history More Small Business Top StoriesThese companies will pay for your paid vacation Big McDonald's comeback runs into troubleSanders wants Clinton to break up big banks. Will she?Israel vs. USA: Google's competition to go to the moonHackers prey on US companies and send cash to Asia

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New study asks: is flood insurance viable in Canada? Sep 17, 20137:30am GUELPH, ON, Sept. 17, 2013 /CNW/ - Canada is the only G8 country in which insurance against overland flooding is not available to homeowners - but does it have to remain that way? A study released today that explores issues related to flooding and property insurance aims to advance informed discussion of the potential to better protect Canadian homeowners. It reveals that while insurance executives are concerned about the lack of flood insurance and agree on many of the associated issues, opinions remain mixed concerning its viability in Canada. The study, entitled Assessing the Viability of Overland Flood Insurance: The Canadian Residential Property Market, was commissioned by The Co-operators and undertaken by Dr. Jason Thistlethwaite and Dr. Blair Feltmate of the Faculty of Environment at the University of Waterloo. The researchers interviewed CEOs and other executives at insurance companies accounting for 57 per cent of the property insurance business in Canada, seeking to better understand their perceptions of the risks and opportunities related to insuring homes against overland flood damage. The interviews were conducted during the winter of 2013 - before this summer's catastrophic floods in Alberta and the Greater Toronto Area. Although coverage for some damage related to flooding, such as sewer back-up, is available, property insurance in Canada does not cover losses from overland flooding, which is by far the most common type of natural disaster in Canada. Those whose homes suffer uninsured damage from floods and other natural disasters may be eligible for some compensation from the federal government's Disaster Financial Assistance Arrangements (DFAA). The purpose of insurance is to spread risk among a large number of policyholders whose premiums are pooled to cover future claims. Flooding presents a challenge in this regard because it is a significant risk only for the small percentage of homeowners who live in areas prone to flooding, making insurance prohibitively expensive for those who need it. "The way things stand, property owners are not adequately protected under a system that places too much emphasis on recovery at the expense of mitigation," said Kathy Bardswick, president and CEO of The Co-operators. "There is no question that this is a complex issue that requires a multi-stakeholder solution involving insurers, governments, developers, banks and homeowners. This report identifies the key issues, challenges and opportunities and we're eager to engage these stakeholders to build upon this research and work toward a solution that better protects our communities and our economy." The study revealed widespread concern among participants about governments' approach to flooding. Too little is invested in flood risk mitigation and adaptation, while the DFAA helps homeowners recover after a storm without providing incentives for preventive measures beforehand. Among the other key concerns participants agreed upon were the lack of reliable information, particularly inadequate flood mapping, and the need for additional investments in flood defences. Those interviewed also "generally shared the same opinion on the major characteristics of flood insurance necessary to make it a viable product." A key recommendation of the report is to "initiate a broad-base discussion on the actions necessary to improve flood and disaster risk management with key stakeholders." The Co-operators has committed to following through on this recommendation in the months ahead. To view the report, please visit the Sustainability section under the About Us tab at www.cooperators.ca. About The Co-operators: The Co-operators Group Limited is a Canadian-owned co-operative with more than $33 billion in assets under administration. Through its group of companies it offers home, auto, life, group, travel, commercial and farm insurance, as well as investment products. The Co-operators is well known for its community involvement and its commitment to sustainability. The Co-operators is listed among the 50 Best Employers in Canada by Aon Hewitt; Corporate Knights' Best 50 Corporate Citizens in Canada; and the Top 50 Socially Responsible Corporations in Canada by Sustainalytics and Maclean's magazine. For more information visit www.cooperators.ca. SOURCE The Co-operators For further information: Leonard Sharman The Co-operators 519-767-3937 Dr. Jason Thistlethwaite University of Waterloo [email protected] 519-807-0525 Dr. Blair Feltmate University of Waterloo [email protected] 226-339-3506 Back to news releases Find us on: Archives 2015 2007 Copyright © 1997-2012 The Co-operators® Contact | Legal | Privacy

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Prosper Lending Review News and tips for the peer to peer (P2P) loan marketplace Swap-A-Debt seeks regulatory approval Swap-A-Debt recently became the latest p2p lending company to seek approval from the SEC. They filed on December 9th - four days after Prosper. On December 22nd they updated their registration.Here are excerpt from the filing which can be read here:Business OverviewWe are a development stage company in the peer-to-peer (P2P) lending space and we have not generated any revenues since 2005 . Our mission is to establish the most efficient Internet non-institutional lending organization with more services than present privately held competitors. Person-to-person lending or peer-to-peer lending or social lending is, in its broadest sense, the name given to a certain breed of financial transactions (primarily lending and borrowing) which occurs directly between individuals (peers) without the intermediation/participation of a traditional financial institution. The biggest enabling technology for person-to- person lending has been the Internet, where person-to-person lending appears in two primary variations: an “online marketplace” model and a “family and friends” model.We are an on-line site for borrower’s who want to borrow $1,000 to $25,000 and for lenders who can make educated decisions on credit scores, intended use etc., to receive a higher rate of interest than available at traditional financial institutions. This is all facilitated with an Internet website and a highly efficient back office system to completely automate a process that has become ever more cumbersome at brick and mortar banks. Our fully automated Internet website which utilizes16 high level programmers is ninety five percent complete (for further details please refer to page 1 “Our Corporate Information” section). Because of the high automation of its website the personnel requirements for the company are relatively modest. Swap-a-debt will embark on a major marketing campaign to expand its client base. It is in discussions with major marketing companies to execute this program.Benefits to BorrowersWe created our peer-to-peer lending community to specifically address the needs of small loan borrowers with few alternatives in the current financial market place. Several key advantages to borrowers participating in the company’s online lending program include the following:Access to needed funds in the small loan range of $1,000 to $25,000The ability to pay a comparatively favorable interest rate, typically ranging from an average of 10% to 16+%, relative to the higher rates often charged by alternative sources such as 25+% for cash advances, credit card changes and payday advances, among othersThe ability to independently source funding from a anonymous third party lender, rather than face the potentially awkward experience of having to approach family and friends for moneyThe convenience of an online “banking-like” experience, whereby the borrower can apply for a loan online and monitor the results of their application and “lender hits” anytime, anywhere online. Benefits to LendersLikewise, we believe our lending program offers several advantages and incentives for lenders to participate in our peer-to-peer community as below.Compared to the estimated return typically earned on cash deposits, which can range from 2.0% and below, we offer lenders the chance to participate in an investment opportunity with average returns as high as 10% to 16+% on loans madeAs part of the features of the company’s online lending program, lenders are able to diversify their investments in a portfolio of loans by electing to disperse their funds amongst one or several different borrowers. Additionally, a single lender may choose to provide just a fraction of a borrower’s requested amount, with the remainder coming from other participating lenders in the online community. By choosing to practice lending diversification, lenders should better be able to insulate their returns from the default of any one/few borrowers while still earnings superior returnsThe convenience of an online “investing” experience, whereby the lender can create his/her own portfolio of borrower loansCompetitionCompetitors are listed as follows:Prosper was the first on-line peer-to-peer matchmaker which started in February 2006 and has over 600,000 users, over 10,000 deals and loans over $200 million. They were initially funded and founded by Chris Larson who founded E-Loan before Prosper. In April 2007, Ebay moved into peer-to-peer lending space with the purchase of pre-launch, San Francisco based MicroPlace.Circle lending started in October 2007 and sold a majority stake in the company to Richard Branson’s Virgin USA, re-branding itself as Virgin money. The site manages more than $200 million in loans between friends and family.The Online Banking Report predicts that within five years, the total market for P2P lending in the U.S. could surpass 1,000,000 loans annually.Resources RequirementsThe resources and necessary know-how to create a successful online community for the purpose of conducting financial transactions, including the borrowing and lending of funds, are extensive. In addition to technical programming skills, the builder must have a thorough understanding of the complex laws and requirements of United States, on a state by state basis, that regulate the online banking industry and dictate its permissible transactions. Effectively, all code must be written to comply with virtually hundreds of laws at every stage and consideration of the transaction process, including the requirements of the Securities and Exchange Commission, the Department of Homeland Security and federal and state laws, among others. Failure to identify and comply with all of these laws as part of peer-to-peer provider’s business plan can delay, halt or even close down an operator’s efforts.We have invested many thousands of man-hours, and the expertise equivalent of over one hundred years in the programming industry via 16 high level programmers to complete our fully automated Internet website. These efforts were undertaken to ensure all code comprising our platform is logically written to comply with the laws of United States. Furthermore, while we believe our website provides an easy-to-use platform for users, the actual technical framework behind our site is extremely sophisticated. We believe this level of complexity limits the ability of new players to easily enter the market.Otherwise, we will utilize the proceeds of the investment to bring on senior management to the company. Because of the high automation of our website the personnel requirements for our company are relatively modest. We will also embark on a major marketing campaign to expand our client base. It is in discussions with major marketing companies to execute this program.Potential Future BusinessWe are the only online peer-to-peer lending platform for the underserved, small loan market of sub-$25,000 that offers an array of additional credit and financing services to potential borrowers. At present, we do not use any of it own funds for making loans to would-be borrowers, rather the entire amount of funds invested in loans is sourced from other lender participants in the company’s online platform. Going forward, we may choose to pursue a “hybrid model” whereby loans to individual borrowers are sourced in part from the peer-to-peer lending community and in part directly from our own corporate funds.We believe this hybrid model would be unique to the industry as, at present, the industry of online lending is comprised of players participating either solely as a banking organizations with the deployment of their own funds/customer deposits, or as a peer-to-peer operation where no “house” funds are involved. Additionally, going forward, we envision extending our lending services small businesses seeking up to approximately $10 million in funding. EmployeesAs of December 8 , 2008, we have two full-time employees, Marco Garibaldi and Edward DeFeudis. Marco Garibaldi is the CEO and Co-Founder, and Edward DeFeudis is the President and Co-Founder. Mr. Garibaldi and Mr. DeFeudis each spend in excess of 50 hours per working on behalf of the company. As we launch and begin to generate revenue, we will look to raise capital and hire 9 additional staff members over the next 12 months. Read the rest of the filing here. In October Lending Club became the first p2p lending company to receive SEC approval. Prosper filed with the SEC on December 5th. Swap-A-Debt Wiseclerk Hi Tom,interesting find.Did you see the rather long list of "selling securities holders" listed on page 22 of the filing? I did see that. As a traded penny stock, this company has a long history. They just changed their focus to p2p lending this year. Did you find it by searching Edgar, or did someone of the company contact you Edgar. There was also some discussion on prospers.org. Steve Rabago Hi Tom,P-2-P lending needs to have a secondary market to create liquidity and long term viability. It is not much different than a bank in that sense - otherwise lenders end up with notes without any liquidity - a "bond" without buyers is a contributing factor in the current financial crisis. It is a good idea with adequate regulation and public transparency.ZimpleMoney will be offering a secondary market for its member portfolio's, though it is our intent to do it a little differently than I understand Swap-a-Debt.Steve Rabago, ZEO, ZimpleMoney.com Wiseclerk, here's a link to the prospers.org discussion I was talking about:http://www.prospers.org/forum/index.php/topic,11174.0.html New to p2p lending? Start here... Eleven perspectives on P2P lending How does Prosper compare to other investments? Prosper: A hands-on education in risk management Why would a borrower use Prosper instead of a bank? Borrowing money to lend on Prosper: Wise or Foolish? Most Prosper lenders do not diversify Are all Prosper loans within a credit grade created equal? An analysis of pre-payment risk on Prosper loans Are non-homeowners a safer lending risk in a declining house market? What effect would a recession have on the Prosper marketplace? Loan money to family and friends Peer to Peer Lending Companies Virgin Money (friends & family) Loanio (currently closed) Kiva (microcredit) P2P Lending Blogs Lazy Man and Money Official Lending Club Blog Official Prosper Blog P2P lending with Prosper Personal Loan Portfolio Wise Clerk Recent P2P Lending Blog Posts P2P lending on twitter CBS features Lending Club Last minute gift certificate idea and $25 for you Pertuity Direct to launch 'immediately after the N... Lending Club opens to lenders from Virginia Prosper files S-1 registration with the SEC Prosper fined $1 million; faces class action lawsu... Contact Prosper Lending [email protected] This website is not owned by Prosper.com or any other peer to peer lending site - we just write about them. Copyright © 2007-2010 Prosper Lending Review. Contact us at [email protected]

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As a direct response to a parabolic rise in obesity rates in the United States and most other Western nations, health products have seen skyrocketing sales figures as more and more emphasis is being placed on fitness and well-being. Companies that sell fitness supplements have benefitted tremendously. GNC Holdings (NYSE:GNC) was one of them, and has seen a doubling of its stock price since its IPO in April of 2011. Since inception, GNC stock has outperformed both the S&P 500 and the Dow Jones Industrial Average by 94%. Another notable example is Vitamin Shoppe Inc. (NYSE:VSI) which saw roughly 230% appreciation since its IPO in November of 2009. Since inception, VSI outperformed both the S&P 500 and the Dow Jones Industrial Average by 196%. Recent IPOs of highly recognized companies (in other industries) have fallen flat on their face due to Wall Street's inability to gauge a company's worth. Perhaps the most high-profile example was the Facebook (NASDAQ:FB) IPO, which was priced on a bunch of intangibles and funny numbers derived from its large subscriber base. Recall that Facebook became a NASDAQ stock on May 17, 2012 at an initial price of $38/share, but has fallen about 30% since due to a lack of actual financial data that justifies the company's market capitalization (which now hovers just under $60 billion.) The neutraceutical/supplement industry, on the other hand, has shown very steady top-line growth that could directly boost the value of the companies in it. This is basically why the market has been so bullish on GNC and VSI post-IPO, and will continue to do so as long as the growth remains intact. A big, upcoming name in the industry is MusclePharm Corporation (MSLPD.OB). MusclePharm has not seen as much attention due to the young age of the company (it was started in 2008) and the company's shady financial history. There is also the fact that company shares are not available on either of the two major US stock exchanges (the New York Stock Exchange or the NASDAQ), which makes MusclePharm equity quite illiquid and hard to discover right now. Nonetheless, the company has a story that could be interesting to investors who are looking for the next big play in healthcare products. MusclePharm's history dates back to 2006, when the original founder Cory Gregory sold his services as a fitness trainer in Nevada. His company Tone in Twenty offered muscle-regenerative isometric techniques, which are increasingly popular amongst professional athletes. MusclePharm CEO Brad Pyatt was then coming out of his four-year tenure in the National Football League (which started with the Indianapolis Colts in 2003). His years in the world of professional sports taught Brad a lot about supplements and the existence of inferior products on the market, which birthed the idea that a new supplement company could be viable competition for the big brands. It was only a matter of time after Brad Pyatt met entrepreneur Cory Gregory that the business concept would be made into reality. As mentioned earlier on, MusclePharm began its operations in 2008 out of Brad Pyatt's garage. Despite a modest $300,000 pool of startup capital, MusclePharm's CEO Brad Pyatt and Cory Gregory, managed sales revenue of $80,000 by the end of the year. Their success early in the year led an IPO, which raised additional capital used to fuel the massive top-line growth that MusclePharm would see over the next few years through a beefed-up marketing budget. By 2011, MusclePharm reported $17 million in sales revenue. This equates to a 2,125% increase in revenue over three years, or an annually compounded growth rate of 597% top-line growth. As one might expect, this hyperbolic growth rate came at a big cost. The supplement business is virtually a carbon copy of the athletic apparel business, where branding is the single most important factor for the success of any company. Realizing the obvious importance for MusclePharm to develop as a brand, the company spent generously on its "beefed-up" marketing budget throughout the first few years of operation. Aggregated throughout the first few years of operation, you can see that MusclePharm spent about $10 million to launch and to build its brand presence. This was close to the same amount of money that MusclePharm raised from its IPO in the first few years, and debt had to be issued. The major problem was that MusclePharm's debt financing was structured very poorly by its former CFO. This resulted in the issuance of an enormous pool of convertible notes that induced egregious dilution of the stock, and made the ticker extraordinarily risky - even for investors who buy shares through uncentralized markets. The company began to undergo a convertible debt retirement program in January 2012, which repurchased $5.5 million worth of toxic derivatives with $3 million in cash derived from sales revenue and with 55 million shares of MSLPD by the end of Q1 2012. This has made MusclePharm much more accessible to both institutional investors attempting to mitigate the risk in their portfolios, as well as the individual investors who are less knowledgeable about debt structuring and the potentially dilutive effects of financial derivatives. Viewing the most recently released version of the company's balance sheet (from their SEC 10-Q filing released on November 13, 2012) shows that MusclePharm's financial position as of September 30, 2012 was improved relative to September 30, 2011. It may seem dangerous that company only holds $634,000 in cash (even less than 2011, when the company held $660 million), but note that there is an enormous build-up of over $4 million in accounts receivable which should be translated into eventual cash flow as we head into 2013. There was also an apparent investment in company property and equipment, which paves the way for MusclePharm to create a self-sufficient supply chain for their product in future years. The most important (and beneficial) change to the company's balance sheet was the reduction of derivative liabilities from over $7 million to a negligible sum of $25,000 as of the end of Q3 2012. As mentioned earlier, these derivatives were causing major uncertainty amongst investors due to their complicated nature and association with high risk. One thing that has plagued MusclePharm's business model has been its reliance on third party manufacturers, which has crushed the company's profit margins, hence preventing the company from posting earnings growth in league with revenue growth. This problem also helps explain why the company is consistently low on cash, and has not seen all that much interest from Wall Street's equity analysts. MusclePharm's EBITDA (earnings before interest, taxes, depreciation, and amortization) for Q3 was $4.07 million. Out of total net sales of $18.56 million for Q3 2012, we calculated that COGS (cost of goods sold) is about 78%. This makes profit margins only 22%, which is an extremely low figure for any business. When you subtract SG&A (or sales, general & administrative) expense from EBITDA you get negative earnings. For MusclePharm in Q3, $7.88 million worth of SG&A expense brought the company negative operational income of $3.8 million. Note that the final losses were higher due to roughly $2 million in additional expenses for the quarter related to the removal of derivative liabilities. Since that was a one-time expense, it can be ignored from a long-term perspective. If you compare MusclePharm to a somewhat similar name like GNC, you'll note that there is a significant gap in the two companies' profitability relative to revenue. Specifically using their Q3 2012 results, you can calculate that GNC had COGS of 62% and gross margins of 38%. MusclePharm, eager to improve on this front, is looking to expand its margins by about 10% through in-house manufacturing and distribution of its supplements. The exact timeframe has yet to be revealed by company management, although this does develop the notion that MusclePharm is not trapped in an unprofitable distribution model forever. What's also important to realize about MusclePharm is that it's a very young company that has already proven its competitive edge in the supplement industry through its huge sales growth. This translated into strong historic top-line growth for the company, with continued expectations of this trend. Also vital to its success is its unique management team. CEO Brad Pyatt is clearly different than GNC's corporate-flavored CEO Joseph Fortunato, since Mr. Pyatt has firsthand experience with the products he now sells and has a profile that should make MusclePharm more accessible to professional athletes as a sponsor. It's not just potential in football either. For instance, note that MusclePharm is the official sponsor of the increasingly popular UFC (Ultimate Fighting Championship.) Also worth noting is MusclePharm's new and highly regarded CFO Gary Davis, who led the fitness website BodyBuilding.com into #1 status between 2006 and 2010. It seems quite certain that Mr. Davis will become integral to MusclePharm's competitive strategy going forward. Investors who are either long or considering MusclePharm as we head into a new fiscal year should be looking for a continuation of the company's success as measured by top-line growth, and also development on the company's plans to manufacture and distribute its own product. The company's COGS is not so great, but can certainly be improved in coming quarters. This is essential to the company's valuation down the line, of course, since earnings are supposed to be the most fundamental driver of stock prices anyway. There are few exceptions out there when it comes to retailers, but some names like Amazon (NASDAQ: AMZN) manage to sell the top-line growth story alone quite well. If MusclePharm can continue its success on the top-line while fixing its cost structure, shareholders could see some huge gains when investors realize that there is a lot of momentum (and money) being created in the supplement industry. Business relationship disclosure: Bio-Wire was commissioned to conduct investment research on MusclePharm. These are the basic results of our findingsAbout this article:ExpandTagged: Investing Ideas, Long Ideas, Healthcare, Drug Manufacturers - Other, SA SubmitProblem with this article? Please tell us. Disagree with this article? Submit your own.Top Authors|RSS Feeds|Sitemap|About Us|Contact UsTerms of Use|Privacy|Xignite quote data|© 2016 Seeking Alpha

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2016-30/1376/en_head.json.gz/10114

Comparing JinkoSolar to three representative competitors in the solar industry, it is clear that JinkoSolar is a relative bargain. The three representative competitors I've chosen are Trina Solar (NYSE:TSL), Yingli Green Energy (NYSE:YGE), and First Solar (NASDAQ:FSLR). The first two are Chinese competitors and the last is an American competitor. JinkoSolar has a higher ROE and lower forward price/earnings ratio (forward P/E) than all of its competitors, standing out as attractively cheap. The price/sales ratio (P/S) is slightly higher than its competitors in China. However, given its status as a cost leader and superior profit margins, its P/S ratio is certainly within the realm of reasonability. Also, with plenty of cash to meet short- and long-term obligations, and superior profit margins than its Chinese competitors, JinkoSolar has a higher probability of surviving any cyclical downturn or overcapacity in the solar industry. Source: Yahoo Finance. There are many macro tailwinds at the solar industry's back that should continue to blow for many years into the future. With costs coming down and the need for many public figures worldwide to make clean energy an essential part of their campaign, subsidization is likely to remain important. According to the SEIA, the United States increased its photovoltaic (PV) capacity 41% in 2013, and it accounted for 29% of all new electricity generation capacity added. Meanwhile, the national average PV installed system price declined by 15% to $2.59/W. Stronger demand and declining costs make it likely that solar will become a far greater percentage of total energy demand, even as total energy demand continues to grow. Aside from the bullish macro trends in favor of the solar industry, JinkoSolar's growth is impressive -- but, relative to its competitors, it is about in line. This is bullish since you can currently buy JinkoSolar at a discount, which means more growth per dollar invested. Source: Yahoo Finance and Nasdaq. The chart below shows how impressive JinkoSolar's earnings and revenue growth have been. JKS Revenue TTM data by YCharts The revenue sources of JinkoSolar are diversifying geographically, and by product/service offerings. JinkoSolar has recently become a market share leader in South Africa (40% market Share) and Chile (30% market share), according to its most recent Q1 conference call. With hopes of expanding its offerings in the United States, Europe, and Japan, it has the potential to break into massive markets as a cost leader. More importantly, JinkoSolar will not be solely dependent on China as its source of future revenue. JinkoSolar is also diversifying its product/services revenue allowing them to be less dependent on earnings from manufacturing solar panels. This gives JinkoSolar the ability to avoid the full pain from overcapacity. As both a manufacturer and an investor in solar panels, JinkoSolar has uniquely positioned itself within China as a stable and predictable growth story going forward. Short-Term Catalysts There are several short-term catalysts for JinkoSolar. Last Friday, a trader purchased 2,000 August 30 calls for $1.15, which would imply a 13.2% increase as of the close yesterday in just the next three weeks in order to break even. Three top hedge fund managers own 13.5% of the floated shares in JinkoSolar, according to Insider Monkey. This puts you in good company owning the stock. Also, JinkoSolar continues to improve its patent portfolio and promised new product offerings in the future on their 2014 Q1 conference call. Finally, the technical pattern currently forming in JinkoSolar has a strong base of support around $22.50 and is currently trading near its 50-day moving average. It would be wise to watch for support at the 50-day moving average, but given how its traded the last two days, the risks seems to be clearly to the upside and signals a higher likelihood that we test the 52-week high of $37.98 (38% upside from its previous close). JinkoSolar is trading at bargain prices with strong growth. The company is intelligently diversifying its revenue stream, both geographically and through different products and services. There are additional risks to investing in Chinese companies, but given JinkoSolar's potential to be a global leader in the solar industry, the reward outweighs the risks. Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in JKS over the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.About this article:ExpandAuthor payment: $35 + $0.01/page view. Authors of PRO articles receive a minimum guaranteed payment of $150-500. Become a contributor »Tagged: Investing Ideas, Long Ideas, Industrial Goods, Industrial Electrical Equipment, ChinaProblem with this article? Please tell us. Disagree with this article? Submit your own.Top Authors|RSS Feeds|Sitemap|About Us|Contact UsTerms of Use|Privacy|Xignite quote data|© 2016 Seeking Alpha

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2016-30/1376/en_head.json.gz/10271

Flu Factor Corporations prepare for the flu, avian and otherwise; the SEC targets stock-option backdating; where guns and corporate safety don't mix; private jet-card programs take off; and more. CFO Staff January 1, 2006 | CFO Magazine share It’s a classic damned-if-you-do, damned-if-you-don’t scenario. Faced with the twin threats of a severe flu season and the possibility of avian flu turning pandemic, employers must carefully balance their traditional policies of discouraging no-shows against the multiplier-effect costs of spreading infection. And as Carol Sladek, work-life consultant with Hewitt Associates, points out, “it’s a very fine line.” Of course, no employer will admit to encouraging sick employees to work, though policies that penalize excess sick days can have that effect. But many are aware of “presenteeism”: the growing phenomenon of snifflers and sneezers showing up at the office. In fact, a recent study by CCH Inc., a human-resources information provider, found that 48 percent of employers have recognized presenteeism as a problem, up from 39 percent in 2004. What’s in Store for Consumers? Pricing Software for All? A Word from Your Sponsor? In response, many companies have concluded that prevention is the best way to slash absenteeism. Some businesses, such as Bellevue, Wash.-based Coinstar Inc., for example, have long offered free flu shots. But this year, it seems more companies are recognizing that there is “a positive ROI in giving people flu shots,” says Helen Darling, president of the National Business Group on Health. For example, Graham Corp., a Batavia, N.Y.-based manufacturer of industrial equipment, sponsored an on-site inoculation program this fall for the first time. “The cost of the shot is de minimis,” says CFO Ronald Hansen, estimating that inoculating 170 of the company’s workers cost “a couple of thousand dollars.” But while Hansen believes that the investment was well spent, he says the ROI can’t be determined until he sees how many sick days are used this winter. Other firms are making provisions to care for the children of sick employees so the employees can recover more quickly. Although just 34 percent of businesses with 5,000 or more employees provided on-site or near-site child care in 2004, says George Faulkner, a principal with Mercer Health and Benefits, many others are now contracting with outside agencies for emergency day care. If the avian flu does turn pandemic, of course, such measures may prove ineffective. Corporate absentee policies may then be trumped by government-imposed quarantines. In the meantime, however, experts recommend that companies review their short-term-disability policies to see if they extend to pandemics, and formulate emergency-travel policies, such as requiring employees who are returning from abroad to stay home for several days. It’s common sense, says Robert Wilkerson, global practice leader for corporate preparedness at Kroll Inc., that “anybody with a long supply chain with a lot of international travel and internationally produced goods will be more susceptible.” Whatever the intensity of the flu season, contingency planning is essential to keep business moving, says Dr. Brent Pawlecki, associate medical director at Pitney Bowes. A multidisciplinary team has been formed at the Stamford, Conn.-based company to formulate responses to an avian flu outbreak, such as customizing work-at-home options. After all, he says, “there is a difference between wanting employees to perform their work and wanting them to come to work.” In this environment, he adds, common sense should rule. “If you’re sick,” he says, “don’t come to work.” — Norm Alster Corporate PreparednessHow do companies regard a possible pandemic? Have not adequately planned to protect themselves. Believe an outbreak would adversely affect their businesses. Say there isn’t much that companies can do to avoid it. Source: Deloitte Center for Health Solutions Park-n-Load Legally speaking, companies have every right to prohibit employees from bringing guns to the workplace. Prohibiting them from bringing guns to the parking lot of the workplace…well, that appears to be another matter entirely. In fact, lawmakers in several states are considering bills that would ban businesses from barring weapons in company parking lots. In Florida, proposed legislation would allow staffers to bring handguns to work — as long as the workers keep the weapons stowed in their cars. A Utah bill would curb an employer’s ability to restrict the carrying of guns on company property. If the proposals pass, Florida and Utah will join a growing number of states that have acted to limit the rights of employers on their premises. Over the past three years, lawmakers in Oklahoma, Minnesota, Alaska, and Kentucky have all approved bills making it legal for employees to store guns in cars parked on company property. Not surprisingly, the laws have sparked a new round of debate between advocates of the right to bear arms and antigun groups. Backers of the bills say workers have a constitutional right to house weapons in their own vehicles. They also argue that the laws enable workers to protect themselves as they travel to and from work. Many employers disagree, however, insisting that the laws hamper their ability to protect employees at work. There is strong evidence that guns and offices do not mix. Indeed, a recent study by a professor at the University of North Carolina found that homicides were about five times more likely to occur in workplaces where guns were permitted than in those that prohibited them. Overall, firearms were used in three-quarters of the workplace homicides that occurred in the United States in 2004, according to statistics from the Centers for Disease Control and Prevention. Says Dave Namura, government-relations manager for the Society for Human Resource Management: “These [pro-gun] laws place restrictions on an employer’s ability to create a safe working environment.” Officers at some businesses have challenged the new laws in court. In 2004, ConocoPhillips Co. and Whirlpool Corp., among others, filed a suit in federal court seeking to overturn Oklahoma’s law. But not all business leaders are up in arms. Charles Barton, finance manager of the Oklahoma Electric Cooperative in Norman, Okla., says his company’s gun policy is pretty similar to what’s in the new law. “As long as employees are carrying the guns legally in their vehicles,” says Barton, “there’s no objection.” — Karen M. Kroll Economists on Parade As the 18-year reign of Federal Reserve chairman Alan Greenspan comes to an end this month, new chairman Ben Bernanke will inherit a daunting job. Fluctuating oil prices, inflation concerns, and a sagging housing market will surely test the new Fed chairman as he assumes the mantle. For advice on how to handle the turbulence, Bernanke may want to turn to Flying on One Engine (Bloomberg Press, 2005). The book, a compilation of essays by 16 top market economists, is a comprehensive view of how global economics can roil markets. Thomas Keene, who edited the book, says he conceived the compilation in part “for people who want to link the day-to-day battles of running businesses with a greater picture.” And certainly the book addresses a number of pressing issues for finance chiefs, such as competition from developing markets in Asia. While the essays in Flying on One Engine are insightful, the authors offer up no easy answers. Indeed, the views provide a glimpse of the contradictory opinions Bernanke will have to wade through. Case in point: the deficit. Bear Stearns’s David Malpass doesn’t seem overly concerned by the shortfall, writing of a “durable U.S. expansion.” William Dudley and Edward McKelvey of The Goldman Sachs Group Inc. sound a slightly different note: “The United States has embarked on a set of policies that will make the deficit chronic and damage U.S. economic performance if left unchanged.” — Kate O’Sullivan With commercial airlines flying into bankruptcy more frequently than flights arrive at O’Hare International, business travelers are increasingly looking for alternatives — in particular, jet-card programs and charter companies. Six-year-old Weymouth, Mass.-based Sentient Jet Inc. is proof. The company, which books flights on 900 private jets for its several thousand subscribers, has increased membership by 85 percent in the last year. Hampton, N.H.-based Private Jet Services Group Inc., a charter service that specializes in groups ranging from 15 to 1,500 people, has seen 100 percent growth in each of the past four years, according to CEO Greg Raiff. With more than 3,000 private-jet carriers and some 6,000 private airports (including 600 commercial airports) in North America, private air travel is not only convenient but also cost-effective, says Sue Swenson, team lead, travel and aviation, for natural-gas producer Encana Corp. In the first three quarters of 2005, the Calgary-based company flew 21,000 employees, two-thirds of them by corporate jet or charter. Swenson estimates that flying on commercial airlines adds about four hours to any trip and can cost an extra $125 per hour per executive in nonproductive paid time. To use the services of a jet-card company like Sentient, businesses place about $100,000 in a flight-time bank account, which is debited as jet hours are used. Most private-flight-card and private-jet companies do not charge for extra passengers, allow reservations up to 10 hours before flight time, offer broadband on the plane, and fly from point to point without transfers. A key benefit of the jet-card approach, says Sentient CEO Steve Hankin, is that “you’re not tying up the capital you would if you bought a plane or invested in fractional air time.” Joseph Appelbe, executive vice president of Subaru New England, points out that the plush ambiance of charter services is an added bonus. He sends 50 of his best dealers to the Caribbean for vacation each year, and recently turned to Private Jet Services instead of commercial flights. Appelbe says chartering a plane for the group saved him the hassle of coordinating commercial flights, and his employees were happier. “They work harder because they want to go again,” he says. “When you look at what you’re trying to accomplish, chartering is well worth it.” — Laura DeMars The Backdating Games Following a yearlong investigation, it appears the Securities and Exchange Commission is finally beginning to crack down on companies with questionable policies governing stock-option grants. In November, management at Analog Devices Inc. agreed to pay $3 million to settle an SEC investigation into the company’s handling of stock-option awards. And three senior managers at software maker Mercury Interactive Corp. recently resigned after an SEC probe uncovered problems with the reporting of stock-option issuances. Published accounts say the commission is looking at about a dozen companies, and appears to be zeroing in on the backdating of grants. The commission apparently became interested in the topic when academic research showed that the share price of scores of companies dropped just prior to the granting of options. The research also indicated that — surprise, surprise — share prices often rose immediately after the pricing of options. “Timing of option grants is a very systematic and widespread practice,” says Patrick McGurn, an executive vice president of Institutional Shareholder Services Inc., in Rockville, Md. “But backdating is a whole other issue.” While backdating is not necessarily illegal, McGurn notes that it can lead to a welter of problems, including violation of securities laws. In the case of Mercury Interactive, an internal company investigation (triggered by the SEC probe) uncovered 49 instances of backdating of options during a 10-year period. Ultimately, three top executives at the Mountain View, Calif., company resigned, including CEO Amnon Landan and CFO Douglas Smith. While the two executives admitted they “benefited personally” from the manipulation of stock-option grant dates, both denied knowingly doing anything wrong. It’s uncertain just how common backdating of options has been. But Andrew Liazos, a partner at McDermott Will & Emery LLP in Boston, believes that accelerated reporting requirements now make backdating more difficult. Section 403 of the Sarbanes-Oxley Act now requires that directors and officers report option grants to the SEC within two business days, instead of weeks (or even months), as allowed under prior law. “For executives with these reporting requirements,” says Liazos, “it’s harder to see how backdating will occur [now].” — L.D. Are Disputes Worth It? The old adage that the customer is always right is true — at least when it comes to resolving collection disputes. A new study by San Mateo, Calif.-based Aceva Technologies finds that 90 percent of disputes are settled in the customer’s favor. Moreover, the average length of time to resolve each dispute is four weeks — time spent mostly on researching what went wrong. The findings do not surprise Shelley Thunen, CFO of IntraLase Corp., an Irvine, Calif.-based laser-technology provider. In customer disputes, she says, “there is a lot of paperwork going back and forth.” Plus, “most companies want to ensure customer satisfaction,” she adds, “so they tend to give them the benefit of the doubt.” Given the impact these disputes have on days sales outstanding, however, “finance has to fix the root causes,” says Aceva COO Sanjay Srivastava, who blames disputes on the “complexity within the quote-to-cash” process. It’s not just the cost of resolving disputes or the impact of inflated DSO on working capital that should concern companies, he adds, but also the attention accounts receivable must pay to “problems that shouldn’t exist in the first place.” The findings raise the question: Why spend so much energy on a battle that you won’t win? “If you chase down these disputes, it may cost you money,” says Srivastava. “But you can’t overlook them; you certainly don’t want to set a precedent.” — Lori Calabro Losing Battle Disputes focused on large accounts or large past-due accounts Average time spent contacting customers seeking resolution Disputes settled in the customers favor Jumped or Pushed? The Nasdaq stock market has made no secret of its desire to lure companies from the New York Stock Exchange. Now the Big Board is making it a little easier. Take the case of Tasty Baking Co. The Philadelphia-based bakery ended its association with the NYSE in October and began trading on Nasdaq after it was unable to comply with new NYSE standards requiring a minimum market capitalization of $75 million, up from $50 million. Company officials had originally agreed to work with the NYSE to come into compliance, but changed their minds over the stringent conditions. “We were under $75 million in market capitalization at the time,” says CFO David S. Marberger. “We submitted a business plan [to the NYSE] outlining how we would get the company to listing standards within 18 months, but until then we would be listed as ‘below criteria.'” Moreover, Marberger would have had to file quarterly business plans during that period. “We felt this would distract us from effectively running the company,” he says. Once Tasty Baking made that intention known, however, the NYSE immediately suspended it. Similarly, Nashua Corp., a maker of specialty imaging products, was delisted once it opted not to work with the NYSE to bring its market-capitalization levels into compliance. (A third company, Midwest Air Group Inc., opted to move to the American Stock Exchange.) For its part, the NYSE maintains that market conditions allowed it to raise the bar. Still, Marberger insists that Tasty Baking is not sacrificing anything by trading on Nasdaq. “Anytime you’re in a situation where you have to change markets, you have to realize that you have two good options,” says Marberger. “We have no regrets.” — Gareth Goh Socially Unacceptable Despite occasional indications to the contrary, officers at most firms insist that their companies are upstanding corporate citizens. Now, some investment banks are looking to test the validity of those claims. Over the past year or so, several marquee investment banks — including The Goldman Sachs Group Inc.; Citigroup Global Markets Inc.; and UBS — have added socially responsible investing (SRI) teams to their sell-side research departments. The aim? To integrate fundamental financial analysis with more mercurial measures like environmental sustainability and social liability. Admittedly, critics may scoff at these fairly fuzzy metrics. But in a report on SRI published last year, UBS suggested that social risk is tantamount to business risk — and should therefore be duly considered when valuing a business. The report, Why Try to Quantify the Unquantifiable?, offers a framework for analyzing nine broad business sectors in terms of potential corporate social liabilities — things like carbon emissions, pollution, product safety, and human-rights violations. Such liabilities, says the report, “should be viewed as a potential claim on the business, and therefore can be incorporated into standard valuation models.” Michael Moran, a vice president in Goldman’s U.S. Portfolio Strategy/Accounting Group, backs the approach. “Even if you’re a fundamentals-based investor, you have to think about these issues,” he argues. “There are actual hard dollars involved.” And dollars to be made. Management at General Electric Co., for one, hopes to reap the rewards of its recently launched green corporate initiative, a program dubbed “ecomagination.” As part of that plan, GE is looking to double its R&D investment in cleaner technologies over the next five years, reduce its greenhouse-gas emissions, and improve its energy efficiency. “Environmental responsibility is not just a negative issue for some companies,” notes Moran. “It’s a positive one for those that can find ways to develop cleaner products or help other companies make their products cleaner.” Both Moran and Shirley Knott, a London-based director at UBS, say that interest from institutional investors, mutual funds, and hedge funds has fueled Wall Street’s curiosity about SRI. Still, the two bankers admit that not everyone shares the same level of interest. Shortly after Goldman’s August 2005 SRI report was issued, Moran had three meetings in a row with institutional clients. Their reaction? Recalls Moran: “One client was intrigued, one client was confused — and one client laughed at me.” — Edward Teach Inappropriate Behavior Some social liabilities: Human-rights violations Respect for privacy Copyright theft Source: UBS Bee the Brand In November, Strategic Hotels & Resorts unveiled a slick new corporate image, including a bumblebee logo. The new brand isn’t designed for customers; it’s intended to help the firm market itself to Wall Street. The branding exercise, completed at the insistence of James Mead, CFO of the Chicago-based real estate investment trust, which owns and manages high-end hotels and resorts, is just part of an effort to unify the firm’s message to investors. The gold bee logo, with the word “strategic” beneath, appears on all investment materials. It symbolizes the characteristics of community, hard work, and elegance that Mead sees as the components of the corporate vision. Meanwhile, Strategic Hotels, which conducted an initial public offering in June 2004, relies on the well-established brands of the hotels it owns, including a few Four Seasons and Fairmont properties, to work their magic on consumers. (While Strategic Hotels owns properties under those names, it doesn’t own the brands.) The CFO says creating a brand is just another financial tool in the capital-raising box. “When you don’t have a long track record to hang your hat on, how you perceive yourself is very important,” says Mead. “The brand helps us understand that, and project it to potential shareholders.” Mead hired an outside advertising agency to develop the brand, which cost $100,000 in total. Investor-relations experts agree that branding is an important part of appealing to investors. “Companies are more and more aware that image is a key factor in attracting investments from Wall Street,” says Lou Thompson, president of the National Investor Relations Institute, in Vienna, Va. Branding is about more than just a logo: it’s about the reputation that a company builds on the Street, he says. Thompson contends that finance executives sometimes struggle with the idea of branding. “A lot of people on the finance side aren’t comfortable with things that are hard to quantify,” he says. Yet, strategic CFOs are getting more involved with how the corporate brand is portrayed to investors, he adds. But branding can backfire if the message doesn’t match reality. “There is nothing wrong with using some sizzle to facilitate attraction,” says Bob Leahy, general manager of the eastern region of the Financial Relations Board, an investor-relations firm. “But at the end of the day, the numbers speak.” — Joseph McCafferty Reaching for Peace Pipes It looks like corporate-governance proponents checked their boxing gloves at the door during the 2005 proxy season. With fewer proxy contests, fewer shareholder proposals, and a management push to declassify boards, companies were doing more listening, and investors made progress in their quest for majority voting rights. Now all eyes are on the SEC’s new chairman, Christopher Cox, to see if he’ll de-emphasize William Donaldson’s regulatory push — and possibly raise the ire of shareholders anew. Either way, next season look for stock-option expensing, poison pills, and majority-election promises to top shareholder agendas. ← Citigroup Tops Equity Underwriters Race to Reform →

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2016-30/1376/en_head.json.gz/10578

Archives:The Audit Why Care About the Banks’ Foreclosure Scandal? The blame-the-borrowers spin has begun By Ryan Chittum The pushback on the foreclosure scandal has already begun along predictable lines and amongst the usual suspects. It’s blame the borrowers all over again! Time to wheel out Rick Santelli’s “losers.” According to variations of this spin, the scandal is a “paperwork” (WSJ) problem involving “clerical errors” (ex-Goldman dude) but at base it’s still about “deadbeat” (John Carney) borrowers hoping to get a “house as a freebie” (Megan McArdle). First, forgery is pretty much by its nature a “paperwork problem.” Funny how the Journal glosses over the bedrock functions of the property system when its convenient for Wall Street. As Barry Ritholtz said the other day in knocking down this line: It is a legal impossibility for someone without a mortgage to be foreclosed upon. It is a legal impossibility for the wrong house to be foreclosed upon, It is a legal impossibility for the wrong bank to sue for foreclosure. And yet, all of those things have occurred. The only way these errors could have occurred is if several people involved in the process committed criminal fraud. This is not a case of “Well, something slipped through the cracks.” In order for the process to fail, many people along the chain must commit fraud. That it is being done for expediency and to save a few dollars on the process is why the full criminal prosecution must occur. Second, nobody is “lionizing deadbeats,” and it’s unfortunate that the millions of folks who’ve lost their jobs or whatever and are down and out have a CNBC journalist call them what they’ve already been called a hundred times by two-bit bill collectors. Carney: The vast majority of people (say, 88 percent) behind on their mortgages aren’t strategic defaulters and would pay if they could. Further, most, I’d bet, would be able to keep paying these mortgages if the banks worked to modify them like they’ve said they would. But how can you modify the mortgage when you don’t even know if you own it? And why would you restructure it if you have no incentive to do so? Carney, who wrote a very good primer on the scandal the other day, and McArdle need to go read Mike Konczal on the servicers’ role here (emphasis mine): … we need a system of rules and a process for collecting and presenting evidence in order to kick a family out of their home. And we need a system where this process sets the ground rules that in turn allow for lenders and borrowers coming together and negotiating a situation that is best for both of them. Because the first rule of mortgage lending is that you don’t foreclose. And the second rule of mortgage lending is that you don’t foreclose. I’ll let Lewis Ranieri, who created the mortgage-backed security in the 1980s, tell you: “The cardinal principle in the mortgage crisis is a very old one. You are almost always better off restructuring a loan in a crisis with a borrower than going to a foreclosure. In the past that was never at issue because the loan was always in the hands of someone acting as a fudiciary. The bank, or someone like a bank owned them, and they always exercised their best judgement and their interest. The problem now with the size of securitization and so many loans are not in the hands of a portfolio lender but in a security where structurally nobody is acting as the fiduciary.” Get it? The same Wall Street-created system that’s responsible for the paperwork foreclosure mess is the one that’s responsible for the families-on-the-curb Foreclosure Mess (not to mention the creation of the bubble in the first place and the key role predatory lending played in it). It’s feeding on itself. You don’t have one without the other. And it may be worse than that. Konczal again: Many of the servicers work for the largest four banks - Wells Fargo, Bank of America, Citi, and JP Morgan - and these four banks have large exposures to junior liens. These are second or third mortgages or home equity lines of credit that would have to be wiped out before the first mortgage can be modified. The four banks have almost half a trillion dollars worth of these exposures and, from the stress test, are valuing them at something like 85 cents on the dollar. Keeping a homeowner struggling to pay the second lien would be more worthwhile to these middlemen banks than getting him or her into a solid first lien to the benefit of the bond investor. So keep these in mind as you read about the servicers here. There have been worries that they, as a designed institution, were simply not qualified for this job going back a decade. They have massive conflicts with the investors they are supposed to be working for. They profit when homeowners collapse and lose money when they are brought up to a normal payment schedule (made current). And if the instruments don’t have the notes necessary to bring standing to carry out the foreclosures they have to take a massive tax hit in order to take the note into the trust. And regulation to handle this isn’t in place. And the straw teetering precariously on the camel’s back is this: Nobody has any confidence that Wall Street will have to pay for any of this. This scandal is just one more major piece of evidence that the deck is stacked against regular folks in favor of the financial interests. And people are already highly pissed off. They wonder why they haven’t been able to get their mortgages modified while Wall Street has lined its pockets with public money. They wonder why homeowners got a pitiful, bank-friendly $75 billion bailout program (most of which hasn’t been used) while the banks got $750 billion, plus a few trillion dollars worth of guarantees, direct and indirect subsidies, and other benefits. But, of course, the biggest problem here is the systemic financial risk that smart folks say may be looming. Carney, to his credit, was on to this (as he’s on to the WSJ’s foolishness, too) in his primer. McArdle, who thinks that the “real scandal of the foreclosure mess” is our “antiquated title system”—and, oh, and in case that didn’t work, hey, look over there: Fannie and Freddie!—doesn’t mention it. The Washington Post, which has done as good or better a job covering the foreclosure scandal than any other paper, had this on page one today: Beyond sloppy documents, the foreclosure debacle has exposed one of Wall Street’s little-known practices: For more than a decade, big lenders sold millions of mortgages around the globe at lightning speed without properly transferring the physical documents that prove who legally owned the loans. Now, some of the pension systems, hedge funds and other investors that took big losses on the loans are seeking to use this flaw to force banks to compensate them or even invalidate the mortgage trades themselves. Their collective actions, if successful, could blow a hole through the balance sheets of big banks and raise fundamental questions about the financial system, financial analysts and a lawmaker said. If judges rule in favor of such lawsuits, “it could be 2008 all over again,” said Josh Rosner, managing director at Graham Fisher & Co., referring to the Wall Street meltdown that occurred after Lehman Brothers collapsed. Bloomberg’s on the same track: The extent to which there’s a documentation problem is unknown to investors, Jeffrey Gundlach, chief executive officer of DoubleLine Capital LP in Los Angeles, said in an interview. If widespread flaws are found in the paperwork for mortgage- backed securities, it could roil a housing market already struggling with a freeze in foreclosures prompted by legal challenges to the documents mortgage servicers used to seize homes of delinquent borrowers, he said. “If people say that you cannot prove that you own the loan, it could be really cumbersome to untangle,” said Gundlach, whose firm manages $5.5 billion in investments, mostly mortgage-backed securities. “It has the potential to spiral into much, much more. There have been many twists and turns to the foreclosure process since the credit crisis started and this is one more turn of the wheel, and it can spin out of control.” The banks have dug themselves a really big hole here. Whether they’ll be buried in it remains to be seen, but these cats may be on life No. 9 if the worst-case scenario arises here. TARP II just ain’t gonna happen. Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at [email protected]. Follow him on Twitter at @ryanchittum.

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Yahoo Under the Gun After Microsoft Deal Collapses CNBC.com With Wires Monday, 5 May 2008 | 10:43 AM ETCNBC.com Yahoo's shares tumbled as much as 20 percent after Microsoft withdrew its $47.5 billion takeover offer, wiping about $7.6 billion off the Internet company's market capitalization and piling pressure on its leadership. In the aftermath, Internet search leader Google seemed poised to reap the gains of the missed deal, which would have been one of the biggest mergers in the technology sector and may have threatened Google's steady expansion on the Web. Yahoo! co-founder Jerry Yang smiles as he watches the Stanford basketball game against Washington State, Thursday, March 3, 2005 in Stanford, Calif. Yahoo! celebrated their 10th anniversary this week. David Filo and Yang founded Yahoo! as doctoral students at Stanford. (AP Photo/Paul Sakuma) Microsoft shares rose 2.6 percent on relief that it was not willing to overpay for Yahoo, while Google rose 2.2 percent. "The terminated Microsoft/Yahoo negotiations eliminate the risk for now of a stronger online advertising competitor to Google," Stifel Nicolaus analysts George Askew and Scott Devitt wrote in a research note. They raised their price target on Google to $675 from $610. Yahoo has been testing an advertising partnership that would give arch-rival Google part of its search listings. While some on Wall Street see this is a potential way out for Yahoo, it also represents a new fringe benefit to Google. The collapse of talks between Microsoft Chief Executive Steve Ballmer and Yahoo CEO Jerry Yang prompted Wall Street brokerages to cut their ratings and price targets on Yahoo, which held out for a $37 per share value despite a sweetened off from Microsoft for $33 per share. Shares closed at $19.18 on January 31, the day before Microsoft made its unsolicited offer for Yahoo. Yang, one of Yahoo's founders, owns about 4 percent of the company. Analysts expect a flurry of shareholder lawsuits against Yahoo management, even as the Web pioneer pursues possible deals with other Internet media and advertising companies, such as Time Warner'ss AOL. Yahoo is also likely to push for the Google partnership, sources familiar with the matter said. That should boost Yahoo's operating performance in the near term, but runs the risk of regulatory scrutiny over an alliance between the Internet's top two players. "Yahoo's execution remains the problem, as the company has not been able to execute better targeting and measurement on its own site effectively enough over the past 15 years," UBS analyst Heather Bellini wrote in a note to clients. Bellini said she would not give Yahoo "the benefit of the doubt that they can make meaningful improvement over the next three years," especially as the break up of talks creates an even more competitive backdrop for Yahoo, Microsoft and Google. Some of Yahoo's shareholders have already started to make their discontent public. Bill Miller, a portfolio manager for Legg Mason, Yahoo's second-largest shareholder, told the New York Times on Sunday that he would have considered selling to Microsoft for $34 or $35 a share. While that was more than Microsoft's offer, it was less than the $37 per share Yahoo's board insisted on. "There is going to be a lot of pressure on Yahoo's management to deliver in the next year or two," Miller said, according to the New York Times. To win the faith of shareholders, Yang will have to execute a turnaround plan that he began drawing up nearly a year ago after he replaced Terry Semel as CEO amid shareholder angst about the company's financial malaise. Ballmer also will be under the gun to prove he can come up with another way to challenge Google's dominance of the Internet's lucrative search and advertising markets. The unsolicited bid was widely seen as Ballmer's admission that Microsoft needed Yahoo's help to upgrade its unprofitable Internet division. Analysts now expect Ballmer to use the money he had earmarked for the Yahoo acquisition to explore other possible deals with large Internet companies like Time Warner's AOL and News Corp.'s MySpace and promising startups like Facebook and LinkedIn. Microsoft already owns a 1.6 percent in Facebook, the second-largest social network behind MySpace. But Ballmer is unlikely to be under as much duress as Yang, 39, who has promised that Yahoo's development of a more sophisticated and far-flung Internet advertising platform will produce net revenue growth of at least 25 percent in 2009 and 2010. That would be a dramatic improvement, considering that Yahoo's revenue rose by 12 percent last year and is expected to grow at about the same pace this year. Analysts, though, are skeptical about whether Yahoo will be able to hit those targets, raising the chances for a shareholder rebellion if the company stumbles in the next two quarters -- a distinct possibility if advertisers curtail spending in a shaky U.S. economy, as many analysts fear. --Reuters and AP contributed to this report. TWX YHOO

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The Guest Blog Greek Financial Crisis: A Failure to Communicate Vince Farrell Wednesday, 29 Jun 2011 | 3:45 PM ETCNBC.com "Cool Hand Luke" (1967) with Paul Newman and George Kennedy. Outside of the hard-boiled egg eating competition, the best line belonged to Strother Martin. "What we've got here is a failure to communicate" became his byline. That is, until "Butch Cassidy and the Sundance Kid." He played the "colorful" mine owner that hired Butch and the Kid and was shot by bandits for the payroll. Not too bad for a former University of Michigan diver that just missed making the Olympic team. Getty Images A protester wears a national flag near to the Syntagma square in front of the Greek Parliament. Clearly, all over Europe, we have a failure to communicate. Thankfully, the Greek Parliament approved the austerity program earlier on Wednesday. The fact that it was at risk was insane. A default, which would have been triggered by a negative vote, would have thrown the euro zone into chaos, and Greece especially would have been decimated. Folks were not paying attention to the risks involved. The Rube Goldberg contraption (Rube was a cartoonist of many years ago that created the most complicated machinery to perform the simplest tasks) being bandied about the holiest of holy euro-zone corridors might work in buying time, but the ratings agencies have said it would signal a "credit event" or a default. The French Plan, as it is being called, would have private investors "voluntarily" agree to reinvest 50 percent of their Greek bond holdings that come due by mid-2014 in new Greek 30-year bonds. The coupon would be 5.5 percent plus a premium depending on the growth of the Greek economy. Currently, you couldn't sell 30-year Greek bonds at any price so the rating agencies are stuck on how voluntary this could really be. Thirty percent of the debt is repaid, and the last 20 percent is placed in a Special Purpose Vehicle (hey! remember Enron and their SPVs). An AAA-rated country, like Germany, or a "supranational agency" like the European Union would issue 0-percent coupon bonds with sufficient face value to collateralize the entire 70 percent. Greece, or the SPV actually, buys these 0-percent coupon bonds as security. But Athens only realizes 50 percent of the funds of the maturing bonds net/net in the voluntary rollover (30 percent being repaid and 20 percent is used to buy the 0-percent collateral). The other 50 percent is supposed to come, in part, from Greece selling stuff, like the State Railroad where costs are four times revenues. So, the EU/IMF/ECB will probably have to loan Greece the money. But that's down the road where the can has been kicked. This is a farce. And, the rating agencies are saying they will declare Greece to be in default so who is not listening here? This is a sort of euro version of the Brady bonds of the late 1980s. But Brady bonds replaced bad bank debts. The haircut was taken at the exchange, and the banks received liquid new instruments they could hold or sell. Under the French plan, forget the ratings agencies might kill it, banks get some guarantees, but Greece gets no debt relief. They will still not have access to the credit markets. The haircut will be in the future. Greece gets some liquidity to survive another day, but the country is still insolvent. We will see this movie again! The stock market decided to listen to the word "relief" regarding Greece and like Pavlov's dogs, responded by buying risk. The euro rallied, causing the dollar to fall. A decline in the dollar made oil cheaper and attractive for a trade, and the stock market responded accordingly. Up is up and is better than down. But I still fear some downside when the quarter is over in two days. _______________________________________ Vincent Farrell, Jr. is chief investment officer at Soleil Securities Group and a regular contributor to CNBC. Vince FarrellChief Investment Officer, Soleil Securities

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Why Steve Ballmer Is Not a Failure Timothy Green | Many investors in Microsoft (NASDAQ: MSFT ) have loathed CEO Steve Ballmer, and the reason why seems to revolve around the stock price, which has fallen significantly since Ballmer took over the role of CEO from Bill Gates at the beginning of 2000. It seems that these investors have gotten their wish, because on Aug. 23, Ballmer announced that he would be retiring within 12 months. On that news, Microsoft stock shot up nearly 7.5%. On the day that Ballmer made the announcement, CNN published an infographic showing what the stock price has done during the tenures of both Gates and Ballmer. It's not a pretty picture. Source: CNN Money It's not all Ballmer's fault If you bought Microsoft stock at the beginning of 2000, you have done terribly, but you don't have Ballmer to blame. In fiscal 2000, Microsoft earned a split-adjusted $0.85 per share, which put the stock trading at a peak P/E ratio of around 70. The stock crashed soon after this, and for the most part has remained stagnant since. Ballmer did not cause the stock to do poorly. Had Bill Gates stayed on as CEO, the stock still would have crashed. No one could have stopped the stock from falling because the valuation had become completely ridiculous. The dot-com boom had pushed the share price up so high that a correction was inevitable. Shareholders were lucky the stock didn't fall even further. Since fiscal 2000, Microsoft has grown both its revenue and its earnings per share by more than a factor of three. During this time, the company has also added $53 billion in cash to its balance sheet. To call Ballmer's reign as CEO a failure ignores the company's performance entirely. At its peak in 2000, Microsoft was valued at around $600 billion. Expecting market-cap growth from that number was downright insane. Mistakes were made Microsoft has turned its Office and Windows divisions into cash cows, generating an incredible amount of cash each year. But the company missed the shift to mobile entirely, with Ballmer dismissing the original iPhone and letting Apple and Google (NASDAQ: GOOGL ) dominate the mobile market. Windows Phone 8, the first modern phone OS from Microsoft, came years after smartphones had become commonplace. Tablets also took Microsoft by surprise, although one could argue that it was Microsoft that pioneered the tablet form-factor to begin with. Back in 2001, Microsoft created the Microsoft Tablet PC specification for devices that would run Windows XP Tablet Edition and be operated via a stylus. These tablets never took off, largely because they were essentially a laptop computer crammed into a tablet. There was no easy-to-use touch interface, only support for a stylus on top of Windows XP. When Apple launched the iPad nearly a decade later, Microsoft had nothing to compete with it. It would take more than two years before Microsoft released Windows 8, its first truly touch-friendly OS. By then, iPads and Android tablets were selling in the tens of millions of units annually. There were also successes Even though Microsoft missed some huge trends, there were a litany of triumphs. The Xbox game console, and later the Xbox 360, entered a market dominated by Sony and won significant market share. Worldwide, the Xbox 360 and PlayStation 3 have sold a nearly identical number of units since launch -- about 78 million -- and the Xbox One and PlayStation 4 will continue this battle in just a few months. The Xbox has given Microsoft entry into the living room, and the Xbox One will attempt to be both a game console and an all-in-one home entertainment solution when it launches in November. Another success over the past decade is the diversification that has taken place. Although Office still represents a big chunk of Microsoft's profits, there are plenty of fast-growing businesses within the company. Microsoft now has 16 businesses that generate over $1 billion in revenue annually, including Windows Server, Xbox, SQL Server, Dynamics, Windows Azure, and cloud-based Office 365. Although Microsoft seems irrelevant to many on the consumer side, the company dominates enterprise. Most of the company's profits come from businesses and not consumers, and the enormous market share of Windows and Office among enterprise users is unlikely to change any time soon. Windows Phone, which has a very small market share in the U.S., is actually doing quite well in certain markets. In Latin America, Windows Phone is now the No. 2 phone operating system, overtaking iOS. This is a huge development for Microsoft, and I suspect that eventually Windows Phone will be No. 2 worldwide. An interesting twist in the mobile phone market, another Microsoft success, is the royalty income the company generates from sales of Android devices. Google, at least according to Microsoft, violated various patents when creating Android, and instead of Microsoft suing Google, it has signed royalty deals with the smartphone manufacturers that use Android. Although the exact figures aren't reported by Microsoft, it's estimated that the company receives as much as $8 per Android device. With deals signed covering 80% of the U.S. Android phone market, Microsoft could generate hundreds of millions or even billions of dollars this year from Android royalties. This is an interesting situation because it puts a cost on using the free Android operating system. With Microsoft charging a fee to use its Windows Phone OS, these royalties put the two operating systems on more equal footing, possibly enabling low-cost Windows phones to be comparable in price with low-cost Android phones. Ballmer took the CEO job at a time when a steep fall in the stock price was basically guaranteed. Mistakes were certainly made, but Microsoft is a far larger and more profitable company today because of Ballmer. There are plenty of successes to go with the failures, and with Microsoft more diversified than ever, the future looks bright. The tech world has been thrown into chaos as the biggest titans invade one another's turf. At stake is the future of a trillion-dollar revolution: mobile. To find out which of these giants is set to dominate the next decade, we've created a free report called "Who Will Win the War Between the 5 Biggest Tech Stocks?" Inside, you'll find out which companies are set to dominate and give in-the-know investors an edge. To grab a copy of this report, simply click here -- it's free! Timothy Green owns shares of Microsoft. The Motley Fool recommends Google. The Motley Fool owns shares of Google and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. On August 30, 2013, sniperboy wrote: Microsoft also makes cash from any Driod based device like cameras and the like as well. It funny how everyone remembers the failure that Microsoft had like the Zune, the Kin, the Spot watch, etc. However, no one remembers any of the failures that Apple has had like the Cube, Newton, E-Mate, Pippin, the Lisa to name a few. I think history will be kind to Ballmer. He be known for his diversification of Microsoft. If Windows 8 and the Windows Phone eventually become globally accepted, I think most of his failures will be forgiven. bugnuts wrote: Yeah, right. Ballmer thought he could ride the Windows/Office cash cow forever. Turns out that cow was headed for the slaughterhouse. Report this Comment rhaferkamp wrote: God. I wish I could have "failed" like that. I'll have to "expire" to retire. ViewRoyal wrote: Steve Ballmer was certainly not a failure from Apple's and Google's perspectives... and they thank him very much for his contributions to their successes. ;-) sniperboy: "no one remembers any of the failures that Apple has had like the Cube, Newton, E-Mate, Pippin, the Lisa to name a few."Yes, if you go back to the 1980's and 1990's (all of those items are from that long ago) there were missteps... no one ever said that Apple has a hit 100% of the time.But each of those "failures" were tiny and insignificant compared to the huge expenses Microsoft lost on it much more recent failures. For example almost a Billion dollars lost on the Surface alone.There is really no comparison between the few Apple products from long ago, and Microsoft's recent extreme failures! sammyb62 wrote: @ViewRoyalPerhaps you forgot the fact that Apple was "90 days" from bankruptcy when Microsft with it's "failures" came and saved the day to the tune of 150 Million dollars.

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ITEP In Action ITEP Microsimulation Tax Model Employment Contact State Information Gasoline Taxes Other Revenue Sources All Reports By Year Multi-State Reports Reports Using ITEP Data A Federal Gas Tax for the Future Read the Report in PDF Form Read the Press Release (PDF) The gas tax is the single most important source of transportation funding for the federal government. Together, taxes on gasoline and diesel fuel raise over $30 billion per year, or 85 percent of the revenue flowing into the nation’s transportation spending account. But gas tax revenues are on an unsustainable course. Over the last five years, Congress has transferred more than $53 billion from the general fund to the transportation fund in order to compensate for lagging gas tax revenues. By 2015, the transportation fund will be insolvent unless an additional $15 billion transfer is made. Larger transfers will be needed in subsequent years. Two important, yet completely unrelated developments have combined to greatly reduce the purchasing power of the poorly-designed federal gas tax. Improvements in vehicle fuel-efficiency have cut directly into gas tax revenues by allowing drivers to travel farther distances while buying less gasoline. Meanwhile, inevitable growth in the cost of asphalt, machinery, and other construction materials has put additional strain on the gas tax because its rate has not been adjusted to keep pace. The combined impact of these two factors has reduced the value of the gas tax by 28 percent relative to 1997—the year in which the federal government decided the gas tax should be used exclusively for transportation purposes. Comparing the relative importance of these two issues, over three-fourths (78 percent) of the current gasoline tax revenue shortfall is a result of Congress’ failure to plan for inevitable growth in the cost of building and maintaining the nation’s infrastructure. The remainder (22 percent) is due to improvements in vehicle fuel-efficiency. In other words, construction cost growth has been 3.5 times more important than fuel-efficiency gains in eroding the purchasing power of the gas tax. This current gas tax revenue shortfall could have been prevented if the tax was better designed. Currently, the gas tax is levied as a fixed amount per gallon sold: 18.4 cents per gallon. A well-designed “variable-rate” tax structure, however, that rises each year alongside construction cost inflation and fuel-efficiency growth would have brought the nation’s transportation account from frequent deficits to surpluses in every year. This reform would have raised a total of $215 billion in revenue to build and maintain America’s infrastructure—including $19 billion in 2013 alone—if it had been enacted in 1997. The cost of this reform for the average driver would have been fairly modest. The gas tax rate today would be 29 cents per gallon—or 10.6 cents higher than where it currently stands. This increase would have been phased-in gradually, with the tax rate increase in most years amounting to less than 1 cent per gallon. That 10.6 cent tax increase would cost the average driver $4.66 per month in 2013. Such a reform is not without precedent. Congress has already recognized the importance of planning for inflation in other areas of the tax code—most of the nation’s income tax brackets, exemptions, deductions, and credits currently rise with inflation every year. Moreover, a majority of the country’s population already lives in a state that levies a “variable-rate” state gas tax, where the tax rate automatically rises on a regular basis. Despite the merits of raising the gas tax, the disproportionate impact of the gas tax on low-income Americans is a real problem. But holding down the gas tax rate is an ineffective tool for preserving the progressivity of the U.S. tax code. Personal income tax provisions like the Earned Income Tax Credit (EITC) are far more helpful to low-income families than a low gas tax rate, and enhancements of such credits can be paired with gas tax reform to offset the regressive impact of the gas tax. Gas Tax in Context On October 1, 2013, the federal gasoline tax rate will have been stuck at 18.4 cents per gallon for exactly 20 years. Despite two decades of neglect, the gas tax is the single most important source of transportation funding for the federal government. Taxes on gasoline and diesel fuel raise over $30 billion per year, accounting for 85 percent of the revenue flowing into the nation’s transportation spending account.[1] But the short-sighted design of the gas tax has put its revenues on an unsustainable course. The gas tax is increasingly falling short of America’s infrastructure needs. In just the last five years, Congress has transferred more than $53 billion out of the nation’s already deficit-ridden general fund in order to compensate for sluggish gas tax revenue growth in the transportation fund.[2] Absent major reform, many more of these Band-Aid fixes will be required in the years ahead, including an additional $15 billion transfer in 2015 just to maintain current funding levels.[3] Transfers significantly larger than this amount will be neefded if Congress decides to address the backlog of maintenance and congestion-reducing projects on hold across the country. The historic and ongoing decline of the gas tax is a result of its inability to deal with two important developments: fuel-efficiency gains that reduce the gas tax base and normal growth in construction costs that erodes the gas tax rate. This report explains how both of these challenges affect the sustainability of the gas tax, and measures the relative importance of each in contributing to the current transportation funding shortfall. The report then offers a specific recommendation for reforming the gas tax to improve its revenue growth in the face of these two issues. It concludes by showing how implementing this reform earlier could have prevented our current predicament—bringing the nation’s transportation spending account from frequent deficits to constant surpluses at a relatively low cost to the average driver. Inflation Trumps Fuel-Efficiency The long-term sustainability of the gas tax is being threatened by two completely unrelated issues: a shrinking tax base, and a shrinking tax rate. The tax base is the universe of items or activities subject to a tax. In the case of the gas tax, the tax base is simply the amount of gasoline sold. In recent years, as vehicles have become more fuel-efficient, the amount of gasoline sold per mile driven has been on the decline. Improved vehicle fuel-efficiency is undoubtedly a positive development for the environment, America’s energy independence, and drivers’ pocketbooks, but it is also a challenge for the nation’s poorly designed gas tax. Since 1997, when the federal government began using all gas tax revenues for transportation projects, the average fuel-efficiency of a passenger vehicle on America’s roads has increased by 1.7 miles per gallon (mpg)—from 19.7 to 21.4 mpg.[4] For a vehicle with a 15 gallon gas tank, this means that the average driver is able to wear down the roadways with an extra 25 miles of driving before they have to stop, refuel, and pay anything in gas taxes. Multiply that by 230 million vehicles, and across the span of a year it’s the equivalent of almost 203 billion tax-free miles of travel on America’s roads.[5] Fuel efficiency’s impact on the gas tax base is often cited as the main reason that gas tax revenues are falling short. In reality, however, the impact of construction cost growth on the gas tax rate has been far more important. Unlike most taxes that are levied on a percentage-basis (e.g., 5 percent of a product’s price or 25 percent of a taxpayer’s income), the gasoline tax is levied as a fixed amount per gallon—currently 18.4 cents. As lawmakers have long known, however, writing fixed dollar amounts into the tax law inevitably creates problems in the medium- and long-term as inflation erodes their “real” value. For this reason, many features of federal income tax law (e.g., tax exemptions, credits, and tax bracket cut-off points) are specifically designed to rise in lock-step with inflation each year. Unfortunately, this type of “inflation indexing” has not been implemented with respect to the federal gas tax. As Figure 1 shows, over the same period of time that fuel-efficiency gains took a 6 percent bite out of the purchasing power of the gas tax, construction cost inflation reduced the tax’s value by 3.5 times that amount, or 22 percent.[6] Put another way, over three-quarters (78 percent) of the current gas tax shortfall can be traced back to growth in the cost of construction materials and labor. The remaining 22 percent of the shortfall is due to fuel-efficiency gains.[7] This trend is nothing new. As Figure 2 shows, construction cost growth has routinely outpaced fuel-efficiency gains over the last 40 years. Interestingly, however, construction costs have actually grown more slowly than the general inflation rate faced by consumers. While construction costs grew by 335 percent between 1972 and 2011, consumers saw the products they buy increase in price by 438 percent.[8] This trend holds true in the more recent past as well—the 29 percent growth in construction costs seen since 1997 trails the 40 percent growth that occurred in consumer prices over that period. Clearly, construction costs are not spiraling out of control. Rather, the extremely poor design of the gas tax has left it unprepared to deal with the medium- and long-term effects of even normal levels of growth in construction costs. Vehicle Miles Traveled Much like improvements in vehicle fuel-efficiency, decreases in the amount of driving, or “vehicles miles traveled” (VMT), reduce gas tax revenues by causing gasoline purchases to fall. For decades, this issue was of little practical significance as both total VMT and per-capita VMT grew steadily. At the turn of the century, however, per-capita VMT unexpectedly began to plateau, and actually began declining in 2005. Total VMT followed a similar pattern, falling in 2007 for the first time in nearly thirty years.* While some of the more recent decline is likely due to the late 2000’s recession, much of it can be traced back to changes in Americans’ transportation preferences and needs. In particular, young Americans’ habits began to change dramatically before the recession began, making it unlikely that historical trends will resume once the economy fully recovers.** Americans, and younger Americans in particular, have opted to cut back on their driving in two broad ways: First, advancements in technology have allowed more would-be drivers to not only work from home, but to socialize from home as well. One poll found that more than half of all young people “sometimes choose to spend time with friends online instead of driving to see them.” To the extent that reduced driving can be traced to people simply having less use for the transportation system, any resulting decline in gas tax revenue is of little concern because wear-and-tear and the need for additional system capacity should decline as well. Second, public transit ridership is on the rise, again driven largely by changes in young people’s habits. This is good news for drivers as more transit ridership means less congestion on the roadways. But this trend also cuts into gas tax revenues without necessarily reducing strain on the transportation system overall. Since a portion of the federal gas tax is reserved for mass transit, this development has resulted in less funding for both roads and transit, and may warrant even larger gas tax increases beyond those needed to offset fuel-efficiency gains and construction cost inflation. *Puentes, Robert. “The Road… Less Traveled.” Brookings Institution. December 2008. ** Davis, Benjamin, et al. “Transportation and the New Generation.” Frontier Group and U.S. PIRG Education Fund. April 2012. Outlook for the Future Going forward, construction cost growth and vehicle fuel-efficiency gains will both continue to be major issues affecting the gas tax. Since 1972, the earliest year for which data are available, transportation construction costs have grown by an average of roughly 4 percent per year.[9] While it’s unlikely that the mix of transportation investments being made in the years ahead will exactly mirror those of the past, there is also no reason to expect that the transportation construction industry will suddenly become immune to the inflationary pressures felt throughout the rest of the economy. Construction cost inflation will continue to affect the purchasing power of the gas tax in the years ahead. In regard to vehicle fuel-efficiency, the signs of what lies ahead are even clearer. New government standards are expected to boost the average fuel-efficiency of most new vehicles from 29.7 to 34.1 mpg between 2012 and 2016, and then to 49.6 mpg by 2025.[10] That’s a 67 percent improvement in just 13 years. (By comparison, fuel-efficiency for new cars over the previous 13 years increased by just 20 percent.[11]) The full effect of this development will not be felt until at least 2040, since it depends on older vehicles being replaced by the newer, more fuel-efficient models. But there is little doubt that the fuel-efficiency of the vehicle fleet on the nation’s roadways will soon begin to climb significantly faster than in years past. In other words, while growth in vehicle fuel-efficiency is a relatively small contributor to the gas tax revenue shortfalls that exist today, it will become an increasingly important issue in the years ahead. The current design of the gas tax has left it incapable of raising an adequate amount of revenue in the face of rising fuel-efficiency and construction costs. But this need not be the case. The useful life of the gas tax could be extended far into the future if the tax is reformed so that its rate automatically adjusts to keep pace with construction costs and vehicle fuel-efficiency. Reform should involve four main components (technical details are explained in Appendix A): First, the gas tax rate should be increased to compensate for the loss in purchasing power described earlier in this report. The Congressional Budget Office (CBO) estimates that the tax rate would need to rise by 10 cents per gallon in 2015 to maintain current funding levels.[12] This is generally in line with the analysis shown later in this report, which indicates that the rate would have to rise by 10.6 cents per gallon in 2013 to offset the last 16 years of inflation and fuel-efficiency gains. The CBO also estimates that an increase significantly larger than either of these amounts would be needed to fund all projects where the benefits exceed their costs.[13] Second, the gas tax rate should be allowed to rise over time alongside construction cost inflation, much like federal income tax brackets and exemptions already rise every year in proportion to inflation. Florida, Massachusetts, and Maryland currently levy their gas taxes in roughly this manner, though their tax rates are tied to the general inflation rate faced by American consumers rather than the specific inflation rate in the cost of transportation construction.[14] Another fourteen states and the District of Columbia tie their gas tax rates to inflation in the price of gasoline.[15] Third, the gas tax rate should also rise over time as vehicle fuel-efficiency improves. If the average vehicle’s fuel-efficiency were to jump by 3 percent (from 30 mpg to 30.9 mpg, for example), the tax rate would increase by an identical 3 percent in order to prevent a decline in the overall amount of taxes paid per mile driven. This would not only allow for a consistent level of funding for transportation, but would also encourage a race-to-the-top in terms of vehicle fuel-efficiency. Drivers’ decisions to buy more fuel-efficient cars would trigger a gas tax increase that would encourage more drivers to follow their lead. Fourth and finally, in order to ensure that these tax rate adjustments do not lead to volatile gas tax collections, two mechanisms should be used to prevent large changes in the tax rate from year to year. First, average measures of construction costs and fuel-efficiency from the previous few years should be used to “smooth” the impact that a single unusual year of growth in these measures could have on the tax rate. Second, a backstop limit on changes in the tax rate should be imposed, preventing the rate from ever changing by more than 10 percent in a single year, for example.[16] Impact on the Transportation Budget To illustrate the impact of the reform proposed in the previous section, Figure 3 shows how the federal government’s transportation fund would have fared if the gas tax rate had been tied to growth in construction costs and fuel-efficiency starting in 1997—the year in which the federal government decided to fully dedicate gas tax revenues to the fund. Assuming diesel tax rates were increased to maintain the current balance between gasoline and diesel tax revenues, $215 billion in additional transportation revenue would have been raised over the 1997-2013 period, including almost $19 billion in 2013 alone.[17] Under this scenario, the nation’s transportation account would have been brought from frequent deficits to surpluses in every year. $53 billion in general fund transfers could have been avoided and nearly $162 billion in additional investments in America’s infrastructure could have been made while still keeping the transportation fund in balance. Impact on Drivers Despite the major impact this reform would have had on America’s transportation budget, the impact on the average driver would have been fairly modest. Figure 4 shows that if lawmakers had implemented gas tax reform in 1997, the gas tax today would be 29 cents per gallon—or 10.6 cents higher than where it currently stands.[18] This increase would have occurred gradually, with the rate rising by no more than 1 cent per gallon in most years, and never by more than 3.1 cents in any given year. For the average driver, a 10.6 cent increase in the gas tax would amount to $4.66 in additional gas tax payments per month.[19] But the payoff associated with that $4.66 payment could be significant. Americans currently waste 5.5 billion hours and 2.9 billion gallons of fuel stuck in traffic each year.[20] At the same time, pavement conditions on nearly one in three of America’s major roads are rated either poor or mediocre, and one out of every nine American bridges is structurally deficient.[21] Infrastructure improvements financed through the gas tax could lessen all of these problems, saving drivers both time and money.[22] Gas Tax Fairness While most drivers could afford to pay $4.66 in additional gas taxes each month with little problem, this may not be the case for families living in poverty. Critics of the gas tax correctly note that the gas tax is regressive—requiring lower- and middle-income families to devote far more of their household budget to paying the tax than the wealthy. ITEP estimates that nationwide, the poorest 20 percent of families spend 1.7 percent of their incomes paying federal, state, and local gas taxes, compared to just 0.2 percent of income for the nation’s most affluent taxpayers. Because of this basic inequity, Minnesota lawmakers chose to pair a 2008 gas tax increase with a new tax credit for low-income taxpayers, although that credit was later repealed to fill the state’s budget gap when revenues plummeted during the recession. Five states currently offer low-income tax credits specifically designed to offset regressive taxes on consumption—typically the sales tax. This same basic model could be applied to the gas tax. For lawmakers concerned with reducing tax regressivity, targeted tax credits are a far better option than holding down the gas tax rate. Roughly one-third of all gas tax revenues come from the wealthiest 20 percent of taxpayers. Enacting a new low-income credit or expanding an existing one such as the Earned Income Tax Credit (EITC) can be done in a way that aids only those families for whom the gas tax and other regressive taxes are truly unaffordable. Reform in Context The gas tax reform proposed in this report is not radical. Seventeen states and the District of Columbia already levy their gas taxes in a manner where the tax rate is automatically adjusted to keep pace with inflation. In total, over half the country’s population lives in a state with a “variable-rate” gas tax of this sort.[23] Moreover, the impact of gas tax reform on gas prices would hardly be unprecedented. Since January of 2000, American drivers have watched the retail price of gasoline swing up or down by more than 10 cents per gallon in a single week on 52 separate occasions. Swings of more than 5 cents per gallon have occurred a staggering 194 times over that same period—an average of more than once per month. In this context, the impact of gas tax reform on gas prices would likely be undetectable to most drivers. Gas taxes make up a small, and shrinking, share of the price drivers pay at the pump.[24] This would hold true even if the gas tax were significantly increased and reformed. Federal gas tax revenues are falling short of the nation’s transportation infrastructure needs—a problem that will worsen significantly in the years ahead unless the gas tax is increased and reformed. Most of the gas tax revenue shortfall occurring today is a result of the tax’s failure to keep pace with inevitable growth in the cost of building and maintaining transportation infrastructure. Vehicle fuel-efficiency gains have played a more modest role in reducing gas tax revenues, but will be an increasingly important issue in the years ahead. The challenge posed to the gas tax by each of these developments can be addressed through the reform proposed in this report: allowing the gas tax rate to be automatically adjusted each year to match growth in construction costs and in vehicle fuel-efficiency. Had this reform been implemented in 1997, the gas tax rate would be 10.6 cents higher today and drivers would be paying an average of $4.66 in additional taxes each month. The revenues raised by reform would have brought the nation’s transportation spending account from frequent deficits to surpluses in every year. Over $162 billion in additional transportation investments could have been made over the last sixteen years, and $53 billion in deficit-financed transportation spending from the nation’s general fund account could have been avoided. Appendix A: Implementing Reform This report proposes reforming the federal gas tax so that its rate automatically varies alongside both transportation construction costs and vehicle fuel-efficiency, subject to certain limitations on volatility in the tax rate. In practice, this reform could be implemented in a variety of ways. One such approach, used to perform the analyses contained in figures 3 and 4 of this report, is explained in this appendix. Construction cost growth is measured using data from the national Composite Bid Price Index (BPI), extended to the present day using the National Highway Construction Cost Index (NHCCI). (The BPI was discontinued in 2006 and replaced by the NHCCI.) These indexes measure growth in the cost of both the materials and labor involved in road construction. We know of no comparable data on the cost of providing public transit, but these indexes are a useful proxy for total transportation cost growth since over 80 percent of federal gas tax revenue is directed toward highway purposes. Data from the Federal Highway Administration’s (FHWA) Highway Statistics series (Table VM-1) were used to measure growth in the average fuel-efficiency of vehicles operating on America’s roadways in any given year. (While data on the fuel-efficiency of vehicles manufactured during each new “model year” are cited more frequently by researchers and journalists, they do not provide an accurate picture of the strain being placed on the gas tax in any given year because only a fraction of vehicles actually using the roads are made in the most recent model year.) The FHWA data are not organized into separate categories for gasoline and diesel-powered vehicles, but we used fuel-efficiency data for passenger cars, vans, sport/utility vehicles, and light trucks as a proxy for the fuel-efficiency of all gasoline-powered vehicles. For 1997-2006, fuel-efficiency was calculated by dividing the total miles driven by “passenger cars” and “other 2-axle 4-tire vehicles” by the total amount of fuel consumed by these vehicles. The same method was used for 2007-2011, but FHWA renamed these categories to be simply “light duty vehicles.” After assembling the data described above into separate indexes measuring both construction costs and vehicle fuel-efficiency, a trailing average of each index was taken before using those indexes to adjust the gas tax rate. This was done to smooth volatility in the gas tax rate over time, since an average of construction costs and fuel-efficiency over the previous few years is less vulnerable to sudden changes than an index based entirely on the most recent year’s data. (The analyses in figures 1 and 2 use actual, rather than average, index values because these analyses are purely informational, and are unrelated to the specific reform proposed in this report.) A three-year trailing average was used for the construction cost index. For example, to calculate the hypothetical gas tax rate under reform in 2013 (see Figure 4), an average was taken of the construction cost index values for 2010, 2011, and 2012. Due to data limitations, this three-year average measure of construction costs was paired with just a two-year trailing average index for vehicle fuel-efficiency. Full-year construction cost estimates become available during the first few months of the following year, but fuel-efficiency data are reported significantly later. Fuel-efficiency data for 2012, for example, will not be released until late 2013—too late to be used in setting the gas tax rate for 2013. As a result, the 2013 tax rate calculation performed in this report relied on an average of fuel-efficiency data for 2010 and 2011. Given current data release schedules, implementing this report’s recommendation exactly as calculated would require adjusting the tax rate roughly mid-year or later. Once these trailing average indexes were created, adjusting the gas tax rate to keep pace with both indexes was done using this equation: rn = r0 * (cn/c0) * (fn/f0) rn and r0 = gas tax rate in the current year and base year cn and c0 = construction cost index in the current year and base year (3-year trailing average) fn and f0 = fuel-efficiency index in the current year and base year (2-year trailing average) Subject to the limitation that, in the interest of reducing tax rate volatility, the tax rate cannot change by more than 10 percent from one year to the next: | rn – rn-1 | ≤ 0.1 * rn-1 Deciding on the precise level at which to set the volatility cap inevitably involves some subjectivity. We chose 10 percent in part because of precedent set at the state level—Kentucky, West Virginia, and the District of Columbia all cap annual changes in their gas tax rates at 10 percent, while Maryland caps changes at 8 percent. Had this 10 percent cap been in place alongside gas tax reform over the 1997-2013 period examined by this study, the cap would have been reached in three of sixteen years. Specifically, the cap would have limited tax rate increases in 2007, 2008, and 2009 that would have otherwise occurred as a result of rapid construction cost growth during the late 2000’s construction bubble. Appendix B: Additional Methodology The gas tax rate calculations used in figures 3 and 4 are explained in Appendix A. To gauge how these increased tax rates would have impacted the average driver, we used FHWA data on the average annual fuel consumption by light duty vehicles for 1997-2011 (see FHWA’s Highway Statistics series, Table VM-1). Given the fairly small size of the gas tax rate changes being analyzed, we assumed that any increase in gas prices associated with those changes would not affect the amount of gasoline consumed per vehicle. To estimate the impact that higher gas tax rates would have had on the federal transportation budget between 1997 and 2011, we multiplied the higher gas tax rate estimated for each year by the number of taxable gallons of gasoline sold in that year (see Highway Statistics, Table MF-2). Again, we assumed no changes in gasoline consumption as a result of the higher tax rate. Diesel tax revenues, which typically make up about one fourth of total motor fuel tax collections in each year, were assumed to rise in order to maintain the same proportion of gasoline versus diesel tax revenues collected in each year. In reality, diesel tax rates would likely be adjusted based either on a separate index measuring growth in the fuel-efficiency of diesel-powered vehicles, or based on a new highway cost allocation study measuring the relative contribution of gasoline versus diesel-powered vehicles in contributing to wear-and-tear on the nation’s roadways. Actual Highway Trust Fund revenues, expenditures, and general fund transfers for years up to 2011 were taken from Table FE-210 of the Highway Statistics series. The most recent general fund transfer ($18.8 billion in the 2012 MAP-21 law) was reported by the Congressional Budget Office. [1] This includes taxes collected on both gasoline and diesel fuel sales. See the Federal Highway Administration’s Highway Statistics series, Table FE-10. [2] ITEP calculation based on data from the Federal Highway Administration and the Congressional Budget Office. [3] Cawley, Kim P. “Testimony: Status of the Highway Trust Fund.” Congressional Budget Office testimony before the U.S. House of Representatives Committee on Transportation and Infrastructure, Subcommittee on Highways and Transit.” July 23, 2013. Available at: http://www.cbo.gov/publication/44434 [4] Highway Statistics, Table VM-1. 1997 data are available at: http://www.fhwa.dot.gov/policyinformation/statistics/1998/vm1.cfm and 2011 data are available at: http://www.fhwa.dot.gov/policyinformation/statistics/2011/pdf/vm1.pdf [5] Unrounded FHWA data reveals that fuel-efficiency for passenger vehicles improved by 1.64 miles per gallon between 1997 and 2011. Multiplying that gain across 233,841,442 light-duty vehicles consuming an average of almost 530 gallons of fuel each yields nearly 203 billion miles of tax-free driving in 2011. [6] ITEP calculations for 1997-2011 based on the Composite Bid Price Index and the National Highway Construction Cost Index (NHCCI). [7] These figures do not include the diesel tax, but rather focus solely on the gasoline tax. The fuel-efficiency of diesel-powered vehicles has remained basically unchanged since 1997 according to FHWA data, so the decline of the diesel tax is rooted entirely in construction cost growth. In other words, the impact of fuel-efficiency on total motor fuel tax revenues (including both gasoline and diesel) is even smaller than 22 percent. [8] As measured by the Bureau of Labor Statistics Consumer Price Index for All Urban Consumers. [10] Congressional Budget Office. “How Would Proposed Fuel Economy Standards Affect the Highway Trust Fund?” May 2012. Available at: http://www.cbo.gov/publication/43198 [11] ITEP calculation for model year 1999 versus 2012 cars and trucks. See Environmental Protection Agency. “Light-Duty Automotive Technology, Carbon Dioxide Emissions, and Fuel Economy Trends: 1975 Through 2012.” EPA-420-R-13-001. March 2013. Available at: http://www.epa.gov/otaq/fetrends.htm#report [12] Cawley, Kim P. “Testimony: Status of the Highway Trust Fund.” Congressional Budget Office testimony before the U.S. House of Representatives Committee on Transportation and Infrastructure, Subcommittee on Highways and Transit.” July 23, 2013. Available at: http://www.cbo.gov/publication/44434 [14] While construction cost inflation is the most relevant measure for purposes of adjusting the gas tax, the general inflation rate as measured by the Consumer Price Index (CPI) often tracks the rate of growth in construction costs fairly well, especially over the longer term. Over the course of the last twenty years, for example, construction costs increased by 63 percent while the CPI increased by a comparable 59 percent. [15] The seventeen states with gas tax rates tied to inflation, the price of gasoline, or both include: California, Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Nebraska, New York, North Carolina, Vermont, Virginia, and West Virginia. [16] See Appendix A for an explanation of both of these volatility-reducing measures. [17] 2012 and 2013 data are not included in Figure 3 because the FHWA has yet to report the official revenue and spending amounts for those years. Projections of the revenues that could have been raised by reform in 2012 and 2013 are based in part on gasoline and diesel consumption estimates from the Energy Information Administration (EIA). [18] This is lower than the 15.1 cent peak increase that would have been reached in 2009 as a result of rapid growth in construction costs associated with the late 2000’s construction bubble. [19] This assumes the full amount of the tax is passed on to the driver in the form of higher gas prices. Furthermore, although a 10.6 cent hike would cause drivers to pay $4.66 more per month than they would otherwise, it’s worth noting that their total monthly gas tax bill ($12.78) would be only $3.63 higher than it was in 1993, since fuel consumption per vehicle has declined in recent years. [20] Schrank, David et al. “Urban Mobility Report.” Texas A&M Transportation Institute. December 2012. Available at: http://mobility.tamu.edu/ums/ [21] American Society of Civil Engineers. “2013 Report Card for America’s Infrastructure.” March 2013. Available at: http://www.infrastructurereportcard.org/ [22] This is particularly salient in the longer-run, since investing more in routine maintenance can avoid the need for costlier total rebuilds of infrastructure at a later date, and since raising additional gas tax revenue can mitigate the need for deficit-financed spending from the general fund that must be paid back later with interest. [23] ITEP calculation based on data from the U.S. Census Bureau. See note 15 for the relevant list of states. [24] Institute on Taxation and Economic Policy. “Don’t Blame the Gas Tax for High Gas Prices.” May 20, 2013. Available at: http://itep.org/itep_reports/2013/05/dont-blame-the-gas-tax-for-high-gas-prices.php Mission & History | ITEP Microsimulation Tax Model Overview | Policy Briefs | All Reports By Year | Sign Up for Our Email Digests | Support ITEP | Copyright 2016 ITEP. All rights reserved.

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Diversified portfolio can lead the way out Karin Price Mueller | NJ Advance Media for NJ.com The Situation: Miranda, 58, was forced into an early retirement with a job loss several years ago. She works a little part time and receives some other income, but she wants to make sure her long-term future is financially sound. She would like to wait until age 65 before taking Social Security and a pension from her most recent employer. The Way Out: The Morris County woman has saved well, but she could improve her asset allocation to be better diversified. Her overall outlook is so positive that she could actually invest less in growth assets and still have a high probability of success. She should also consider some tax strategies that would benefit her bottom line. Miranda wasn’t planning on an early retirement, but the struggling economy put her out of a job a few years earlier than she expected. At age 58, she does some part-time work, but it doesn’t generate much income. “My major concern is income generation between now and starting Social Security and my pension,” Miranda says. “I would like to hold off until age 65.” She’s thinking her real retirement will involve moving to a less expensive area, working a part-time job and travel. Miranda, whose name has been changed, has saved $660,000 in IRAs, $220,000 in annuities, $370,000 in mutual funds, $600 in a brokerage account, $72,000 in Certificates of Deposit, $145,900 in money markets, $23,300 in savings and $10,000 in checking. She expects, at age 65, to receive a pension of $14,000 in addition the a smaller annual $6,402 per year pension that she’s already receiving from a different employer, and $25,000 a year from Social Security. The Star-Ledger asked Jeffrey Boyer, a certified financial planner with RegentAtlantic Capital in Morristown, to help Miranda determine how to best handle her money up until and through retirement. “Miranda has an after-tax spending level of approximately $30,000 a year, not including mortgage payments,” Boyer says. “However, Miranda would like to increase spending during retirement in order to take classes, go on local trips and major vacations.” For starters, she lacks a well-diversified portfolio. Boyer says the majority of her investment assets are allocated between two asset classes: U.S. large-cap stocks and fixed income. “She would likely be rewarded, both in terms of return and risk, by being more diversified into additional asset classes such as small-cap stocks, foreign stocks, emerging market stocks, and infrastructure, to name a few,” he says. Miranda has approximately $260,000 in cash and cash alternatives. Boyer says accumulating cash savings would be appropriate to set aside an emergency fund or to establish a reserve for a known near-term expenditure. But as part of a long-term portfolio, cash has a lower expected return than both equities and bonds. “Cash is returning negative real yields, meaning that it is failing to keep up with inflation,” he says. Miranda prepares her own tax returns, and a review of her financials and most recent tax return shows she will probably continue having negative taxable income, Boyer says. She’s currently making contributions to an IRA account for the amount of earned income she generated in 2011 — $1,540. Boyer says there are several planning opportunities Miranda should consider with proper advice from a tax professional — because some of the opportunities are contradictory to one another. First, Boyer says because Miranda is not paying any tax, she should not be making contributions to a traditional IRA because there is no income tax deduction afforded to her today and withdrawals during retirement will be taxed as ordinary income. “Rather, if contributions were to be made, they should be directed toward a Roth IRA account because earnings from this type of vehicle will not be subject to tax in the future,” he says. Next, Miranda holds many after-tax investments that were purchased years ago and are currently being held at large unrealized gains. Current tax law allows for taxpayers in the bottom two brackets to realize capital gains without paying capital gains tax, he says. “Miranda should take advantage of this current law by realizing gains to soak up the bottom two brackets,” Boyer says. “With uncertainty looming around the future of tax law, it would be wise to seriously consider this recommendation for tax year 2012.” Also, Miranda holds almost $200,000 in municipal bond mutual fund investments. Boyer says the benefit of owning municipals bonds is that the income received by the investor is exempt from federal — and sometimes state — income tax. “These bonds are most appropriate for investors with a high income tax liability,” he says. “As this is not the case with Miranda, she would be better compensated owning taxable bonds with higher yields.” Additionally, she should consider paying off her the remaining mortgage balance because she’s not benefitting from the interest deduction. Looking at retirement, Boyer assumed Miranda would pay off the existing mortgage balance and incur $20,000 of home renovations in the next couple years, periodically purchase new cars and incur annual costs of classes and travel that could exceed $20,000 a year in addition to her base annual spending. “I was delighted to review with Miranda how successful the results of the plan were, and I hope she came away with the same impression,” he says. “Based on the assumptions we made, Miranda has a very high likelihood — 99 percent probability — of having assets through age 93.” Boyer says Miranda can reduce her exposure to growth assets while still maintaining the 99 percent probability of success. Her current portfolio is invested in 55 percent growth assets and 45 percent fixed income. Boyer says she could reduce her growth exposure to 30 percent while not altering the probability analysis results. Still, he says, it’s important to note that portfolios with a greater exposure to equities will likely result in higher dollar values at the end of the plan. Overall, Boyer says the key takeaways from this analysis are that Miranda has done a great job accumulating assets during her working career and should feel comfortable retiring today if she so chooses. “At a minimum, it is important to maintain a portfolio allocation of 30 percent equities and 70 percent fixed income, however, she has the ability to invest more aggressively if she wishes,” he says. “Further diversification of investments could improve her risk/return profile, and there should be greater attention paid to her tax situation and constructing an investment strategy that is most suitable for Miranda.” Get With the Plan is designed to illuminate personal-finance concepts and isn’t a substitute for actual financial planning or dedicated professional advice. To participate, contact Karin Price Mueller at [email protected].

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Loans up for grabs for community buildings CASH is available for villages in Cheshire to spruce up their community buildings or build new ones. The Rural Community Buildings Loan Fund has £700,000 to help renovate buildings like church halls, village halls and community centres. It encourages communities to raise funds, knowing a loan could be available to help them meet their target and win funding from other sources. The fund is managed by Action with Communities in Rural England (ACRE), the national voice for England’s network of 38 rural community councils, on behalf of Defra. The average loan taken out by village hall committees is around £15,000 but larger loans are considered. The interest charged on the loan is returned to the Government, but capital is put back into the fund to support other community buildings. For details of how to apply email [email protected]

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up in Attytood: Archie is out! — Attytood The one picture that tells you everything you need to know about America in 2011 Updated: September 18, 2011 — 11:47 PM EDT Guess where Elizabeth Warren went for a cheesesteak Jul 25 - 9:46 PM You've heard of a sacred cow, right? Only in America do we have a sacred bull -- a bronze idol to the false gods of Merrill Lynch and assorted other bankster racketeers. It's arguably outrageous enough that there's an official monument to these rodeo clowns on one of the most famous streets in America (Broadway, just off of Wall Street), a place that was once known as "The Canyon of Heroes" where people who actually contributed to the betterment of America were honored with ticker-tape parades. But it's more outrageous that the taxpayers of New York City are being charged God knows how much in police overtime to "defend" this graven image of Wall Street avarice Kind of like how two straight administrations -- one Republican and one Democratic -- have worked overtime to protect the banksters from any criminal penalties for their crimes. Right now, a small band of protestors -- it was several hundred to as many as 1,000 people on Saturday, probably less than that now -- are camped out near the center of American finance, part of a fairly spontaneous, social-media organized protest ( #occupywallstreet , among other Twitter hashtags ) aimed at going all Tahrir Square on Lower Manhattan. I don't think I'm going out on a huge limb to predict that they won't succeed -- not this time, not yet. I know we're all in love with the power of Twitter and all that, but the truth is that the Tea Party was able to get big (big, but not huge) crowds for its earlier protests because it had a national TV network, Fox News, mainstream conservative pols like Rick Perry and billionaires like the Koch Brothers promoting it. A left-wing protest isn't going to have that, especially not with the cowardly scared chickens of the Democratic Party clucking their way to the 2012 slaughterhouse. The good news/bad news is that there's a pool of about 25 million unemployed and under-employed Americans from which to draw potential Wall Street occupiers, and the worse things get (just wait until the Boehner-Obama austerity program kicks in), the more likely that you'll see an American Winter take the ball from the Arab Spring. I'll be pulling for 'em. Published: September 18, 2011 — 11:47 PM EDT

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La Seda must split under proposed refinancing deal By: Richard HiggsEUROPEAN PLASTICS NEWS BARCELONA, SPAIN — Spanish PET and packaging group La Seda de Barcelona (LSB) announced it has reached an outline deal with banks coordinating its syndicated loan in the process of renegotiating its debts.Based on a refinancing proposal put forward by the loan coordination committee, the "tentative" agreement must still be approved by a majority of the group's lenders before it is confirmed, the Catalan company said in a statement to CNMV, Spain's stock market regulator.Key terms of the deal mean that Barcelona-based LSB must restructure the industrial group, with financial and operational separation of its successful APPE packaging business from the PET polymer and recycling divisions.LSB must agree to restructure its senior or secured debt which would be implemented through a court-approved Scheme of Arrangement in the United Kingdom. In addition, a super senior credit facility of 30 million euros would be granted."The company feels that this agreement would guarantee the industrial group's continuity, while permitting it to expand its core packaging business, ensuring the necessary investment in order to boost its competitiveness and growth," said the board vice chairman José Luis Morlanes in the SE statement.Now it is up to lenders and LSB's shareholders to back this deal in view of the failure of the last capital plan submitted by the Spanish group.

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Table: C19101. Family Income In The Past 12 Months (In 2006 Inflation-Adjusted Dollars) [11] Universe: Universe: Families C19101. Family Income In The Past 12 Months (In 2006 Inflation-Adjusted Dollars) ACS 2006-1yr Summary File: Technical Documentation -> Appendix B. Subject Definitions -> Population Variables -> Income in the Past 12 Months -> Income of Families In compiling statistics on family income, the incomes of all members 15 years old and over related to the householder are summed and treated as a single amount. Although the family income statistics cover the past 12 months, the characteristics of individuals and the composition of families refer to the time of interview. Thus, the income of the family does not include amounts received by individuals who were members of the family during all or part of the past 12 months if these individuals no longer resided with the family at the time of interview. Similarly, income amounts reported by individuals who did not reside with the family during the past 12 months but who were members of the family at the time of interview are included. However, the composition of most families was the same during the past 12 months as at the time of interview. Excerpt from: Social Explorer; U.S. Census Bureau; American Community Survey 2006 Summary File: Technical Documentation. Income components were reported for the 12 months preceding the interview month. Monthly Consumer Price Indices (CPI) factors were used to inflation-adjust these components to a reference calendar year (January through December). For example, a household interviewed in March 2006 reports their income for March 2006 through February 2006. Their income is adjusted to the 2006 reference calendar year by multiplying their reported income by 2006 average annual CPI (January-December 2006) and then dividing by the average CPI for March 2006-February2006. In order to inflate income amounts from previous years, the dollar values on individual records are inflated to the latest years dollar values by multiplying by a factor equal to the average annual CPI-U-RS factor for the current year, divided by the average annual CPI-U-RS factor for the earlier/earliest year. Limitation of the Databack to top Since answers to income questions are frequently based on memory and not on records, many people tend to forget minor or sporadic sources of income and, therefore, underreport their income. Underreporting tends to be more pronounced for income sources that are not derived from earnings, such as public assistance, interest, dividends, and net rental income. Extensive computer editing procedures were instituted in the data processing operation to reduce some of these reporting errors and to improve the accuracy of the income data. These procedures corrected various reporting deficiencies and improved the consistency of reported income questions associated with work experience and information on occupation and class of worker. For example, if people reported they were self employed on their own farm, not incorporated, but had reported only wage and salary earnings, the latter amount was shifted to self-employment income. Also, if any respondent reported total income only, the amount was generally assigned to one of the types of income questions according to responses to the work experience and class-of-worker questions. Another type of problem involved non-reporting of income data. Where income information was not reported, procedures were devised to impute appropriate values with either no income or positive or negative dollar amounts for the missing entries. (For more information on imputation, see "Accuracy of the Data.") In income tabulations for households and families, the lowest income group (for example, less than $10,000) includes units that were classified as having no income in the past 12 months. Many of these were living on income "in kind," savings, or gifts, were newly created families, or were families in which the sole breadwinner had recently died or left the household. However, many of the households and families who reported no income probably had some money income that was not reported in the American Community Survey. Users should exercise caution when comparing income and earnings estimates for individuals from the 2006, or 2006 ACS to earlier years because of the introduction of group quarters. Household and family income estimates are not affected by the inclusion of group quarters. Comparabilityback to top The income data shown in ACS tabulations are not directly comparable with those that may be obtained from statistical summaries of income tax returns. Income, as defined for federal tax purposes, differs somewhat from the Census Bureau concept. Moreover, the coverage of income tax statistics is different because of the exemptions for people having small amounts of income and the inclusion of net capital gains in tax returns. Furthermore, members of some families file separate returns and others file joint returns; consequently, the tax reporting unit is not consistent with the census household, family, or person units. The earnings data shown in ACS tabulations are not directly comparable with earnings records of the Social Security Administration (SSA). The earnings record data for SSA excludes the earnings of some civilian government employees, some employees of nonprofit organizations, workers covered by the Railroad Retirement Act, and people not covered by the program because of insufficient earnings. Because ACS data are obtained from household questionnaires, they may differ from SSA earnings record data, which are based upon employers reports and the federal income tax returns of self-employed people. The Commerce Departments Bureau of Economic Analysis (BEA) publishes annual data on aggregate and per-capita personal income received by the population for states, metropolitan areas, and selected counties. Aggregate income estimates based on the income statistics shown in ACS products usually would be less than those shown in the BEA income series for several reasons. The ACS data are obtained from a household survey, whereas the BEA income series is estimated largely on the basis of data from administrative records of business and governmental sources. Moreover, the definitions of income are different. The BEA income series includes some questions not included in the income data shown in ACS publications, such as income" in kind," income received by nonprofit institutions, the value of services of banks and other financial intermediaries rendered to people without the assessment of specific charges, and Medicare payments. On the other hand, the ACS income data include contributions for support received from people not residing in the same household if the income is received on a regular basis. In comparing income for the most recent year with income from earlier years, users should note that an increase or decrease in money income does not necessarily represent a comparable change in real income, unless adjusted for inflation. Question/Concept Historyback to top The 1998 ACS questionnaire deleted references to Aid to Families with Dependent Children (AFDC) because of welfare law reforms. In 1999, the ACS questions were changed to be consistent with the questions for the Census 2000. The instructions are slightly different to reflect differences in the reference periods. The ACS asks about the past 12 months, and the questions for the decennial census ask about the previous calendar year. Company

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U.S. banks to pay $8.5B in mortgage settlement A foreclosure home for sale is shown in this 2006 photo taken in Spring, Texas. Ten major banks agreed Monday to pay $8.5 billion to settle federal complaints that they wrongfully foreclosed on homeowners who should have been allowed to stay in their homes. WASHINGTON -- Hundreds of thousands of Americans stand to benefit from the latest mortgage-abuse settlement, but consumer advocates say U.S. banks may be getting the best of the deal.Banks have agreed to pay $8.5 billion to settle charges that they wrongfully foreclosed on millions of homeowners in the wake of the 2008 financial crisis. Abuses included "robo-signing," when banks automatically signed off on foreclosures without properly reviewing documents.But the agreement announced Monday will also help eliminate huge potential liabilities for the banks.Consumer advocates complained that regulators settled for too low a price by letting banks avoid full responsibility for foreclosures that victimized families and fueled an exodus from neighborhoods across the country. The settlement ends an independent review of loan files required under a 2011 action by regulators. Bruce Marks, CEO of the advocacy group Neighborhood Assistance Corp. of America, noted that ending the review will cut short investigations into the banks' practices."The question of who's to blame - the homeowners or the lenders - if you stop this investigation now, that will always be an open-ended question," Marks said.The banks, which include JPMorgan Chase, Bank of America and Wells Fargo, will pay about $3.3 billion to homeowners to end the review of foreclosures.The rest of the money - $5.2 billion - will be used to reduce mortgage bills and forgive outstanding principal on home sales that generated less than borrowers owed on their mortgages.A total of 3.8 million people are eligible for payments under the deal announced by the Office of Comptroller of the Currency and the Federal Reserve. Those payments could range from a few hundred dollars to up to $125,000.Homeowners who were wrongly denied a loan modification will be entitled to relatively small payments. By contrast, people whose homes were unfairly seized and sold would be eligible for the biggest payments.Banks and consumer advocates had complained that the loan-by-loan reviews required under the 2011 order were time-consuming and costly and didn't reach many homeowners. Banks were paying large sums to consultants to review the files. Some questioned the independence of those consultants, who often ruled against homeowners.The deal "represents a significant change in direction" that ensures "consumers are the ones who will benefit, and that they will benefit more quickly and in a more direct manner," Thomas Curry, the comptroller of the currency, said in a statement.But Charles Wanless, a homeowner in the Florida Panhandle, is among those who question that promise. Wanless, who is fighting foreclosure proceedings with Bank of America, says he doubts the money will benefit many who lost homes."Let's say they already foreclosed on me and I lost my home," said Wanless, who runs a pool-cleaning business in Crestview, Fla. "What's $1,000 going to do to help me? If they took my house away wrongfully, is that going to get me my house back? I might be able to find one if I'm one of the lucky ones who gets $125,000."Diane Thompson, a lawyer with the National Consumer Law Center, complained that the deal won't actually compensate homeowners for the actual harm they suffered. The deal "caps (banks') liability at a total number that's less than they thought they were going to pay going in," she said.Thompson supports the decision to make direct payments to victimized homeowners. But she said the deal will work only if it includes strong oversight and transparency provisions.The companies involved in the settlement announced Monday also include Citigroup, MetLife Bank, PNC Financial Services, Sovereign, SunTrust, U.S. Bank and Aurora. The 2011 action also included GMAC Mortgage, HSBC Finance Corp. and EMC Mortgage Corp.Regulators announced the deal on the same day that Bank of America agreed to pay $11.6 billion to government-backed mortgage financier Fannie Mae to settle claims related to mortgages that soured during the housing crash.The agreements come as U.S. banks are showing renewed signs of financial health, extending their recovery from the 2008 crisis that nearly toppled many of them. They are lending more and earning greater profits than at any time since the Great Recession began in December 2007.Monday's foreclosure settlement doesn't close the book on the housing crisis, which caused more than 4 million foreclosures. It covers only consumers who were in foreclosure in 2009 and 2010. Some banks didn't agree to the settlement. And resolving millions of claims involving multiple banks and mortgage companies is complicated and time-consuming. "It's going to take a few more years to get it sorted out," said Bert Ely, an independent banking consultant.Michael Allen of Petersburg, Va., hopes to benefit from the settlement. He lost his home last month after 2½ years of trying to modify his mortgage. He had fallen behind on his payments after the plant he was working closed."I was working with the banks to re-modify (my loan), and I'd get to the final stages and I'd have to start over again. They didn't give me any reason. I'd call them, they'd transfer me from one person to the next. ... They just kept giving me the runaround."Citigroup said in a statement that it was "pleased to have the matter resolved" and thinks the agreement "will provide benefits for homeowners." Citi expects to record a charge of $305 million in the fourth quarter of 2012 to cover its cash payment under the settlement. The bank expects that existing reserves will cover its $500 million share of the non-cash foreclosure aid.Bank of America CEO Brian Moynihan said the agreements were "a significant step" in resolving the bank's remaining legacy mortgage issues while streamlining the company and reducing future expenses.Amy Bonitatibus, spokeswoman for JPMorgan Chase, said the bank had "worked very hard" on the foreclosure review and was "pleased to have it now behind us."U.S. Bancorp, which owns U.S. Bank, said its part of the settlement includes an $80 million payment to homeowners. That payment will reduce its fourth-quarter earnings by 3 cents per share. It has also committed $128 million in mortgage aid.Leaders of a House oversight panel have asked regulators for a briefing on the proposed settlement. Regulators had refused to brief Congress before announcing the deal publicly.Rep. Elijah Cummings of Maryland, the top Democrat on the House Committee on Oversight and Government Reform, said the settlement "may allow banks to skirt what they owe and sweep past abuses under the rug without determining the full harm borrowers have suffered."He complained that regulators failed to answer key questions about how the settlement was reached, who will get the money and what will happen to others who were harmed by these banks but were not included in the settlement.The settlement is separate from a $25 billion settlement among 49 state attorneys general, federal regulators and five banks: Ally, formerly known as GMAC; Bank of America; Citigroup; JPMorgan Chase and Wells Fargo.

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News Highlights Johnson Finance Professor Earns Best Paper Honors Hyunseob Kim’s research on corporate asset redeployability was chosen as “best paper in corporate finance” at the Society of Financial Studies annual research conference May 19, 2014 Hyunseob Kim, assistant professor of finance at the Samuel Curtis Johnson Graduate School of Management at Cornell University, will receive a prominent research award from the Society for Financial Studies in Washington, D.C., on May 19, 2014. Kim’s paper, "The Asset Redeployability Channel: How Uncertainty Affects Corporate Investment,” was selected as the “best paper in corporate finance” at the Finance Cavalcade, a major conference in finance. The paper was co-authored with Howard Kung, assistant professor of finance at the University of British Columbia. Kim’s research reveals that during times of high economic uncertainty, like the recent global financial crisis, companies such as Exxon Mobil and BP, which use specialized, hard to sell assets (such as oil rigs), cut investment significantly more than other companies, like Phillip Morris which use generic assets (such as trucks). This is because companies become cautious about investment, when future business prospects are uncertain, and the decision is difficult to reverse. ”These findings have important implications for policymakers, who should be concerned about the negative effects of uncertainty on economic activities such as investment and hiring,” said Kim. “Not being able to efficiently sell assets across firms and industries are important drivers of corporate investment,” he said. “In addition, uncertainty can significantly slow down economic growth, especially for core industries, such as manufacturing and materials, due to their need to invest in specialized machinery and equipment.” News Headlines Index

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Speech by SEC Commissioner: Remarks at "The SEC Speaks in 2009" Commissioner Elisse B. Walter Ronald Reagan Building and International Trade Center Thank you very much Linda for that kind introduction. I am delighted to be here today and I appreciate all of the efforts that have gone into preparing for this year's conference. The SEC Speaks has always been a good opportunity for the Commission to report on the events of the past year and provide a glimpse into the year to come. Even during these difficult times, I am excited to be serving as a commissioner. To some extent, I have spent my entire career preparing for the day that I would return to the agency in this capacity. Although I never anticipated arriving back at the Commission in the middle of a market crisis, I am confident that, with our new Chairman and my fellow commissioners, we are up to the challenges before us. Today I would like to give you some of my background, explore a few aspects of the Commission's history, and briefly discuss what the future may hold. Before I get too far along though, please let me remind you that my remarks represent my own views, and not necessarily those of the Commission, my fellow Commissioners, or members of the staff.1 I would like to begin by telling you a little bit about my background. My career has given me broad-ranging experience—from drafting SEC filings early on, to appellate and other litigation, legislative drafting and advice, reviewing all Commission action items, rulemaking, opinion writing, and working on major policy initiatives. After a short period in private practice, I arrived at the Commission in 1977 for what I thought would be a 3–4 year stint, only to spend the next 17 in the Office of General Counsel and the Division of Corporation Finance. I then became the General Counsel of the CFTC, and later spent over a decade at NASD, which has now become FINRA. Last summer, I was fortunate enough to return to the SEC, the agency where I had cut my teeth as a young lawyer. I was honored to have the opportunity to return to the Commission, especially given my utmost respect for its able staff and central role in protecting investors. Then last month I had the privilege of serving briefly as Acting Chairman of the agency. Now, I am not sure whether the length of my Acting Chairmanship—7 calendar days—broke any records for the shortest tenure, but it must have been close. I am quite sure that I will receive either confirmation or denial of that fact during the events celebrating our 75th Anniversary, where no shortage of war stories will be swapped. Quite frankly, I was thrilled to turn the reins over to Mary Schapiro. I've served with Mary in a number of capacities and she is precisely the leader that the Commission needs right now. The Commission has played an absolutely critical role in our nation's economy for more than seven decades by protecting investors and ensuring the integrity of our securities markets. And, despite the wave of criticism to which the Commission is now being subjected, we will weather the storm—by engaging in critical self-analysis, making informed decisions, implementing desirable changes, and doing what is best for investors and our markets. I believe that an important part of this will be enhancing our enforcement program, which is so critical to the protection of our nation's investors. As you know, the foundation of the SEC was laid in the aftermath of the stock market crash of 1929. Before that time, there was no real public support for reining in the booming securities markets in the post war era of the "Roaring 20s." Instead, investors were lured by the promise of easy money. Times were good, and money flowed freely. That quickly changed, however, and declining stock prices and margin calls led to a vicious cycle that shook the very core of our nation's financial markets and economy. As the Congressional investigation into the securities markets and exchanges led by Ferdinand Pecora revealed that there was serious misconduct in securities financing in the time leading up to the crash, investor confidence in our securities markets hit rock bottom. The investigation and growing public support for reform led to the first effective federal legislation regulating corporate finance: the Securities Act of 1933. The bill that ultimately became the '33 Act was the third attempt by President Franklin Delano Roosevelt to draft what he called "truth in securities" legislation. Harvard Law professor Felix Frankfurter had been brought to Washington to work on the bill, bringing with him Benjamin Cohen, James Landis, and "Tommy the Cork" Corcoran. During a weekend at the Carlton Hotel in early April 1933, they drafted the bill, which within weeks made its way through Congress and to the pen of President Roosevelt to become law. Frankfurter's "Happy Hotdogs," as they were known by journalists of the day, would have yet more to do in Washington. After the Congressional investigations continued to expose abuses, momentum grew for a bill to regulate the stock exchanges, and the Hotdogs advised on the so called Rayburn Fletcher bill that was introduced almost exactly 75 years ago today. The bill was later amended to vest a new commission with broad authority over exchanges and required disclosure of information about stocks that were already trading. On June 1, 1934, President Roosevelt signed the bill into law as the Securities Exchange Act, and the SEC was born. After signing the bill, the President handed his pen to Pecora and asked, "Ferd, now that I have signed this bill and it has become law, what kind of law will it be?" Pecora, taking the pen, answered, "It will be a good or bad bill, Mr. President, depending on the men who administer it."2 If Pecora were with us today, I'm sure that he would have said "men and women." Since that time, the dedicated men and women of the agency have built upon our strong foundation and worked tirelessly to administer the Exchange Act and other securities laws. These efforts have had tremendous positive effects—preventing countless frauds and immeasurable harm to the securities markets. Whether campaigning against securities fraud and reviving the securities markets under Joe Kennedy, pursuing fund industry reform and scrutinizing the commission rate structure under Manny Cohen, reconnecting with retail investors and bringing some transparency to the municipal securities markets under Arthur Levitt, responding to the 9/11 terrorist attacks and implementing sweeping Sarbanes Oxley reforms under Harvey Pitt, or ushering in a new regulatory era under Mary Schapiro—to name just a few of our outstanding Chairmen and their initiatives—the Commission has and will continue to take action to protect our nation's investors and ensure the integrity of the securities markets. Although the Commission has come under attack recently, and we will seek to make changes in our processes, rules, and governing legislation, we all know that these principles have always been at the forefront of our minds, day in and day out. As in the 1930s, the current economic climate is challenging on many fronts and Congress and other regulators are looking for ways to improve the financial system and boost investor confidence. These actions will help to write the next chapter for the Commission, and I believe that they should be informed by our proud history. And it is critical that all involved study the crisis carefully, understand its causes and lessons to be learned, and take action to reduce the chances of a similar crisis in the future. These efforts are ongoing, but I believe that some lessons are already emerging. For one, recent events have clarified that the Commission needs enhanced authority and resources to continue to fulfill its critical and unique mission as an independent agency. Also, recent events have demonstrated the interconnected nature of financial markets and institutions, and that the regulatory landscape has simply not kept pace with market developments. The events have also reinforced focus on broader threats to financial market stability. Efforts to consider broad regulatory reform, including reform in the financial services area, should draw upon these lessons. They should also be guided by several important principles, which include rationalizing the regulatory structure to eliminate overlaps, gaps, and weaknesses, enhancing transparency, maintaining a focus on the needs of investors, and ensuring regulatory flexibility and cooperation. Although today I am not endorsing a particular model for reform, the practical application of these guiding principles may point to reform in certain specific areas. For example, there is significant regulatory overlap in the securities and futures markets, and Congress should address this problem. It should also strengthen the Commission's jurisdiction over OTC financial derivatives, an area in which we have already taken important steps. Last November, we signed a memorandum of understanding with the Federal Reserve Board and CFTC that established a framework for consultation and information sharing on issues related to central counterparties for credit default swaps. And, in December, we approved temporary exemptions to allow a central counterparty for these instruments. Legislative action would provide clarity to the markets and additional stability in this important area. Reform also is needed to address the regulation of financial intermediaries such as broker dealers, investment advisers, and insurance agents. Currently, these intermediaries are regulated under different statutes, and sometimes by different regulatory bodies, even though they often provide similar products and services to investors. When your Aunt Millie walks into the local financial professional to ask for advice, she has no idea—nor should she—which set of laws governs the conduct of the person on the other side of the table. What she does need to know is that no matter who it is, or what product they are selling, she will receive a comparable level of protection. I don't think that we can give Aunt Millie that assurance today. As for transparency, although the Commission has made important strides in improving disclosure in the municipal securities market, more can be done to improve the quality and timing of such disclosures. More also can be done to increase the transparency of the ratings used by credit rating agencies. These are just some of the ways that the Commission can ensure that investors get the information they need when they need it. Finally, although I fully support efforts to address systemic risk in the markets, I also strongly believe that this should neither erode the central role that the Commission plays in protecting investors nor confine its role to a retail, sales practice perspective. To do our job of protecting investors well, it is critical that we continue to have comprehensive market knowledge and the ability to oversee the risk management practices of those firms dealing with the investing public. In closing, I appreciate the opportunity to share some of the Commission's rich history and to discuss what the future may hold for financial services regulation. I look forward to many more of these opportunities and hope also to meet with you to discuss your thoughts and concerns. Please remember that my door and phone lines are always open. Thank you. 1 The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publications or statements by any of its employees. The views expressed herein are those of the author and do not necessarily reflect the views of the Commission, other Commissioners, or the staff. 2 See 50 Years of the U.S. Securities and Exchange Commission, SEC (1984). http://www.sec.gov/news/speech/2009/spch020609ebw.htm

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Morgan Stanley and Goldman Sachs bid to reassure staff and clients • Morgan under increasing pressure to do a deal • Wachovia in preliminary talks John Mack, the Morgan Stanley chief executive, told staff that all options were on the table. Photograph: Mark Lennihan/AP Andrew Clark in New York Last modified on Thursday 18 September 2008 14.08 EDT Wall Street's last standalone investment banks, Morgan Stanley and Goldman Sachs, anxiously tried to reassure staff and clients as their shares collapsed for a second consecutive day, fuelling doubts about their future as independent businesses. Under increasingly urgent pressure to do a deal, Morgan Stanley pursued advanced merger negotiations with the US commercial banking firm Wachovia and held discussions with China's CIC about a possible capital infusion. But Wall Street sources said Morgan Stanley had rebuffed an approach from Citigroup for a tie-up. Such a deal would have involved a great deal of overlap, potentially putting many thousands of jobs at risk. At a hastily arranged "town hall meeting" in New York, Morgan Stanley's chief executive, John Mack, tonight told staff that although he would prefer the firm to remain independent, all options were on the table. Amid increasing signs of panic among investors, Morgan Stanley's shares were down 28% by lunchtime in New York and Goldman's stock dived by 14%. Since the beginning of the week, Morgan Stanley's market value has halved, losing $17bn in value, while Goldman's has dropped by 35%, dropping by $21bn. Senior executives at both Morgan Stanley and Goldman Sachs believe the collapse in confidence is nonsensical. They argue that it is driven by short sellers out to make a quick buck. Both banks are profitable and insist that they have nothing like the liabilities held by their erstwhile rivals Bear Stearns and Lehman Brothers. At Morgan Stanley, insiders said the firm was still prospering, picking up 16 new client mandates in Europe this week of which half were from defunct Lehman Brothers. "We're dealing with a completely irrational market reaction," said a source at one major bank. "But if you live by the market, you have to accept that markets can occasionally be irrational." Founded in 1935, Morgan Stanley employs 48,000 people in 33 countries. Its board of directors includes Howard Davies, the former head of the Financial Services Authority. Morgan Stanley was originally an investment banking breakaway from the commercial banking network JP Morgan. Critics are now questioning whether a Wall Street bank can survive without a high-street network, pushing it into the arms of Wachovia which has 3,300 branches across America. But there was scepticism among analysts about the logic of a deal with Wachovia, which has had its own problems with sub-prime security liabilities at a homeloans company, Golden West Financial, which it bought two years ago. Merrill Lynch's banking analyst, Guy Moszkowski, described the combination as a "potential mismatch" which would saddle Morgan Stanley with credit risk: "It is difficult for us to perceive a strategic benefit for Morgan Stanley, which would be merging with the weakest of the five major US banks." China's CIC is Morgan Stanley's biggest shareholder with a stake of 9.9% and another option pursued by Mack was to sell up to 49% to the state-controlled fund - stopping just short of handing the Chinese government control of a major US bank. Although Goldman Sachs was under slightly less pressure than Morgan Stanley, sources said it, too, was opening up channels of communication with sovereign wealth funds. Chief executive Lloyd Blankfein offered assurances to staff that Goldman's relatively strong trading performance would see it through. Experts said that a herd mentality was setting in. In a research note, Citigroup's chief US equity strategist, Tobias Levkovich, wrote: "Fear seems to be overtaking any rational discourse with the credit crunch slipping into crisis proportions and the desire to be in cash overwhelming any willingness to remain invested in equities." The index of market volatility, known as VIX, reached its highest level since 2002. Levkovich said that after a 25% fall from their peak, stocks are down by more than the average slump for an entire recession. Several US money market funds, usually seen as ultra-safe, shut down after struggling with Lehman Brothers debt which had been viewed as low risk until this week. An auction began for the troubled Seattle-based bank Washington Mutual, which has 2,200 branches across the US. It has called in Goldman Sachs to find a buyer. There has been speculation that Britain's HSBC could be interested. Others mentioned include JP Morgan, Bank of America and Wells Fargo.

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Payday loans may outstrip credit cards – PwC PwC warns mainstream lenders that customers are being increasingly drawn towards 'smaller, more agile loan providers' Payday loan companies may introduce credit cards and longer term products, said PwC. Photograph: Murdo Macleod Jill Insley Payday lenders could overtake credit cards and become a mainstream method of borrowing, a report by one of the UK's leading accountancy firms has warned. PricewaterhouseCoopers (PwC) said that consumers unable to borrow from traditional lenders, including credit card companies, were seeking alternatives such as so-called payday loans. But while these short-term, high-cost loans have previously been associated with higher risk borrowers on low incomes, the convenience and innovation offered by payday lenders are attracting a broader and more prosperous selection of consumers, at the expense of traditional bank loans. In its report, Precious Plastic 2012, Simon Westcott, director at PwC, said: "Mainstream lenders need to be aware that what may have begun as a last resort could be an enduring relationship, as consumers are pleasantly surprised at the convenient and innovative service they receive from these smaller, more agile providers. "As these providers become more conventional, we are likely to see them venture further into the mainstream market with their own credit card, longer term loan products or even current accounts." Payday lenders have attracted considerable bad publicity for their high interest rates and tendency to allow loans to roll over, resulting in huge charges for those who can't afford to repay their debts within the original time frame. Labour MP Stella Creasy is campaigning for the government to introduce a total cost cap on short-term loans to protect vulnerable borrowers. But Wescott argues that the limited length and size of payday loans appeals to consumers who are increasingly nervous about borrowing in an uncertain economic climate. "Our credit confidence survey has shown that there is a growing reluctance to borrow in the future and a marked deterioration in confidence about meeting repayments – particularly among 18- to 24-year-old consumers where less than half of those surveyed believe they will be able to repay their debts," he said. The firm, which surveyed 2,000 adults, found that levels of unsecured borrowing had fallen for the third year in succession by more than £355 per household in 2011, but worrying signs remained about their ability to continue paying off their debts, particularly in the 25- to 34-year-old age group, where 25% admitted to needing to use credit to fund essential purchases. Westcott said: "UK consumers are among the most indebted in the world, with the average UK household still saddled with nearly £8,000 of unsecured debt." However, credit cards were suffering a "mid-life crisis", with consumers discarding nearly 1m cards in 2011, and credit card borrowing reducing at a faster rate than other types of unsecured lending. Total outstanding credit card debt dropped by 5% in 2011, leaving the average credit card balance at about £1,000. In contrast, the use of debit cards has grown by 10% in 2011 and they are now used more than cash payments for the first time. Wescott said: "As the credit card model comes under pressure, there may be a return to annual fees as regulators push for more transparent ways of charging. Other banking products are likely to go the same way as consumers and regulators look for simpler products, and the free bank account may become a thing of the past." PwC audits the accounts of Wonga, but none of the firm's auditors were involved in drawing up the report.

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News Releases2016201520142013201220112010200920082007200620052004In the NewsMultimediaLogosMedia ContactSubscribe Your gift will make a difference in the lives of people who survive on less than $1 a day. Learn more. RSS Email PrintNews ReleasesJuly 28, 2010 Stan Hollen Wins Inaugural Global Women’s Leadership Network AwardLongtime Support of Women Executives, WOCCU Affiliate Group Cited Kimberley Hester, executive vice president of network services for CO-OP Financial Services (second from right), accepts the first Global Women's Leadership award on behalf of network supporter Stan Hollen, CO-OP Financial Services' president and CEO. Joining Hester are (from left) Patsy Van Ouwerkerk, president and CEO of Travis Credit Union, Vacaville, Calif.; Diana Dykstra, president and CEO of San Francisco Fire Credit Union; Susan Mitchell, network chair and CEO of credit union consulting firm Mitchell, Stankovic & Associates, Boulder City, Nev.; and Caroline Lane, senior vice president of business development and marketing for CO-OP Financial Services. LAS VEGAS – Stan Hollen, president and CEO of CO-OP Financial Services, has received the first of what will be an annual award for contributions to worldwide credit union women's leadership development from the Global Women’s Leadership Network, a program of World Council of Credit Unions (WOCCU). The award was accepted by Kimberley Hester, CO-OP Financial Services’ executive vice president of network services, at a reception for the 2010 Global Women’s Leadership Forum held in conjunction with The 1 Credit Union Conference, the recent joint event co-sponsored by Credit Union National Association and WOCCU. “Stan Hollen is a key leader within the credit union industry,” said Susan Mitchell, network chair and chief executive officer of credit union consulting firm Mitchell, Stankovic & Associates in Boulder City, Nev. “He believes in developing future leaders – especially women leaders – throughout the credit union movement. His actions support the network’s vision to provide women with the resources to make a measurable difference in the lives of each other, of credit union members and their communities.” Hollen was recognized for his ongoing support not only of individual U.S. women credit union leaders, but also of the Global Women’s Leadership Network, according to Mitchell. At Hollen’s direction, CO-OP Financial Services sponsored the network’s inaugural golf outing, an event that raised more than $40,000 for the network. "It is with pleasure that I accept this award from WOCCU and the Global Women's Leadership Network," said Hollen. "I believe in supporting the credit union industry and leadership development is of critical importance as we face future challenges. It is an honor to know that I have helped to create opportunities for women." World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach. World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 57,000 credit unions in 105 countries serve 217 million people. Learn more about World Council's impact around the world at www.woccu.org. NOTE: Click on photos to view/download in high resolution.Organization: World Council of Credit UnionsPhone: (608) 395-2000 Home > Newsroom > News ReleasesAbout Mission & VisionVision 2020What is a Credit Union?International Credit Union SystemLeadershipHeritageCareers & RFPsCompany CultureContact UsFinancial Inclusion

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Liberty Property Acquires Asset DRE Trades from $3 Liberty Property Trust recently purchased a Class A distribution property spanning 535,000 square feet at 7533 Industrial Park Way in Macungie, Pennsylvania for approximately $32 million. The property was developed five years ago but has remained vacant since then. The company also executed a long-term lease for 63% of the building spanning 337,500 square feet. The new tenant will occupy the space on January 1, 2012. Liberty Property boasts a presence in multiple markets, thereby helping the company to mitigate geographical risk. In each of its markets, the company offers an appropriate mix of office and industrial properties, sufficient to be recognized as a significant participant in the market. The distribution market in the Lehigh Valley is growing rapidly and with this transaction, Liberty Property seeks to strengthen its presence in this market. As the economy picks up, demand for distribution facilities across the region is expected to grow. Based in Pennsylvania, Liberty Property provides leasing, property management, development, construction management, design management, and related services for a portfolio of industrial and office properties. Currently, the company owns and manages more than 16 million square feet of office, flex and industrial space in the Lehigh Valley, and is the largest commercial real estate landlord in the region. Liberty Property currently retains a Zacks #4 Rank, which translates into a short-term Sell rating. We are also maintaining our long-term Underperform recommendation on the stock. One of its competitors, Duke Realty Corp (DRE - Analyst Report) currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Get the latest research report on DRE - FREE

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Business Biz Beat Blog Biz Beat Blog Category Archives: Banking Bank of America to consolidate, sell building in Fort Worth and move workers From Wire Reports Email [email protected] Published: May 26, 2016 6:56 pm (Saul Loeb/AFP/Getty Images) By Steve Kaskovich Bank of America is consolidating back-office operations in Tarrant County and will sell a building on Beach Street in north Fort Worth where it handles mortgages and other consumer services, the bank said Thursday. The facility was once part of Countrywide Financial, a mortgage company that became troubled during the financial crisis last decade and was sold to Bank of America. At one time, Countrywide employed as many as 3,000 people in north Fort Worth. Bank of America said workers in the Beach Street building will be moved to its campus in far east Fort Worth, at 4200 and 4500 Amon Carter Blvd., in the second or third quarter of this year. The company declined to say how many workers are being affected but said no job cuts are tied to the move. In a statement, Bank of America said the decision to consolidate is “in keeping with the bank’s approach to manage our real estate portfolio as effectively and efficiently as possible.” “Bank of America has a strong history in the Dallas/Fort Worth market and we remain committed to the area,” the company said. The company has 14,000 full-time employees in North Texas. The 395,000-square-foot Beach Street building was put on the market in August. Bank of America has 586,000 square feet at its campus on Amon Carter Boulevard, where it employs more than 1,000 workers, spokeswoman Britney Sheehan said. The Beach Street building was once an office/research and development building for Motorola, and Countrywide acquired it as part of a big expansion into North Texas aided by a $20 million grant from the Texas Enterprise Fund in 2004. The company promised to add 7,500 jobs in the region, but its expansion stopped when the mortgage crisis hit and Bank of America acquired Countrywide in 2008. As the company fell short of its hiring targets under the Texas Enterprise Fund grant, Bank of America agreed to refund $8.45 million to the state in 2009. Dallas-based Santander Consumer’s Spanish parent company plans to cut as many as 1,200 jobs Santander Bank’s financial city entrance in Madrid. (Javier Soriano/AFP/Getty Images) By Macarena Munoz Banco Santander SA plans to cut as many as 1,200 jobs in Spain as it closes branches and customers switch to online banking, a person familiar with the matter said. Spain’s largest lender met union representatives Wednesday in Madrid to start talks that could affect as much as 5 percent of the staff in its home market, said the person, who asked not to be identified. Dallas-based Santander Consumer USA is the Spanish bank’s consumer unit in the U.S., specializing in auto loans. About 950 of the job losses will be at branches in Spain, while the rest will affect employees at the central services unit, the UGT union said in a statement. The bank will seek to offer employees early retirement and voluntary redundancy, the union said. Santander said last week it plans to close 450 branches, representing about 13 percent of its Spanish network, to boost profitability as it steers customers toward digital banking. Banco Bilbao Vizcaya Argentaria SA, the country’s second-biggest lender, may also reduce its domestic branches, Chief Executive Officer Carlos Torres Vila said Tuesday. Santander’s Spanish business employs 24,000 people and is the lender’s third-largest market, contributing 12 percent of profit. Santander Consumer USA last month notified the Securities and Exchange Commission that it missed the deadline for filing its annual report. The Wall Street Journal reported at the time that Santander has failed the Federal Reserve’s “stress tests” for two years in a row. Banco Santander has appointed new executives in the U.S. and stepped up meeting with regulators to try to shape up the bank’s operations in the U.S. Former Dallas Fed chief Richard Fisher recounts role in 2007-08 financial crisis and recession Sheryl Jean Follow @SJeanDallas Email [email protected] Published: December 2, 2015 11:30 am Richard Fisher, former president of the Federal Reserve Bank of Dallas, talked in his office in February, one month before he retired. (David Woo/The Dallas Morning News) Former Federal Reserve Bank of Dallas president Richard Fisher yesterday recounted the central bank’s role — and his role — in reversing the 2007-08 financial crisis and ensuing economic recession. The San Antonio Express-News reported on a speech Fisher gave at Trinity University in San Antonio. Fisher, who led the Dallas Fed from 2005 until March 19, also gave some advice about current economic conditions. Today’s challenge “is to stop flooding gas into the economy,” Fisher said in the Express-News. He favors an interest rate hike in December. Fisher was one of the most outspoken critics of the Fed’s third round of economic stimulus and thought the central bank should have started raising interest rates long ago. In typical Fisher fashion, he used colorful commentary mixed with historical and literary references in his speech. The Express-News said: He used drug analogies to described the healing process from Great Recession. Morphine to get rid of the pain. Cocaine to stimulate. Following the talk, he told reporters Ritalin might be the right treatment now. You can read the full Express-News’ story. Twitter: @SJeanDallas Forest Park Medical Center in Dallas closed on Oct. 30, management works to reopen Published: November 2, 2015 11:38 am After Forest Park Medical Center in Dallas closed suddenly on Friday due to a lending issue, its management company is looking for ways to resolve the problem and hopes to reopen soon, but isn’t certain exactly when. Todd Furniss, chairman of the management company for the physician-owned Forest Park system, says the “pause” in operations is temporary and he hopes it will reopen in a matter of “days.” “We’re doing what we can do,” Furniss said. Management is focused on two things: the introduction of capital into the business and “preserving” the hospital’s license, he said. On Friday, the hospital transferred about 20 patients to other facilities, Furniss said. It also did not pay all of its 150 employees, who are now out of work. “Some employees were paid and some were not,” Furniss said. “We’re still catching up.” Forest Park is part of a growing trend of high-end, for-profit, doctor-owned hospitals that pledge more privacy, more comfort and better outcomes. Forest Park has five facilities across Texas, but some of those also have faced difficulties. The Dallas hospital, which opened in 2009, specializes in bariatric, orthopedic and certain pediatric surgeries. Forest Park’s San Antonio 139-employee hospital also closed Oct. 15 and has not yet reopened. In September, its Frisco hospital filed for bankruptcy reorganization to restructure more than $12 million in debts, but it’s still open. “The hospital has been under distress for several months and has been actively seeking additional capital to allow continued operations,” FPMC Services, Forest Park’s Dallas-based operator, said in an Oct. 15 layoff letter to state officials. “It has become apparent that the hospital will not be able to secure the additional capital.” What happened in Dallas on Friday is that the hospital’s lender did not fund a “draw” for just over $1 million against its revolving line of credit, Furniss said. He declined to name the lender, but said the $10 million-plus credit line had “plenty” of borrowing capacity. “It’s fair to say we’re disappointed,” Furniss said about the lender. “And we’re trying to do everything we can to solve the problem right now and not do things counterproductive to that.” The Dallas hospital is the only one of Forest Park’s facilities with a revolving loan, but it handled all of the leveraged assets, Furniss said. These issues highlight larger conflicts developing for for-profit, physician-owned hospitals under the new health care model. “What you’re looking at is a symptom and not the underlying disease or problem,” Furniss said. “This all is arising out of the perhaps unintended consequences of the Affordable Care Act.” The health care law prohibits physician-owned hospitals from expanding, but those that did couldn’t receive Medicare or Medicaid reimbursements. That means doctors at Forest Park hospitals must split their time at different places to handle Medicare or Medicaid cases, creating “downward pressure on revenue,” Furniss said. Rampant consolidation in health care also is complicating matters for smaller hospital systems like Forest Park, he said. For example, UT Southwestern Medical Center last month announced a collaboration with Texas Health Resources and Baylor Health Care System merged with Scott & White Healthcare in 2013. In addition to Dallas, Forest Park operates hospitals in Fort Worth, Frisco, San Antonio and Southlake. One in Austin is under construction. Could Forest Park’s Fort Worth and Southlake hospitals also shut down? “These are in a much different financing position,” Furniss said. “I have no reason to believe that will occur.” In May, a federal grand jury indicted Dallas anesthesiologist Dr. Richard Ferdinand Toussaint Jr., a co-founder of Forest Park, on 17 counts of health care fraud in 2009 and 2010. The U.S. attorney’s office charged that he submitted $8 million in claims — $5 million of which are believed to be false — to Blue Cross Blue Shield of Texas, United Healthcare and the Federal Employees Health Benefits Program. In 2013, Forest Park Medical Center, which operated three hospitals in Dallas, Frisco and Southlake at the time, paid about $260,000 and accepted federal monitoring for up to two years over allegations that it paid doctors kickbacks for referring military families, according to an agreement with the U.S. Defense and Justice departments. Layoff letter to state officials for Forest Park Medical Center San Antonio Comerica Bank names new Texas market president Published: September 2, 2015 11:08 am Peter Sefzik, left, succeeds J. Patrick Faubion as Comerica Bank’s Texas market president. Faubion recently became head of its business bank. (Comerica Bank) Comerica Bank today named Peter L. Sefzik as its Texas market president. He replaces J. Patrick Faubion, who became executive vice president of Comerica’s business bank in July. Sefzik will oversee all of Comerica’s lending, retail banking and business and community development in Texas and manage six regional presidents across Texas, Arizona and Florida. He also becomes part of the bank’s Management Policy Committee. Sefzik began his banking career with Comerica as a credit analyst in 1999. He was national private banking group business manager since 2014, but also had been regional managing director of wealth management in Texas, Arizona and Florida and held various roles the bank’s wealth and commercial banking, including its energy lending group. Comerica names new head of legal affairs Published: August 31, 2015 4:10 pm John D. Buchanan, left, will succeed Jon w. Bilstrom as head of legal affairs at Comerica Inc. (Comerica Inc.) Comerica Inc. today named John D. Buchanan, 52, as executive vice president of legal affairs and a member of the Dallas-based bank’s Management Executive Committee. He is expected to assume the role of executive vice president of governance, regulatory relations and legal affairs, on or around Jan. 1, 2016, succeeding Jon W. Bilstrom, who plans to retire on March 2016. Bilstrom has worked for Comerica since 2003. Buchanan has more than 23 years of bank legal experience and most recently was general counsel and corporate secretary for the Federal Reserve Bank of Dallas. He also has been senior executive vice president at Regions Financial Corp. and general counsel for AmSouth Bancorporation and SouthTrust Bank. He was a U.S. Army officer and helicopter pilot. Need financing? Dallas SBDC’s “Deal Day” aims to connect business owners and bankers Published: August 26, 2015 9:15 am Dustin Gadberry, CEO of Gadberry General Contracting & Construction, last year landed his first bank loan after meeting at Deal Day. He stands in front of a mural found at a downtown Dallas building his company was helping to redevelop a year ago. (Ron Baselice/The Dallas Morning News) Many Dallas businesses owners met their banker or obtained their first loan thanks to “Deal Day.” The free annual venue is where entrepreneurs can connect with bankers and lenders. The Dallas Metropolitan Small Business Development Center, with the North Texas Association of Government Guaranteed Lenders, is sponsoring this year’s event. A record 300 entrepreneurs and more than 30 lenders already have registered for the event. The event will take place Sept. 2, from 12 p.m. to 3 p.m. at the Sheraton Hotel, 500 N. Olive St., Dallas. Interested attendees should pre-register online through Eventbrite. On-site registration starts at 11:30 a.m. Corey Egan, CEO and co-founder of Plano-based ilumi, which makes smart lightbulbs, will speak at the event about how he and his business partner funded their startup through competitions and crowdfunding — and even by getting TV’s Shark Tank billionaire and Dallas Mavericks owner Mark Cuban to invest $350,000 in it last year. Deal Day also will recognize established small business clients of the Dallas SBDC that grew their sales and created jobs last year. Rose Blair, director of the Dallas Metropolitan SBDC, said Deal Day is “geared toward established businesses, but start-ups can come to learn about the lending process,” she said. Charnella Derry, owner of Beacon Hill Preparatory Institute in Dallas, said she met a PeopleFund loan officer at Deal Day 2014 who reviewed her loan application on the spot. Derry received a micro-loan to help her business grow a few weeks later. For more information about the event, call Mary Alvarado at the Dallas Metropolitan SBDC at 214-860-5865 or email her at [email protected]. MoneyGram names next CEO, starting Jan. 1 Published: July 31, 2015 10:40 am MoneyGram named its CFO and COO W. Alexander Holmes (at left) to become CEO on Jan. 1, 2016. He will succeed chairman and CEO Pamela Patsley, who will become executive chairwoman through at least 2017. (Courtesy of MoneyGram) Dallas-based MoneyGram today unveiled its leadership succession plan by promoting from within. The money transfer and payment services company named its chief financial officer and chief operating officer W. Alexander Holmes as CEO as of Jan. 1, 2016. He also will become a member of MoneyGram’s board of directors at that time. Holmes will succeed current chairman and CEO Pamela Patsley, who will become executive chairwoman through at least 2017. She has been CEO since September 2009. The Dallas-Fort Worth area will lose one of only two women CEOs among the region’s top 150 publicly traded companies. The other one is Melissa Reiff of The Container Store Group Inc. “We are pleased to be moving forward with a succession plan that provides for an orderly leadership transition and builds on the strong, collaborative partnership that Pam Patsley and Alex Holmes have developed during the last six years,” said J. Coley Clark, chairman of the human resources and nominating committee of the MoneyGram board. “Alex has made many valuable contributions to our business and his proven leadership skills across a range of senior executive roles, as well as his extensive knowledge of the company’s financial and business operations, make him highly qualified to serve as our next CEO.” Holmes has been COO of MoneyGram since February 2014 and CFO since March 2012. Before joining the company in 2009, he spent nine years at First Data Corp. and Western Union. A bank, a sick kid and a film: How Dallas-based Comerica Bank helped finance “Batkid Begins” Published: July 8, 2015 9:00 am Five-year-old leukemia survivor Miles Scott’s wish to be Batkid for a day came true in San Francisco in November 2013 thanks to Make-A-Wish Foundation. Now, a feel-good documentary film Batkid Begins: The Wish Heard Around the World tells the story — with a little help from Dallas-based Comerica Bank — of how it all came together. Batkid Begins, which debuted earlier this year at the Slamdance Film Festival in Utah and hit some movie theaters last month, will be shown in Dallas starting tomorrow at the Angelika Theater. Comerica donated $10,000 to the film in its first sponsorship of a documentary and its first participation in a crowdfunding campaign. Here’s how Comerica got involved: Last summer, bank vice president Susan Siravo in Sacramento, Calif., heard about the film’s director, Dana Nachman, launch of a fund-raising campaign on the crowdfunding site Indiegogo to raise $100,000 to pay for the music, graphics, aerial shots of San Francisco and some other big-ticket items. She also learned that proceeds of the film would go to the Batkid Fund to support San Francisco charities. “We thought this would be a great project for us to be involved in,” Siravo said. She contacted Nachman about Comerica becoming involved. Comerica, whose entertainment group provides financing options to independent film producers and studios, offered to match donations up to $10,000 for a week. The bank ran Facebook ads to drive people to Indiegogo. It worked. Nachman beat her goal, raising $109,630. Comerica, the only company to donate to the film, won a contest for sending the most clicks to Indiegogo. “It was a really fun experience for us,” Siravo said. “The film has such a positive message. It really shows what a fantastic experience it was not only for Miles, but for thousands of people who came together for a common purpose. By having it in a film, the whole spirit of the enthusiasm and generosity can live on for years.” Film critic Nick Allen of RogerEbert.com called Batkid Begins “a crowd-pleaser with succinct cases of kindness, but one that doesn’t venture to do more than reminding of when a great good dominated one moment.” The film combines collected footage from the San Francisco rally with new interviews, reenactments and comic book graphics. Batkid’s wrist-mounted device created by Eric Johnston (Courtesy of Machine Level.) Another Dallas company is connected to Batkid. At the request of Make-A-Wish, Eric Johnston of Machine Level in San Francisco built a gadget for Batkid using Texas Instruments Inc.’s digital light processing (DLP) technology. The wrist-mounted, battery-powered device let Scott project video calls from San Francisco Police chief Greg Suhr on ceilings and the side of a car. Follow me on Twitter at @SJeanDallas. Former Dallas Fed president Richard Fisher joins Barclays Published: June 30, 2015 10:52 am Former Dallas Fed president Richard Fisher has joined Barclays. (David Woo Dallas/Morning News) Richard Fisher, the former president of the Federal Reserve Bank of Dallas, has returned to his investment banking roots. Nearly four months after he retired as president of the regional Fed bank, he has been named senior advisor at Barclays, the investment bank confirmed. He starts his new job tomorrow. Fisher began his career with the Wall Street investment firm of Brown Brothers Harriman & Co. in the 1970s and later started his own investment advisory firm and a separate funds management firm. He also was executive assistant to the U.S. Treasury secretary during the Carter administration and a deputy U.S. trade representative. Fisher’s “exceptional knowledge and extensive experience in monetary policy, financial markets and services, global trade negotiations and regulatory matters will be of tremendous value to Barclays and to our clients,” Tom King, CEO of the investment bank at Barclays, said in a statement. As head of the Dallas Fed for the last decade, Fisher was one of the most outspoken policymakers and critics of the financial bailouts to big Wall Street banks and of the government’s continued stimulus program. Fisher also led the “too-big-to-fail” effort, proposing to break up the biggest U.S. banks and level the playing field for smaller banks. Barclays bought the North American operations of investment bank Lehman Brothers days after its 2008 collapse to expand is U.S. operations. That collapse led to the nation’s worst recession since the Great Depression. Fisher also recently was named to the board of directors of AT&T and PepsiCo. The Dallas Fed’s board of directors — with help from a search firm and an advisory group — still seeks Fisher’s replacement. The regional bank’s first vice president, Helen Holcomb, is the acting president. Ad:TopRight Ad:TopLeft Ad: Position1 Archives Title Archives June 2016 May 2016 April 2016 March 2016 February 2016 January 2016 December 2015 November 2015 October 2015 September 2015 August 2015 July 2015 June 2015 May 2015 April 2015 March 2015 February 2015 January 2015 December 2014 November 2014 October 2014 September 2014 August 2014 July 2014 June 2014 May 2014 April 2014 March 2014 February 2014 January 2014 December 2013 November 2013 October 2013 September 2013 August 2013 July 2013 June 2013 May 2013 April 2013 March 2013 February 2013 January 2013 December 2012 November 2012 October 2012 September 2012 August 2012 July 2012 June 2012 May 2012 April 2012 March 2012 February 2012 About this blog About This Blog Daily breaking news alerts from the Business staff of The Dallas Morning News. Amazon widget Video Video General Business Stories General Business Stories A. H. 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First-Time Homebuyers Care More About Work, Not Neighborhood NEW YORK (TheStreet) -- What do people really want in buying a home? First-time buyers differ from "average" homebuyers in establishing those priorities, according to a survey from the Bank of Montreal -- and it underlines to what extent first-timers care about work over home life. According to the bank, 34% of first-time buyers value a short commute to work, compared with 28% of other homebuyers, while 28% of first-time buyers want to live near public transit, compared with 19% of other so-called average buyers. Also see: Living Together but Not Married? 5 Tips But first-time buyers aren't as adamant about living in a quiet neighborhood -- only 30% say that's a big priority, compared with 43% of other homebuyers. Nor are they really interested in having "good neighbors" -- only 21% of first-time buyers say that's a big deal, compared with 30% of other homeowners. More Headlines The Psychology Behind Why We Love Black Friday In general Canadians want location, the survey says. But they also want: A safe neighborhood -- 63% Living on a quiet street -- 43% Having "good neighbors" -- 30% A short commute to work -- 28% Being near family and friends -- 25% "Everyone has a unique set of personal and financial priorities, so it's important that those particular needs are considered when deciding on the right location to purchase a home," explains Laura Parsons, a mortgage expert at BMO Bank of Montreal. "Taking a practical approach to homebuying is the key to preventing yourself from getting 'swept away' by the bells and whistles of a house." That's all about deciding on what really matters in a home purchase, then acting on those decisions. "Homebuyers should make a list of needs versus wants and prioritize them in order of highest to lowest importance," Parsons says. The bank urges consumers to work closely with a trusted real estate professional to establish priorities and act on them. It's also advisable to take care of the financial end of the home purchase before hunting so you're ready to pounce when a great deal pops up. "If planning to buy or sell a property, consider working with an expert who can help you make decisions that are appropriate to the health of your local market, and more importantly, that fit within your particular personal and financial priorities," Parsons says. Also see: How to Win a Bidding War on the Home You Really Want "Getting pre-approved financing, choosing a fixed rate and stress-testing mortgage payments in advance of buying a home can provide peace of mind and help homebuyers become mortgage-free sooner," she adds. If you have your financial ducks in a row and know exactly what you want in a new home, your chances of homeownership are greatly enhanced.

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CEA Home Page my.economics.ca About the CEA Can. Journal of Econ. Canadian Public Policy CEA Fellows A-Z Quick Find Nancy Gallini Secretary-Treasurer Robert Dimand President Elect & Conference Organizer Frances Woolley Vice President Angela Redish Past President Charles Beach Executive Director Vivian Tran Information Technology & Assistant Treasurer Werner Antweiler EVENTS & NEWS CEA 2016 Ottawa Conference Prize Winners: The Canadian Economics Association congratulates the following Prize winners � who had awards conferred during the CEA Annual Meetings in Ottawa, June 2016. ************************************************** Doug Purvis Memorial Prize: The winner of the Doug Purvis Memorial Prize for 2015 is The Ecofiscal Comission for their report: "The Way Forward: A Practical Approach to Reducing Canada's Greenhouse Gas Emissions". ************************************************** The Rae Prize: 2016: Fabian Lange (McGill University) Harry Johnson Prize: The Harry Johnson Prize for the best article published in the Canadian Journal of Economics in 2015 was awarded to Gregor Smith and Nicolas-Guillaume Martineau for their article:"Identifying Fiscal Policy (In)effectiveness from the Differential Counter-Cyclicality of Government Spending in the Interwar Period" published in the November 2015 issue of the Canadian Journal of Economics. Gregor W. Smith is the Douglas D. Purvis Professor of Economics at Queen's University, and Nicolas-Guillaume Martineau is a Professor at York University. Robert Mundell Prize: The Robert Mundell Prize for the best article published in the Canadian Journal of Economics in 2015 by an early-career economist was awarded to Alex Chernoff for his paper: "Between a Cap and a Higher Price: Modeling the Price of Dairy Quotas under Price Ceiling Legislation," which appeared in the November 2015 issue of the Canadian Journal of Economics Alex Chernoff is a Doctoral Candidate at Queen's University. Vanderkamp Prize: Ryan Cardwell, Chad Lawley and Di Xiang for the best article in 2015 in Canadian Public Policy/Analyse de politique with "Milked and Feathered: The Regressive Welfare Effects of Canada's Supply Management Regime". Canadian Women Economists Network/R�seau de Femmes �conomistes (CWEN/RF�) Young Researcher Prize: 2016: Svetlana Demidova (McMaster University) CEA Distinguished Service Award: Christopher Green (McGill University) Mike McCracken Award: The Mike McCracken Award recognizes theoretical and applied contribution to the development or use of economic statistics in Canada. Sadly Mike McCracken died since our last meetings. Mike is well known within Canada for the many ways he contributed to the development of economic statistics: in particular he was a strong supporter of Statistics Canada, the Canadian Employment Research Forum and the Canadian Econometric Study Group. In 2010, he was the first winner of this award which bears his name. This year the committee has chosen to honour Russell Davidson (McGill University) and James MacKinnon (Queen�s University). ************************************************** Bank of Canada: Graduate Student Paper Award (2016): Li, Bingjing (University of British Columbia) Source: Statistics Canada the web economics.ca © 2016 Canadian Economics Association. The CEA web site is maintained by Werner Antweiler.

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The Optimists' Turn: EU's Crisis May Not Be So Bad By Marilyn Geewax Jan 10, 2012 ShareTwitter Facebook Google+ Email A woman checks stock indexes of a bank in Milan. Some analysts say the turmoil in Europe may actually help the U.S. economy. Originally published on January 10, 2012 3:25 pm Europe's debt crisis is a huge threat to the U.S. economy. Or is it? For many months, economists have been warning that Europe's debt troubles could spiral into a massive recession that drags down U.S. growth. But some analysts say those fears may be wildly exaggerated. The U.S. economy has been "decoupling" from Europe for some time, and wouldn't be significantly harmed by any recession taking shape over there, they argue. In fact, the decoupling already is a fait accompli because U.S. financial institutions and corporations have responded to warnings about Europe by taking defensive steps, such as stockpiling cash and avoiding European bonds, according to Vincent Truglia, director of global economic research at Granite Springs Asset Management. "If it was a year ago, we'd be more susceptible" to financial turbulence triggered by any European government defaults, Truglia said. "At this point, if you haven't gotten prepared for it, you should not be working for a major financial institution." Why Europe Won't Hurt The U.S. For those who agree with Truglia, the evidence of U.S.-EU decoupling is all around. Here are some factors that suggest Americans will not be dragged down by Europeans' trouble: Interest Rates: The interest rates that many European governments must pay to attract bond buyers are high. For example, Italian bond yields are exceeding 7 percent. But the U.S. Treasury can offer yields of less than 2 percent on 10-year notes and still attract buyers. Since Treasury bonds serve as a benchmark for all sorts of lending rates, state governments, companies and individuals in this country can borrow money more cheaply than their EU counterparts. Currency Values: Over recent months, the euro, a 17-nation common currency, has lost value while the dollar has advanced. That suggests global investors have been losing confidence in Europe while gaining an appreciation for U.S. safety and strength. Stock Prices: In 2011, publicly traded shares in the eurozone dropped more than 11 percent while U.S. stocks were down only about 2 percent. This year, U.S. stock prices are rising, while European stocks are mostly flat at depressed levels. U.S. Growth: As 2012 begins, the U.S. annual growth rate appears poised to run at nearly 3 percent, and job creation is accelerating. Meanwhile, with the exception of Germany, most eurozone economies are barely growing, and some already are contracting. Japan's Example: Japan experienced a "lost decade" from 1991 through 2000 — a period with very little growth. Now it appears Europe may be heading into a similarly long downturn. But Japan's weak economy did not tank U.S. growth in the 1990s. Likewise, optimists say, Europe's long recession won't have a major impact on U.S. growth. Momentum: In 2008, the United States and Europe experienced recessions triggered by the U.S.-based mortgage securities meltdown. But BRIC nations — Brazil, Russia, India and China — had enough economic momentum that year to quickly shake off the troubles and keep powering through. Likewise, in 2012, the U.S. and the BRICs will keep growth rolling even as Europe slides. Indeed, the BRICS and other emerging markets with young and fast-growing populations, such as Indonesia and Turkey, will hold the keys to U.S. economic health, not Europe, according to the man who coined the acronym BRICs. Jim O'Neill, the chairman of Goldman Sachs Asset Management, has released a new book: The Growth Map: Economic Opportunity in the BRICs and Beyond. In the book, O'Neill says emerging economies will make Europe relatively less important to Americans. "The world economy has doubled in size since 2001, and a third of that growth has come from the BRICs," O'Neill wrote. "Their combined GDP increase was more than twice that of the United States, and it was equivalent to the creation of another new Japan plus one Germany, or five United Kingdoms, in the space of a single decade." Optimists say the United States may not only escape Europe's troubles, but actually could be helped by the turmoil. Investors are pulling money out of Europe to seek shelter in U.S. stocks and bonds. "There's a flight to quality," Truglia says. This influx of capital can help U.S. businesses expand while keeping interest rates low. Risks From Europe Remain But even optimists admit the course of events will be very difficult to predict this year because of several major unknowns. For one, China's economy could be in for a "hard landing," if its growth stalls. If China, Japan and Europe all are in recession in 2012, then it would be very difficult for the United States to shake off that much bad news. And, of course, the idea that U.S. financial institutions could really build a fireproof wall around themselves to protect against a European market meltdown could be wishful thinking. Many analysts say financial institutions are so globalized that a series of European government and bank defaults would necessarily lead to trouble for U.S. financial institutions. "In the near term, the eurozone sovereign-debt crisis is the biggest threat to the U.S. economy," IHS Global Insight chief economist Nariman Behravesh wrote in his 2012 assessment. One pessimist goes further. David Levy, an economist with the Jerome Levy Forecasting Center LLC, said in his 2012 outlook that U.S. companies couldn't absorb a major financial shock from Europe because "private balance sheets, in the aggregate, remain oversized, fragile, and sufficiently troubled to keep contracting." Despite some evidence of decoupling, Levy believes that "any major jolt to ... markets will aggravate this unstable financial situation and risk triggering a new vicious cycle of financial and economic decline."Copyright 2013 NPR. To see more, visit http://www.npr.org/. View the discussion thread. © 2016 KASU

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The Trillion Dollar Trick Peter Schiff Print this article The birth, and the apparent death, of the trillion dollar platinum coin idea may one day be recalled as a mere footnote in the current debt crisis drama. The ultimate rejection of the idea (which was to use a loophole in commemorative coinage law to mint a platinum coin of any denomination) by both the President and the Federal Reserve seems to offer some relief that our economic policy is not being run by out-of-touch academics and irresponsible congressmen. In reality, our government has been creating more than one trillion dollars out of thin air every year for the past five. The only difference is that the blatant dishonesty of a trillion-dollar platinum coin is so easy to understand that the public simply couldn’t be expected to swallow it. The American people are more than willing to be fooled, but they won’t tolerate so simple a ruse. People have a long and intimate history with coins. Some of us collected them as kids, and we all touch and see them every day. Unlike currency bills,: we know intuitively that a coin’s value is supposed to come from its metal content. That’s why quarters are bigger than dimes. As a result, most people have viscerally rejected the platinum coin idea. To assign an arbitrary, sky high, valuation to a small piece of metal strikes most people as a deceitful, desperate act. They are right. However, the same people have no problem with images of thousands of crisp paper notes flying off the printing presses. The acceptance is not impacted by how many zeroes the bills contain. People simply believe that paper money derives value from the numbers, not the paper.: : This was not always so. Paper money originally entered the public awareness as promissory notes to pay different amounts of gold. Once people got used to the paper, few really cared when the gold backing was finally removed. As a result, the public would likely have been much more accepting of the Fed printing a trillion dollar bill than the government minting a trillion dollar coin. But there was no legal pathway for the Fed to simply give that money to the government. The government, not the Fed, mints coins, so they did not have to rely on the Fed to create value out of thin air. That is why the platinum coin idea was so seductive, if ultimately unsellable. But the Fed does the exact same thing all the time using sophisticated accounting and state of the art computing. The Fed “expands its balance sheet” by buying government bonds from private banks. In exchange for these securities, the Fed credits the banks with funds it creates out of thin air. The banks then pass the funds to the general public through loans. But it’s important to realize that the Fed does not have any money to actually buy the bonds in the first place.: The funds are “created” by a Fed computer. The process is easier (and equally duplicitous) than minting a trillion dollar coin (which at least requires the production of something other than computer code). The only difference is the lack of window dressing. It’s a shame that the platinum coin episode did not result in a wider recognition of this brutal truth. A similarly silly and meaningless distinction is being made with respect to raising the debt ceiling. In his press conference yesterday, President Obama said the Republican reluctance to raise the debt limit was the equivalent of a diner who had ordered and enjoyed a meal who then decides to leave the restaurant without paying the bill. The President is actually arguing that if the diner had no cash on hand,: it would be much more responsible to simply use a credit card. In taking this moral high ground, the President ignores the fact that the diner (who has indebted himself through habitual restaurant meals) intends to pay his credit card bill with another card, and then repeat the process until he runs out of cards. So in the end, it’s not the restaurateur who gets stiffed, but the issuer of the last card the diner is able to acquire. As with the platinum coin, this is a distinction without a difference. Currently the Federal Government counts more than $16 trillion in funded obligations. Over the next 10 years we are expected to add another $10 trillion or more. At no point in the foreseeable future are we expected to approach balance in our annual budget. All of our future bills are expected to be paid by future borrowing on a massive scale. Anyone with an ounce of integrity would have to plan for the possibility that an ever increasing debt rollover is a limited prospect. Such an understanding will mean that eventually someone will get stuck with the bill. How is this any more responsible than dining and ditching? In truth, a failure to raise the debt ceiling is not a commitment to renege on obligations. It is simply a decision to stop borrowing. The government could still meet obligations by cutting spending, raising taxes, or making reforms to entitlements. But it chooses not to take this difficult step. More important than that is the message America is sending its creditors. By informing them that the United States will not use its taxing power to repay its debts, but will only rely on its ability to borrow more (ironically from the same creditors),: it effectively admits to running the world’s largest Ponzi scheme. It’s a shame that more people can’t seem to grasp these very simple truths. Peter Schiff is the CEO and Chief Global: Strategist: of Euro Pacific Capital, best-selling author and host of syndicated Peter Schiff Show.: 0SHARESShareTweetSubscribe More articles by Peter Schiff

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CalSTRS Issues First Diversity in Investment Management Report to Legislature The report will be filed annually as part of Senate Bill 294 March 03, 2014 02:30 PM Eastern Standard Time WEST SACRAMENTO, Calif.--(BUSINESS WIRE)--The California State Teachers’ Retirement System (CalSTRS) today submitted its first report to the California Legislature outlining progress in bringing emerging managers into the stewardship of its investments. The report, “Diversity in The Management of Investments 2014 Progress Report,” is a requirement under Senate Bill 294, which became law in 2011. It nonetheless reflects CalSTRS’ strategic goal, since 2003, to bring greater diversity to its external investment management. “Reflecting the philosophy of inclusion ingrained in the work and the ranks of California’s educators, CalSTRS seeks to increase the participation of emerging investment managers, while enhancing returns at a prudent level of risk,” said CalSTRS Chief Investment Officer Christopher J. Ailman. “That diversity mindset extends to our 108-strong CalSTRS investment staff, comprising wide-ranging backgrounds and experience.” CalSTRS’ strategic goals on diversity fall into three broad categories: CalSTRS investment staff. The challenges identified in the “four pillars” of real estate, corporate governance, global equity and brokerage services. CalSTRS’ foundation of existing programs. CalSTRS employs four initiatives aimed at increasing the diversity of its investment staff. They are the development of recruitment strategies to attract a diverse workforce; development of training programs to facilitate hiring recent California university graduates; creation of staff training and development programs to retain staff and attract civil servants from other disciplines; and maintenance of internship programs with surrounding universities. The four pillars—real estate, corporate governance, global equity and brokerage services—present some of the toughest challenges to incorporating diversity in the management of investments across the CalSTRS portfolio. CalSTRS focuses on meeting four goals. They are: Increase the diversity of real estate external managers handling CalSTRS funds. Increase the diversity of corporate boards of directors. Develop a direct relationship program with equity managers to move managers from the CalSTRS Developing Manager Program to CalSTRS’ core portfolio. Increase the diversity of firms providing brokerage services to CalSTRS. The report also sets out the foundations of CalSTRS’ focus on diversity through its existing programs, which are: The Private Equity Proactive Portfolio. The Global Equity Developing Manager Program. Fixed Income direct relationships with diverse managers. Local community college internships. Active participation in industry organizations. “However we approach our goals, we keep in mind the CalSTRS core value of strength, which says, ‘We ensure the strength of our system by embracing the diversity of ideas and people,’” Mr. Ailman said. “It’s why we continue to be recognized as an industry leader. We don’t rest on our laurels, and developing new, diverse and talented asset managers is a key part of our strategic plan.” CalSTRS’ leadership in diversity is award-winning and has been recognized with several recent accolades, including: November 2013 – CalSTRS received the Association of Asian American Investment Managers Champions award. November 2012 – New America Alliance Pension Leadership Award for Promoting Latino Advancement, presented to Solange Brooks of CalSTRS Investments Executive Unit. April 2012 – CalSTRS Corporate Governance Investment Officer Aeisha Mastagni was awarded the aiCIO magazine’s “Top 40 under 40” award. The California State Teachers’ Retirement System, with a portfolio valued at $176.2 billion as of January 31, 2014, is the largest educator-only pension fund in the world. CalSTRS administers a hybrid retirement system, consisting of traditional defined benefit, cash balance and voluntary defined contribution plans. CalSTRS also provides disability and survivor benefits. CalSTRS serves California's 868,000 public school educators and their families from the state’s 1,600 school districts, county offices of education and community college districts. California State Teachers’ Retirement SystemRicardo Duran, [email protected] CalSTRS first annual Diversity in the Management of Investments report aligns with 4 pillars of real estate, corporate governance, global equity direct program and brokerage services, says CIO Ailman.

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Ex-Enron CEO Skilling resentenced to 14 years HOUSTON — Former Enron Corp. CEO Jeffrey Skilling has been resentenced to 14 years as part of a court-ordered reduction that closes one of the country’s most notorious financial scandals. Skilling was resentenced Friday by U.S. District Judge Sim Lake in Houston. Skilling already was in prison for his role in the once-mighty energy giant’s collapse, having been sentenced in 2006 to more than 24 years. That sentence was vacated by an appeals court. The Justice Department also agreed to an additional sentence reduction of about 20 months as part of a deal with prosecutors to allow the distribution of about $41 million in restitution to victims of the Enron collapse.

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Class-action suit accuses Kohl's of securities violations July 26, 2013 | By Dan Berthiaume Menomonee Falls, Wis. – Bernstein Liebhard has filed a securities class-action complaint in the U.S. District Court for the Southern District of New York on behalf of all those who purchased shares of Kohl's Corp. between Feb. 26, 2009. and Sept. 13, 2011. The complaint alleges that Kohl's and some of its executives and directors violated the Securities Exchange Act of 1934 during that time period by materially understating the company’s reported debt, overstating reported equity, materially understating leverage ratios and not complying with other accounting and financial reporting requirements. In August 2011, Kohl’s reported errors in accounting for its leases, which eventually resulted in a loss of stock value the following month. Anyone who invested in Kohl's shares during the class period and either lost money on the transaction or still holds the stock may be eligible to participate in the suit. Kohl’s has not released a statement in response to the complaint.

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No skimping on tips to save money Humberto CruzTribune Media Services columnist As long as you keep sending great savings ideas I'll keep printing them.As part of its "America Saves" campaign the Consumer Federation of America invited readers to submit tips for building an emergency fund (e-mail Nancy Register at [email protected] and send me a copy). More than two months later, I'm still receiving a steady stream of letters and e-mails on the subject and savings in general. Here are just a few:-- "Saving money requires spending less than you make each month. Saving also demands discipline," said Donald Swegan, of Sebring, Ohio. His system--the same one my wife, Georgina, and I use--involves setting aside enough money each month to pay not only for the regular monthly expenses but also a share of all anticipated expenses for the year. Swegan estimates he incurs expenses totaling $7,200 a year for automobile and other types of insurance, doctor bills, holiday gifts and other items. These bills come at different times and for different amounts.But they don't catch Swegan by surprise because he sets aside $600 a month into an account where he always keeps enough to handle those expenses.-- Beverlyann Dooley, of Ocala, Fla., realizes she's "spending" money every time she drives, not just for gasoline but also because of the wear and tear on her car. If she goes on car trips lasting 11/2 to 2 hours she sets aside $20 toward future maintenance, repairs and eventually replacing the vehicle. For trips of six hours she ups the amount to $100.-- Irene Lewandowski, of Dalefield, Wis., took up a "$1-a-day challenge" and has hundreds of dollars and a high-yielding certificate of deposit to show for it. "I took the challenge (saving $1 a day plus loose change, as suggested in a magazine article) on Jan. 1, 2006," she said. "I cleaned an empty coffee can and added my first dollar and what change I had. By the end of the month I counted what I had accumulated and deposited it in my savings account, which didn't pay much interest. However, by the end of 2006 I managed to save close to $500, which I used to open a certificate of deposit that earns 5 percent interest."And yes, I did start the $1-a-day program again in 2007 and it has become a habit. So the next time you say you can't save, just try the $1-a-day challenge--or just the change in your pocket. You'll be amazed how it can add up."-- Here's another way to save a dollar at a time and also engage in a friendly competition with friends: "I save $1 bills that have the sequence 24 anywhere in the serial number," said Doris Winchester, of Colorado Springs. "I have a friend who saves dollar bills with a 23. Another friend saves bills with the letter J. We have fun comparing how quickly the dollars add up."-- Finally, Bill Etherton, of Phoenix, reminds us that the most effective way to save is to not spend money on things you don't need:"Your article on saving reminded me of something that happened a long time ago. I was either in elementary or junior high school and my Mom wanted to go buy something on sale. I told my Dad, `Why don't we put the money we save in the bank?' My dad replied, `Why don't we not buy it and put all of it in the bank?' It has made me rethink a lot of purchases since then."Humberto Cruz is a columnist for Tribune Media Services. E-mail him at [email protected].

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Crime inquiry said to open on Citigroup Ben Protess and Michael Corkery Thursday, 3 Apr 2014 | 12:27 AM ETThe New York Times Just as Citigroup was putting a troubled past of taxpayer bailouts and risky investments behind it, the bank now finds itself in the government's cross hairs again. Federal authorities have opened a criminal investigation into a recent $400 million fraud involving Citigroup's Mexican unit, according to people briefed on the matter, one of a handful of government inquiries looming over the giant bank. Citigroup CFO must leave: Mike Mayo The investigation, overseen by the F.B.I. and prosecutors from the United States attorney's office in Manhattan, is focusing in part on whether holes in the bank's internal controls contributed to the fraud in Mexico. The question for investigators is whether Citigroup — as other banks have been accused of doing in the context of money laundering — ignored warning signs. The bank, which also faces a parallel civil investigation from the Securities and Exchange Commission's enforcement unit, hired the law firm Shearman & Sterling to lead an internal inquiry into the fraud, said the people briefed on the matter, who spoke only on the condition of anonymity. At a meeting last month, the bank's lawyers presented their initial findings to the government. The bloom of activity stems from Citigroup's disclosure in February that its Mexican unit, Banamex, uncovered an apparent fraud involving an oil services company. show chapters Markets were surprised by Citi: Pro Jerry Braakman, EVP, Chief Investment Officer & Treasurer at First American Trust, discusses how investors should be trading Citigroup after it failed the Fed's stress test. Markets were surprised by Citi: Pro Thursday, 27 Mar 2014 | 1:11 AM ET The disclosure — that at least one Banamex employee processed falsified documents that helped the oil services company obtain a loan that cannot be repaid — generated immediate interest from federal authorities. But the decision by the F.B.I. and prosecutors to open a formal investigation, a move that has not been previously reported, has now officially drawn a faraway crime to Citigroup's doorstep. The case represents another setback for the bank, which has also come under fire from regulators in Washington. Last week, the Federal Reserve rejected Citigroup's plan to increase its dividend. The rebuke embarrassed the bank and raised questions about the reliability of its financial projections. The scrutiny coincides with Citigroup's recent announcement that it faces a separate, and perhaps more threatening, investigation from federal prosecutors in Massachusetts. The prosecutors, who have sent subpoenas to Citigroup, are examining whether the bank lacked proper safeguards against clients laundering money. Citigroup, the people briefed on the matter said, has hired the law firm Paul, Weiss, Rifkind, Wharton & Garrison to handle that case, which stems from the prosecutors' suspicion that drug money was flowing through an account at the bank. Fed rejects Citigroup capital plan, shares drop Together, the developments threaten to complicate Citigroup's relationships with government authorities, who had previously lost faith in the bank after it required two bailouts and came to epitomize Wall Street's role in the financial crisis. While Citigroup's chief executive, Michael L. Corbat, has repaired ties to regulators using a blend of contrition and self-accountability, the latest investigations could test those improvements. Still, the government scrutiny could be short-lived. Citigroup has not been accused of wrongdoing, and prosecutors might ultimately close the cases without extracting fines or imposing charges, which typically come only if wrongdoing was pervasive. And Citigroup is sharing the spotlight with banks like JPMorgan Chase, whose missteps, including a $6.2 billion trading loss in London, make its own problems seem arguably manageable by comparison. A Citigroup spokesman declined to comment. In a letter to shareholders last month, Mr. Corbat said: "We continue to investigate what took place in Mexico and are working to identify any areas where we need to strengthen our controls through stronger oversight or improved processes." Cramer on Citi: 'They were very cocky' Spokesmen for both the F.B.I. in New York and Preet Bharara, the United States attorney in Manhattan, declined to comment. In a speech this week, however, Mr. Bharara emphasized the importance of investigating not only individual bankers and traders, but also the Wall Street firms that employ them. "Effective deterrence sometimes requires that institutions be punished, because sometimes it is the institution that has failed," he told a conference of Wall Street lawyers. At first glance, Citigroup appeared to be the victim of the fraud involving the Mexican oil services company Oceanografía. After all, the bank lost millions of dollars. But the F.B.I. and prosecutors, the people briefed on the matter said, are questioning whether Citigroup was equal parts victim and enabler. show chapters Citi's wakeup call from the Fed The Fed announced Citi is one of five banks to fail its stress test. Anthony Polini, Raymond James analyst, discusses what the big bank can do now. This seems to be more of a bump in the road for Citi rather than a critical shortfall, says Polini. Citi's wakeup call from the Fed Thursday, 27 Mar 2014 | 6:07 AM ET For one, it is unclear whether the wrongdoing at Citigroup was actually limited to a single Banamex employee, as early reports indicated. The authorities, according to the people briefed on the matter, are investigating whether the scheme involved co-conspirators at the bank's offices in the United States. Prosecutors also tend to weigh whether an episode was isolated or illustrative of a broader problem. In the case of Banamex, the fraud was the latest in a series of questionable loan deals for the Citigroup unit. Bank employees say that Banamex, which accounts for 13 percent of Citigroup's revenue, undergoes the same level of oversight as any other business arm. But others inside the bank say that the Mexican unit has always had some degree of autonomy from New York. And even if Oceanografía defrauded Citigroup — and the fraud was indeed an "isolated incident," as the bank has said — Citigroup may have lacked the proper controls to thwart the scheme at its inception. Under the law, banks must report suspicious activity and set up compliance programs to prevent money laundering and other illegal activity. When banks fail to do so, it could amount to a criminal or civil violation, depending on the severity of the problem. For a breakdown to be criminal, prosecutors would typically need to show that the bank willfully ignored warning signs of the fraud. Was Citi the Fed's sacrificial lamb? With the focus on bank controls, the Banamex case and the separate money- laundering investigation in Massachusetts echo other recent Wall Street investigations. Prosecutors have claimed that lax controls enabled drug trafficking, money laundering and business deals with blacklisted countries like Iran and Cuba. In 2012, federal prosecutors penalized HSBC for turning a "blind eye to money laundering that was happening right before their very eyes." The HSBC case, defense lawyers say, provided a template for prosecutors to go after not just a bank's actions, but its inaction as well. In January, Mr. Bharara's office announced a criminal case that extracted a $1.7 billion penalty from JPMorgan Chase over accusations that it ignored warning signs about Bernard L. Madoff's Ponzi scheme. Mr. Madoff's firm used JPMorgan as its primary bank for more than two decades. At Banamex, Oceanografía became one of the bank's largest corporate clients. Under a short-term lending arrangement, Banamex would advance money to Oceanografía, whose existence hinged almost entirely on government contracts. Banamex issued the loans with the understanding that Oceanografía had received contracts from the state-owned oil monopoly Pemex. Once the work was completed, Pemex would repay the loan to Banamex. More from the New York Times: 4 Dead and 16 Injured in Fort Hood Attack In Crimea, Russia Showcases a Rebooted Army Ruling Is a Win for Big Donors and Party Leaders But this year, Mexican authorities suspended Oceanografía from obtaining additional government contracts for several months. Shortly after, Banamex discovered a fraud. There was valid documentation for $185 million of work, Citigroup said, but Banamex had advanced Oceanografía a total of $585 million. Some of Oceanografía's invoices, Citigroup said, "were falsified to represent that Pemex had approved them. A Banamex employee processed them." Mexican authorities, including lawmakers and the attorney general, have directed their own investigations into the fraud. Citigroup has said it has worked with the Mexican authorities "to initiate criminal actions" that may allow it to recover some of the missing money. "We are exploring every available option to recoup the misappropriated funds and we will be relentless in pursuing their recovery," Mr. Corbat said in a memo to employees. "All will be held equally responsible and we will make sure that the punishment sends a crystal-clear message about the consequences of such actions." Related Securities

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Bank of America Searches for Assets to Sell Justin Baer and Francesco Guerrera |Financial Times Tuesday, 14 Sep 2010 | 9:50 AM ETFinancial Times Bank of America plans to identify tens of billions of dollars in assets and businesses that it wants to sell or wind down, in the latest effort to ease investors’ concerns about its holdings of risky securities and loans. The move could set the stage for more aggressive steps to shrink the bank’s $2,300 billion-plus balance sheet at a time when regulators and shareholders are putting pressure on lenders to slim down. Executives at BofA , the largest US bank, have told analysts and fund managers in recent meetings that they were weighing detailed disclosures on the loans, businesses and stakes that do not fit in their long-term plans, according to people who attended the gatherings. Although the plans have not been made public, analysts said that the non-core assets could exceed $100 billion, and include both complex structured-credit products and impaired loans that came with its 2008 acquisition of Countrywide Financial, the mortgage lender. BofA declined to comment. “BofA intends to provide more details on its non-core assets at some point in the future,” said Betsy Graseck, a Morgan Stanley analyst who recently met the bank’s management. “BofA would do itself and investors a great service if it gave greater clarity and details on the size and composition of its non-core assets.” Other analysts confirmed that executives at BofA, which also bought the investment bank Merrill Lynch during the financial crisis, had spoken about more disclosure on non-core assets. BofA’s plans go beyond previous announcements that designated assets such as the Balboa credit insurance arm and its stake in the asset manager BlackRock as non-core. However, BofA is unlikely to go as far as Citigroup, which has assigned executives to manage and sell non-core assets and provides investors with a quarterly income statement for the portfolio, analysts said. As part of its agreement to repay bail-out funds from the US government during the crisis, BofA pledged to add $ 3billion in equity through asset sales. BofA has already sold some businesses, including shares in Brazil’s Itau Unibanco, MasterCard and Grupo Financiero Santander. By the end of the second quarter, the bank had reaped $10 billion in gross proceeds from the sales and $1.9 billion in after-tax gains that it can apply towards the $3 billion mandate.

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Restaurants get a taste for Cleveland attorney's 'cash mobs' LinkedIn Google+ Gojo Industries Businessweek.com catches up with Andrew Samtoy, a Cleveland attorney credited with starting “cash mobs,” as the movement spreads to new types of ventures, and to new places around the world.Cash mobs involve, essentially, altruistic strangers coming together for shopping sprees at neighborhood shops. Mr. Samtoy has become “the face of the mobs in the U.S.,” according to the story, though he doesn't get paid to organize them; he does it because he wants to “give back to businesses that support their communities.”Mr. Samtoy estimates 2,000 cash mobs have taken place around the world since he led his first one in Cleveland in fall 2011, according to the story.“Last year, when dining deals site Restaurant.com approached him about funneling his mobs to a handful of its 18,000 partner restaurants, he agreed, and together they organized events in five cities with hungry folks forming 'dish mobs,'” Businessweek.com reports. “While other national businesses have tried to partner with Samtoy and fellow organizers, he says Restaurant.com was 'the only one that made sense, as they respected us and our mission and did not try to dominate the whole process or go against the spirit of cash mobs.'”The story notes that Restaurant.com plans more dish mobs across the country, with Salt Lake City, Dallas, Orlando, Raleigh and Baltimore scheduled in the coming weeks.For Mr. Samtoy's part, he tells Businessweek.com that he plans to spend less time this year organizing cash mobs in the United States and more time getting the word out internationally. While he has seen growth in the United Kingom, Germany, and Australia, “Spain is absolutely massive right now.”Businessweek.com adds that he reasons the popularity is due in part to Spain's record unemployment and Spaniards' desire to help each other, “because the politicians are clearly not doing it.”A gloomy group The nation's small business owners, as represented by the National Small Business Association, generally have been a pessimistic group, with 51% of members recently reporting they expect a flat economy this year and just 14% expecting growth.But Slate.com argues we shouldn't pay much attention to such confidence surveys because, well, these small business owners aren't very good predictors of the direction of the economy.From the piece:So are we doomed? Not really. Delving into the history of NSBA reports, small-business owners appear to be a remarkably grumpy and pessimistic lot. The number of respondents foreseeing a recession next year is the highest since July 2009, which might make us curious as to how the economy fared in the August 2009-July 2010 period. It turns out that July '09 was basically the low point of the recession. Over the next four quarters U.S. output expanded by $357 billion. In other words, small business owners predicted a recession just as the recovery was starting.The 47-to-23 ratio of respondents saying the economy is worse off today than it was a year ago is alarming. But six months ago the ratio was an equally alarming 48-to-21. In December 2011, it was 44-to-24 and six months before that it was 52-to-24. So has the economy been on a steady downward slide for the past two and a half years? Nope. Growth has been disappointingly slow in some ways, but the economy is clearly on an upward trajectory.So why are small business owners so gloomy? “One plausible theory is politics,” according to Slate.com.“Owners and operators of businesses are one of the most reliably Republican occupational categories in the United States, so it's perhaps natural for them to have a pessimistic bias,” according to the piece. “There is a president they don't like in the White House, and they've consistently believed Obama's policies are driving us into an economic ditch. Like most Americans, they don't change their partisan commitments in the face of contrary evidence.”Also worth noting is that small business owners “take a considerably rosier view of their own business prospects than those of the economy as a whole,” says Slate.com. “A healthy 47 percent of respondents anticipate their own gross sales rising, while just 23 percent say they'll decline. If growing businesses outnumber shrinking ones 2-to-1, then it's hard to see how the economy is going to shrink.”This topic is less dry than you'd think There are Northeast Ohio connections in this Wall Street Journal story about the rise of companies selling alcohol-free sanitizers with antimicrobials they say give long-lasting protection without drying hands. “Many hand sanitizers, which gained popularity in the 1990s, contain alcohol, which provides a quick kill but evaporates in a few seconds — meaning users can pick up more bacteria as soon as they touch something, scientists say,” The Journal notes. “And frequent users of alcohol-based sanitizers, such as nurses, sometimes complain of dry hands, doctors say.”However, it adds that some scientists say “there is insufficient real-world evidence to show the new (alcohol-free) sanitizers work as well as they do in lab tests.”Even so, The Journal reports that the website of SafeHands LLC, of Boca Raton, Fla., markets its alcohol-free sanitizer, made with the antimicrobial benzalkonium chloride, as "tough on germs and safe on skin." Another sanitizer, 4 Hour Protection sold by Angel Dough Ventures LLC, Hicksville, N.Y., has the same active ingredient and offers "moisturizing, long-lasting coverage," according to the company's website.The formula in 4 Hour Protection hasn't been studied to see how it performs after drying on skin for several hours, says Don Muir, executive vice president of MicroArmor Inc. of Willoughby, which makes the product for Angel Dough.“But he says published data in the August 1998 journal of the Association of periOperative Registered Nurses on a sanitizer with the same active ingredient shows sustained activity,” The Journal reports. (The study used a formulation that was a precursor to the one used in the SafeHands product, according to David L. Dyer, who is a co-author of the study and co-inventor of SafeHands.)Mr. Muir adds that not all of the 4 Hour Protection product will rub off and moisture on the hands is enough to allow it to work, according to The Journal. The company's website says the product provides "continuous effectiveness" when applied every two to four hours along with handwashing. Dave Macinga, a microbiologist for Akron-based Gojo Industries Inc., the maker of Purell, tells The Journal that it is an "absolute misconception" that alcohol-based sanitizers dry your hands. He also says moisturizers are added.“In a Gojo-funded study published in 2000 in the journal Infection Control and Hospital Epidemiology, 32 nurses used Purell for two weeks for an average of about twice an hour during their workdays,” The Journal reports. “It found Purell caused no hand irritation or dryness and proved gentler on the hands than soap and water.”You also can follow me on Twitter for more news about business and Northeast Ohio.

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Full Site Articles Only <img src="/images/nav_ra.png" /> Home Why Not Another World War? July 19, 2010 - 5:42pm — europac admin Our weekly commentaries provide Euro Pacific Capital's latest thinking on developments in the global marketplace. Opinions expressed are those of the writer, and may or may not reflect those held by Euro Pacific Capital. By: Peter Schiff Monday, July 19, 2010 Email There is overwhelming agreement among economists that the Second World War was responsible for decisively ending the Great Depression. When asked why the wars in Iraq and Afghanistan are failing to make the same impact today, they often claim that the current conflicts are simply too small to be economically significant. There is, of course, much irony here. No one argues that World War II, with its genocide, tens of millions of combatant casualties, and wholesale destruction of cities and regions, was good for humanity. But the improved American economy of the late 1940s seems to illustrate the benefits of large-scale government stimulus. This conundrum may be causing some to wonder how we could capture the good without the bad. If one believes that government spending can create economic growth, then the answer should be simple: let's have a huge pretend war that rivals the Second World War in size. However, this time, let's not kill anyone. Most economists believe that massive federal government spending on tanks, uniforms, bullets, and battleships used in World War II, as well the jobs created to actually wage the War, finally put to an end the paralyzing "deflationary trap" that had existed since the Crash of 1929. Many further argue that war spending succeeded where the much smaller New Deal programs of the 1930s had fallen short. The numbers were indeed staggering. From 1940 to 1944, federal spending shot up more than six times from just $9.5 billion to $72 billion. This increase led to a corresponding $75 billion expansion of US nominal GDP, from $101 billion in 1940 to $175 billion by 1944. In other words, the war effort caused US GDP to increase close to 75% in just four years! The War also wiped out the country's chronic unemployment problems. In 1940, eleven years after the Crash, unemployment was still at a stubbornly high 8.1%. By 1944, the figure had dropped to less than 1%. The fresh influx of government spending and deployment of working-age men overseas drew women into the workforce in unprecedented numbers, thereby greatly expanding economic output. In addition, government spending on wartime technology produced a great many breakthroughs that impacted consumer goods production for decades. So, why not have the United States declare a fake war on Russia (a grudge match that is, after all, long overdue)? Both countries could immediately order full employment and revitalize their respective manufacturing sectors. Instead of live munitions, we could build all varieties of paint guns, water balloons, and stink bombs. Once new armies have been drafted and properly outfitted with harmless weaponry, our two countries could stage exciting war games. Perhaps the US could mount an amphibious invasion of Kamchatka (just like in Risk!). As far as the destruction goes, let's just bring in Pixar and James Cameron. With limitless funds from Washington, these Hollywood magicians could surely produce simulated mayhem more spectacular than Pearl Harbor or D-Day. The spectacle could be televised- with advertising revenue going straight to the government. The competition could be extended so that the winner of the pseudo-conflict could challenge another country to an all-out fake war. I'm sure France or Italy wouldn't mind putting a few notches in the 'win' column. The stimulus could be never-ending. If the US can't find any willing international partners, we could always re-create the Civil War. Missed the Monitor vs. the Merrimack the first time? No worries, we'll do it again! But to repeat the impact of World War II today would require a truly massive effort. Replicating the six-fold increase in the federal budget that was seen in the early 1940s would result in a nearly $20 trillion budget today. That equates to $67,000 for every man, woman, and child in the country. Surely, the tremendous GDP growth created by such spending would make short work of the so-called Great Recession. The big question is how to pay for it. To a degree that will surprise many, the US funded its World War II effort largely by raising taxes and tapping into Americans' personal savings. Both of those avenues are nowhere near as promising today as they were in 1941. Current tax burdens are now much higher than they were before the War, so raising taxes today would be much more difficult. The "Victory Tax" of 1942 sharply raised income tax rates and allowed, for the first time in our nation's history, taxes to be withheld directly from paychecks. The hikes were originally intended to be temporary but have, of course, far outlasted their purpose. It would be unlikely that Americans would accept higher taxes today to fund a real war, let alone a pretend one. That leaves savings, which was the War's primary source of funding. During the War, Americans purchased approximately $186 billion worth of war bonds, accounting for nearly three quarters of total federal spending from 1941-1945. Today, we don't have the savings to pay for our current spending, let alone any significant expansions. Even if we could convince the Chinese to loan us a large chunk of the $20 trillion (on top of the $1 trillion we already owe them), how could we ever pay them back? If all of this seems absurd, that's because it is. War is a great way to destroy things, but it's a terrible way to grow an economy. What is often overlooked is that war creates hardship, and not just for those who endure the violence. Yes, US production increased during the Second World War, but very little of that was of use to anyone but soldiers. Consumers can't use a bomber to take a family vacation. The goal of an economy is to raise living standards. During the War, as productive output was diverted to the front, consumer goods were rationed back home and living standards fell. While it's easy to see the numerical results of wartime spending, it is much harder to see the civilian cutbacks that enabled it. The truth is that we cannot spend our way out of our current crisis, no matter how great a spectacle we create. Even if we spent on infrastructure rather than war, we would still have no means to fund it, and there would still be no guarantee that the economy would grow as a result. What we need is more savings, more free enterprise, more production, and a return of American competitiveness in the global economy. Yes, we need Rosie the Riveter - but this time she has to work in the private sector making things that don't explode. To do this, we need less government spending, not more. This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License. Please feel free to repost with proper attribution and all links included. Legal Information Schiff Radio RSS Feeds Euro Pacific Canada SchiffGold Euro Pacific Bank © 2016 Euro Pacific Capital, Inc. All rights reserved. Member FINRA & SIPC - Privacy Policy Check the background of our investment professionals on FINRA’s BrokerCheck. Investing in foreign securities involves risks, such as currency fluctuation, political risk, economic changes, and market risks. Precious metals and commodities in general are volatile, speculative, and high-risk investments. As with all investments, an investor should carefully consider his investment objectives and risk tolerance as well as any fees and/or expenses associated with such an investment before investing. International investing may not be suitable for all investors. Dividend yields change as stock prices change, and companies may change or cancel dividend payments in the future. The fluctuation of foreign currency exchange rates will impact your investment returns. Past performance does not guarantee future returns, investments may increase or decrease in value and you may lose money. Our investment strategies are based partially on Peter Schiff's personal economic forecasts which may not occur. His views are outside of the mainstream of current economic thought. Investors should carefully consider these facts before implementing our strategy.

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Will Windstream's Leadership Preserve Its Dividend? I've been looking at Windstream (NASDAQ: WIN ) , a rural telecom company that has attracted investors with an impressive dividend yield. Yet with Windstream and its peers all facing many of the same challenges in dealing with major acquisitions in the recent past, does the company have the strength of leadership at the helm to navigate through tough waters? I've been crafting a premium research report on Windstream that goes into more detail about the rural telecom company. Let's take a closer look at who's running the show at Windstream. Leadership CEO Jeffery Gardner has been at the helm at Windstream since its formation in 2006. Prior to that, he served as CFO at Alltel and has had various roles throughout the communications industry since 1986. Gardner also serves on Windstream's board of directors, but he doesn't act as its chairman. That honor goes to Dennis Foster, who served as lead director of Windstream since mid-2006 and who took on the role of chairman in early 2010. With a long history in the communications industry, Foster has worked at Sprint (NYSE: S ) , 360 Communications, and GTE in a management role. He's also served on boards at Alltel, NiSource (NYSE: NI ) , and YRC Worldwide. Unfortunately, neither Gardner nor Foster have a clear alignment of their incentives with those of shareholders. Gardner owns roughly 1.5 million shares of stock worth about $15 million at current prices, but that represents barely a quarter percent of the company's outstanding shares. Meanwhile, Gardner earned almost $9.8 million in compensation in 2011, with $6.5 million of that coming from stock awards. Although some of Gardner's awards are performance-based, the steady decline in stock price during 2011 apparently wasn't enough to trigger a decrease in compensation. Moreover, Gardner has an employment agreement that would pay him almost $3 million in severance if he's terminated without cause or if he quits for "good reason" -- including a material reduction in compensation. For his part, Foster has an even smaller stake worth roughly $2.6 million. He earned $266,000 as a director, of which he got slightly more than half in the form of common stock and restricted stock awards. Gardner emphasizes his belief that Windstream remains on the right track in following its strategy over the past several years. As he said in a recent conference call, "The power of a nationwide network is significantly enhancing our ability to win larger, multi-location enterprise deals, and our sophisticated product offerings and brand promise of personalized service are resonating very well. The PAETEC integration activities are on track, and we are making solid progress as a combined organization. In summary, I am confident in our strategy and our ability to execute on our plans." And in Windstream's most recent conference call, Gardner emphatically said, "Windstream's management team and board of directors unanimously support continuing to pay our dividend at its current rate and believe it is the best way to create value for our shareholders." In general, Gardner seems to have some employee support, although it's not overwhelming. According to Glassdoor, about 57% of those rating Gardner approve of his job performance as CEO. Windstream has able leaders with plenty of experience at the helm. Yet shareholders still have to question whether they can count on the company's management to put shareholder interests first. Learn more Stay tuned for further excerpts from my premium report on Windstream. In the next part of this series, I'll turn to several areas to keep your eyes on as Windstream moves forward. Learn more about Windstream rival Frontier Communications by reading our premium research report on the stock. Both Frontier and Windstream have juicy dividends, but can the good times last for rural telecom payouts? In the report, we walk you through all of the key opportunities and threats facing the company. Better yet, you'll receive a full year of updates to boot. Click here to learn more. Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. On February 22, 2013, drseusphd wrote: NEW YORK | Tue Feb 19, 2013 9:39am EST Feb 19 (Reuters) "Windstream continues to produce substantial free cash flow that enables us to invest in our business and reduce our debt while continuing to pay our $1 annual dividend," Chief Executive Jeff Gardner said in a statement.The company also reported a fourth-quarter profit of $10 million or 2 cents per share compared with a loss of $35 million or 7 cents per share in the year-earlier quarter on revenue that rose to $1.54 billion from $1.21 billion. Frontier Communica… YRCW

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InvesTT and Lok Jack GSB launch World Investment Report Tweet Published: Thursday, June 19, 2014InvesTT Limited in conjunction with the Arthur Lok Jack Graduate School of Business will on Tuesday launch the World Investment Report 2014 (WIR) prepared by the United Nations Conference on Trade and Development (Unctad). The 23rd in its series, this year’s WIR is subtitled Investing in the Sustainable Development Goals: An Action Plan. First published in 1991, the WIR has been published annually by Unctad and presents data on and existing trends in global foreign direct investment (FDI) and is an influential resource of economic intelligence to global policy makers. This year’s report comes at a critical time to provide insight into the development of Sustainable Development Goals for international development beyond 2015. Each year the WIR is launched simultaneously via press conferences at strategic locations around the world. InvesTT, the country’s investment promotion agency charged with attracting, facilitating and retaining FDI into T&T, has been invited for the third consecutive year by Unctad to host the launch of the WIR. Business Previous Article Bid to block Republic takeoverNext ArticleImbert questions FCB’s share issue In case you missed it. Persad-Bissessar: AG’s claims mischievous, baseless Opposition Leader Kamla Persad-Bissessar has accused Attorney General Faris Al-Rawi of attempting to mislead and deceive the population into thinking that 1,300 prisoners are likely to be freed... Tuesday 26th July, 2016 Health Ministry finalising NCD policy A national policy on non-communicable diseases (NCD) will be introduced within the next two weeks, Health Minister Terrence Deyalsingh said yesterday. Marchers back in court Nov 3 Islamic activist Inshan Ishmael and two others pleaded not guilty yesterday to charges of leading and participating in a march without permission from the Commissioner of Police. Huawei sows local seeds On June 25, for two weeks, Huawei, a major Chinese telecommunications company operating in T&T over the last decade, hosted six computer science and computer engineering students from UWI on... A shining light in Welcome Village School van driver Enal Ramsaroop and his group, Welcome Action Group (WAG) and Friends, have become a shining ray of light and hope in the once depressed agricultural communities of Welcome... Robocop murder weapon used in Sea Lots shooting The AR-15 assault rifle that was used in the killing of Selwyn “Robocop” Alexis is the same type of weapon that was used to shoot police officer Sgt Ricardo Morris multiple times in Sea Lots in... G-20 countries pledge to protect against Brexit shock BEIJING—Global finance officials promised yesterday to protect the world economy from the shockwaves of Britain’s European Union referendum and to boost sluggish growth. Monday 25th July, 2016 Mysteries around Mosquito Creek drowning The elderly man whose body was recovered from the Gulf of Paria on Saturday by journalists and environmental activists investigating a massive fish kill has been identified as Satrohan Bunsee, 80... GUARDIAN MEDIA is not responsible for the content of external sites. Copyright © 2014 GUARDIAN MEDIA LIMITED

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Freeholders look for fatPhone bill went up by almost $700K; Can they keep your taxes from rising? by Jun 09, 2013 | 3849 views | 0 | 154 | | view slideshow (2 images) The overseers of Hudson County’s $304 million budget are holding a road show, and on Wednesday and Thursday they made stops in Secaucus and Hoboken. The Hudson County Board of Freeholders introduced a budget last month that will cause county taxes to rise in Hoboken, Weehawken, and Secaucus, so several county departments came to the meetings to talk about how to save money. The final vote on the budget is scheduled for June 20.The freeholders had some pointed questions for the heads of county departments. In one case, they asked why the cost of employee phone calls climbed by $700,000, and why certain county employees get their own taxpayer funded cars.Property owners pay a rate that is determined by the budgets of three entities: the county, their school district, and their town. These hearings affect only the county budget.Secaucus Mayor Michael Gonnelli had requested that one of the hearings be held in his town, which officials believe will be affected more than other municipalities in Hudson. Gonnelli had held a joint press conference in Hoboken on May 7, with Hoboken Mayor Dawn Zimmer and Weehawken Mayor Richard Turner. Those three municipalities have been hit with a vastly higher county tax rate because of new construction and tax ratables.“It’s almost if you govern well, you get penalized,” Gonnelli said at the press conference.As Wednesday night’s meeting opened in Secaucus, Gonnelli thanked the county officials for coming, then asked them to reduce their budget.He urged them to “go to each and every line item in each and every department to come up with areas to cut.”Gonnelli asked that the county cut $5 million from its budget to help his town. He said Secaucus has seen a 29.5 percent increase in its county tax levy over the last three years, and is expecting about a 10 percent rate hike this year. That translates into an additional $2.3 million in taxes for his town’s residents._____________“We’ll look at all the line items, we feel the pain.” – Freeholder Chairman Anthony Romano____________“We fortunately are a community that has a lot of ratables,” he said, “and therefore carry a large part of the county tax burden.”He reminded them that his town hosts several county facilities that are tax exempt and produce no tax revenue for Secaucus. He urged them to consider cutting from the Open Public Space program and talk about municipalities sharing services wherever possible.“Let’s think out of the box,” he said.Why so much money, and so many employees?“We’ll look at all the line items, we feel the pain,” said Freeholder Chairman Anthony Romano.“Public Safety has four different entities. Maybe we can share services there.”During the meeting, the topics of phone bills, “turf watchers” (people paid to monitor athletic fields for trespassers), county cars and part-time versus full-time employees were all discussed.Freeholders grilled several departments about where cuts could be made, questioning specific line items. Freeholder William O’Dea asked Harold Demellier Jr. of the Department of Roads and Public Property, Engineering & Transportation why a department telephone bill of $1 million in 2012 went up to almost $1.7 million.“We have to question if people are making long-distance phone calls when they shouldn’t, if the phone is connected to the internet,” he said. “We need to understand why a line item would increase by more than 50 percent in a given year.Freeholder Albert Cifelli questioned why no alarm went off when the phone bill went up so much.“There’s no blip on the radar, no smoking gun, no red flag?” he said.Demellier pledged to get back to them with an answer.O’Dea also asked about Demellier’s 270 employees, and if all the current job vacancies have to be refilled. Demellier said there are various collective bargaining agreements with unions that would be a factor if changes are made.The electricity and gas bills of Demellier’s department were also questioned by freeholders looking for cost savings.‘Turf watchers’ and plannersThe next county official, Michelle Richardson, director of the Department of Parks and Community Services, was grilled even more by the board. The freeholders took exception to the use of “turf watchers,” employees who literally sit and monitor astro-turf athletic fields so no damage is done to them, and only allow those with permission to play on them. Lincoln Park in Jersey City, Washington Park straddling Jersey City and Union City, and Laurel Hill Park in Secaucus are among them.“Why can’t camera operators monitor them and alert the Sheriff’s Department who are patrolling” if there are any problems, O’Dea asked. “What level of incidences have you had that it’s that much of a concern?”The board also questioned why a workforce of part-time workers – who do not have to become full-time like seasonal workers and who do not have to be paid benefits – can’t be created.O’Dea asked Richardson why she has a division with eight planners in it and wanted to know exactly what they do.“I would like to be honest with you inspector; I would like to see activity logs for all these individuals,” he said. “I want to know, do we really need all these people?”Saying that most planning is done on the municipal level, and that many municipalities contract it out to consultants, O’Dea questioned why the county cannot operate the same way.“There are large cities that have outsourced their planning and have saved a substantial amount of money,” he said. “I’m really having trouble understanding and justifying the need for all these positions.”Cifelli even questioned whether the county was required to have a planning board. The freeholders also asked Richardson if the position of planning aide waiting to be refilled was really necessary. She answered that “Because of [Hurricane] Sandy, there’s a focus on more planning.”“I have not seen a single report in the seven months since the storm. I don’t know what they’re studying, what they’re planning,” O’Dea said. “I don’t see any reports from them. Can you provide us tomorrow with all plans, all documents they’ve generated in regard to Sandy?”County cars and part-time lawyersThe Office of the County Counsel was the next to be examined. The amount of county cars given to employees for work was a bone of contention. Several individuals receive them, and O’Dea wanted to know why that was the case.“Why wouldn’t we simply reimburse them for their legitimate travel,” he asked. “Wouldn’t that be a better approach?”O’Dea suggested another department money saver might be hiring more part-time attorneys and less full-time ones. But County Counsel Donato Battista did not agree with that idea.“Freeholder, if I had my preference, all my attorneys would be fulltime,” he said, “so their primary obligation would be to the county.”Public commentsIn the public portion of the meeting, three citizens spoke. The first was Russell Carbone, who asked the freeholders “to respect taxpayers and try to save as much money as possible.”Charlene Burke of Jersey City asked that the body try to avoid touching the Open Public Space program, as officials at the meeting had earlier discussed.“For the pennies I pay, there’s incredible improvement in parks,” she said. “I understand where the mayors come from, but there are tremendous benefits from that program.”Freeholder Jose Munoz said the program would not go away, even if the freeholders have to cut money from it.“I would never support eliminating the Open Public Space,” he said. Romano added that cutting money from its budget “wouldn’t be eliminating it, only postponing it.”Larry Dicken, of the Harmon Cove section of Secaucus, said he sensed a sincere effort to reduce the county budget. But he questioned why the board would continue to roll over a $20 million-plus surplus that had been discussed earlier in the evening.Hudson County Administrator Abraham Antun said that the county tries to “generate the surplus every year. It’s become a stable item in each budget.” Joseph Passantino may be reached at [email protected].

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Bank Of America To Cut Investment Banker Pay By 25 Percent: Report First it was the layoff announcements. Now it's time for pay cuts. A new type of structural adjustment continues to plague one of America's most iconic banks. Bank Of America officials reportedly told investment bankers to prepare for pay packages an average of 25 percent smaller than last year, Bloomberg reports. As average overall compensation for a BofA investment banking associate was $163,438 as of October, according to Glassdoor.com, that figure would seem likely to remain in six-figure territory. The announcement comes one day after reports emerged that the company plans to cut costs by as much as $8 billion per year in neat future, according to a separate Bloomberg report. The bank, which recently surrendered the title of largest in the country, announced late last year that it would slash 30,000 jobs over the next few years to compensate for the bank's mortgage unit and new regulations, both of which have hurt BofA's bottom line. The bank has had a rough few years, with company stock plunging 63 percent between 2010 and 2011. The bank also lost $14 billion last year from legal settlements tied to mortgages alone. That's not to say the bank isn't profitable. BofA netted $2 billion in profits during the last three months of 2011, reversing a loss from the same time in 2010. But BofA employees aren't the only Wall Street workers that will have to face the consequences of an industry in transition. Wall Street firms as a whole will likely slash their compensation pools to the lowest levels since the financial crisis in 2008, according to the Wall Street Journal. The sordid details of pay packages at some banks are already trickling out. Morgan Stanley announced earlier this month that it would cap all cash bonuses at $125,000, according to The New York Times. One employee at Goldman Sachs told CNBC that the bank's bonus day last week was a "bloodbath," as some junior workers found out they wouldn't be taking home any bonus at all this year. In addition, the bank reportedly slashed the pay of some high-level employees by half, the WSJ reports. all-also-on-huffpost Business News Big Banks Wall Street Bonuses Bank Bonuses Wall Street Pay

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No. 08/144 Côte d'Ivoire and the IMF Sign up to receive free e-mail notices when new series and/or country items are posted on the IMF website. Modify your profile français Press Release: Statement of an IMF Mission at the Conclusion of a Staff Visit to Côte d'Ivoire Press Release No. 08/144 An International Monetary Fund (IMF) mission led by Arend Kouwenaar, mission chief for Côte d'Ivoire, visited Abidjan from June 5-19 2008, to discuss with the Ivoirien authorities the implementation of their economic program for 2008 that is supported by a SDR 40.6 million (about US$66 million or FCFA 27 billion) arrangement approved in April 2008 under the IMF's Emergency Post Conflict Assistance (EPCA). The mission also initiated discussions on a new program for the period 2009-11 that could be supported by the IMF's Poverty Reduction and Growth Facility (PRGF). Staff from the World Bank and the African Development Bank participated in the discussions. The mission met with President Gbagbo, Prime Minster Soro, Minister of Finance Diby, and other senior officials. It also met with representatives of the private sector and the international community. The mission issued the following statement in Abidjan today: "The economy is continuing its recovery, helped by a favorable international environment for Côte d'Ivoire, including high world market prices for oil and cocoa. Real GDP growth is projected to double to 3 percent in 2008. Rising international food prices, however, have pushed up somewhat domestic inflation. "Regarding the execution of the budget in the first months of 2008, expenditures were kept within the budget envelopes and revenues were on target. However, the mission expressed concern about emerging overruns on gas subsidies for the electricity sector and the risk of revenue shortfalls, in part due to delays in the contribution to the budget by the national petroleum company, as well as the risk of renewed accumulation of arrears to domestic suppliers. "The mission welcomed the authorities' determination to take urgent remedial actions so as to safeguard the budgetary targets for 2008, including for social and crisis-exit program spending. It stressed the need to mobilize the windfall from higher oil prices and speed up the redeployment of tax administrations in the Center-North-West zone of the country. It also recommended that the authorities limit budgetary subsidies to the electricity sector and safeguard revenue from petroleum product taxation. This should also allow adequate resources to cushion the impact of the increase in food prices on the poorest segments of the population. "The mission welcomed important progress in improving fiscal transparency and governance. Recent steps included the quarterly publication of budget execution statements, reports on quasi-fiscal cocoa levies and their use, and reports on financial flows in the energy sector. The mission also welcomed the Rural Investment Fund's (Fonds d'Investissement en Milieu Rural) use of cocoa levies for enhancing rural social and other basic infrastructure as well as Côte d'Ivoire's progress on implementing the Extractive Industries Transparency Initiative (EITI) procedures. However, the mission noted delays in initiating the independent audits of key public enterprises and in preparing a new institutional and regulatory framework for the coffee/cocoa sector. "The mission stressed to the authorities that strong implementation of the economic program under EPCA in 2008 would be essential to underpin the economic recovery and ensure continued donor support for crisis-exit programs. It will also help lay the basis for a comprehensive economic program for 2009-11 that could be supported by the IMF's PRGF. The mission encouraged the authorities to complete expeditiously their Poverty Reduction and Strategy Paper, in broad consultation with the population. A solid implementation of the 2008 program could also pave the way to the decision point on debt relief under the HIPC Initiative at the time of approval of a PRGF arrangement. Discussions on such an arrangement are expected to continue in the coming months."

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People's Republic of China and the IMF United States and the IMF Working Paper: “Women Workers in India: Why So Few Among So Many?" Sign up to receive free e-mail notices when new series and/or country items are posted on the IMF website. Modify your profile Seizing India’s Moment, by Christine Lagarde, IMF Managing Director By Christine Lagarde Managing Director, International Monetary Fund Lady Shri Ram College, New Delhi, March 16, 2015 Good afternoon—Namaste! Dear Arun, thank you for your kind introduction. Dear faculty members, students, and distinguished guests, thank you for having me here today. It is a pleasure to be back in India and speaking at such a prestigious academic institution. Your mission is to prepare young women to assume leadership positions and to develop critical thinkers and concerned citizens. I cannot tell you how much I support this important mission. And on a personal note, I am especially pleased to be invited by the center named after an alumna of this school, and a woman I admire greatly—Aung San Suu Kyi. I also find Lady Shri Ram’s philosophy appealing—the belief in a “holistic” vision that “never discounts the past while embracing the future with unwavering confidence in its ability to shape it and harness its potential.” Unwavering confidence! Amid all the anxiety that we face when thinking about the future these days, it is good to be reminded by the teachings of past history that we have the power to shape this future; and yes, there is so much to look forward to! It is through this prism that the world, IMF included, sees India today. A rich and complex culture and a vibrant society, India is more than just India—it is more than the sum of its parts, intimately connected with the world. It has become a leader in information technology, sciences, pharmaceuticals, biotechnology, you name it, with many home-grown experts working in multiple companies around the world. And not only has India managed to find the most cost-effective way to send a mission to Mars, it also gave us yoga, ayurveda, bollywood, and chicken tikka masala! The Gitanjali poem by Rabindranath Tagore embodies where India is: “Where the mind is without fear and the head is held high; Where knowledge is free; Where the world has not been broken up into fragments by narrow domestic walls…” Here is your country. This is a special moment for India. Just as many countries around the world are grappling with low growth, India has been marching in the opposite direction. This year already, India’s growth rate is expected to exceed that of China, and by 2030, it is will overtake China as the most populous country in the world. The conditions are ripe for India to reap the demographic dividend and become a key engine for global growth. It is on the verge of a new chapter, filled with immense promise. You young women and men here in this audience will shape India’s destiny, and indeed the destiny of the world. So let me propose how your energy and vitality can shape and serve a better tomorrow. (i) We will take a tour of the global economy, and explore how we can inject greater momentum. (ii) And I will share my views on India’s economy and consider if it is ready to fly higher? (iii) And then, I will talk about the quality of growth and how it can benefit the poor, the women, and the youth of India. 1. State of the global economy—injecting greater momentum Let’s start with the state of the global economy. More than six year after the global financial crisis, the recovery remains too slow, too brittle, and too lopsided. We have pared down our forecasts of global growth since last October, despite the boost from cheaper oil and stronger U.S. growth. And while the global economy is expected to grow by 3.5 percent this year, and 3.7 percent next year, this is still below what could have been expected after such a crisis. In most advanced economies, prospects continue to be weighed down by the “high-high, low-low” legacies of the crisis—high debt, high unemployment, and low growth, low inflation. Too many firms and households keep cutting back on investment and consumption today because they are concerned about low growth in the future. Apart from the United States and the United Kingdom, where a promising recovery continues, growth remains rather low in the Euro Area and Japan. But one sees some reassuring “pick up signs.” Momentum is slowing in many large emerging market economies. China is decelerating to a more sustainable growth rate, whereas Russia and Brazil, albeit for different reasons, find themselves in recession territory. Looking ahead, something better may yet come on the back of low oil prices and low interest rates. Still, there are significant risks to this fragile global recovery. The first risk is what I have called “asynchronous monetary policy” in advanced economies—normalizing monetary policy in the United States and the United Kingdom while Japan and the Euro Area are increasing monetary stimulus. Even if this process is well managed, it may result in excessive volatility in financial markets, including in India. The second risk is that the Euro Area and Japan could remain stuck in a “low growth-low inflation” gear for a prolonged period. This would make it harder for countries to reduce unemployment and excessive public and private debt, and raise the risk of recession and deflationary pressures around the globe. The third risk is that emerging and developing economies could face a triple hit of a stronger U.S. dollar, higher global interest rates, and more volatile capital flows. A stronger dollar will have a significant impact on financial systems in emerging markets, including India, because many banks and companies have increased their borrowing in dollars over the past five years. Of course, compounding these risks are geopolitical tensions that are simmering in different parts of the world. All this points to one thing—coordinated policies and renewed momentum into the global economy. In practice, this means accommodative monetary policies where appropriate, growth- and job-friendly fiscal adjustment, and above all, much needed structural reforms that are critical to lift employment and growth in countries all over the world. For example, the drop in oil prices provides a golden opportunity to cut energy subsidies—which generally favor the middle class—and use the savings for more targeted cash transfer systems to protect the poor. This is a policy that the IMF has been pushing very hard, and where India has made important strides. Through the Aadhar system, some fuel subsidies are now being replaced with cash transfers to the poor. All this is not new. But it has taken on new urgency. And this places increased emphasis on political leadership. 2. India tomorrow—ready to fly? So where is India in this global configuration? In this cloudy global horizon, India is a bright spot. Recent policy reforms and improved business confidence have provided a booster shot to economic activity. Using India’s new GDP series, the IMF expects growth to pick up to 7.2 percent this fiscal year and accelerate further to 7.5 percent next year—making India the fastest growing large economy in the world. Indeed, a brighter future is being forged right before your eyes. By 2019, the economy will more than double in size compared to 2009. When adjusting for differences in purchase prices between economies, India’s GDP will exceed that of Japan and Germany combined. Indian output will also exceed the combined output of the three next largest emerging market economies—Russia, Brazil, and Indonesia. So clearly India’s weight among the group of emerging markets will increase. Much of this has to do with population growth. More than 50 percent of India’s population is currently below the age of 25, and more than 12 million people enter the labor market every year. By 2030, India is expected to have the largest labor force in the world. At more than one billion people of working age, India’s labor force will be larger than the combined labor force in the United States, the Euro Area, and Indonesia. The potential benefits to be reaped from your collective work efforts could be enormous. So we know India can run—judging by your cricket record! Can it fly? I believe it can. As India grows and takes its rightful place in the global economy, the focus should remain on sound policies and inclusive institutions. This is where stronger economic frameworks come in—to make the economy more resilient, nimble, and ever more supportive of growth. Let’s start with fiscal policy. A sound, growth-friendly revenue and expenditure framework anchored in an explicit medium-term consolidation path is critical. The recently approved Budget is a step in the right direction and contains several promising elements. For example, the emphasis on increasing spending to upgrade India’s infrastructure is critical—a point to which I will return later. Looking ahead, progress on other measures can help underpin the consolidation effort, such as further subsidy reform and implementation of the goods and services tax. How about monetary policy? Here too, a sound monetary policy framework to keep inflation under control and ensure financial stability is essential. India’s recent adoption of flexible inflation targeting is indeed very welcome. This framework should provide a robust institutional foundation for maintaining price stability as growth is picking up. Finally, a sound and healthy financial sector is essential to support strong and sustainable growth. This requires banks, including public sector banks, with strong balance sheets. Higher capital injections and improved operational efficiency can certainly help in strengthening banks’ balance sheets. But there can also be synergies between fiscal consolidation and financial intermediation. As the fiscal deficit continues to shrink, Indian banks can reorient their balance sheets away from holding government securities toward more lending to the private sector for investment and growth. Still, international experience tells us that an ambitious growth rate cannot be a goal in itself. It should also support an increase in the well-being of the population and improve opportunities for those who have been traditionally excluded, so that they be included. 3. Making India’s growth more inclusive This takes me to the last topic I want to discuss today—how to make India’s growth more inclusive so that that it will be more sustainable. (i) Unleashing the potential of women Starting with the potential of women—India faces some unique challenges. On the one hand, women have made great strides in society. You are all a good example of that. On the other hand, much remains to be done to give girls and women a level playing field in India; equal access to education and healthcare, and most importantly—respect, so that all the daughters of India can feel safe in the cities and villages of your beautiful country. I am very heartened by the Prime Minister’s campaign on saving the girl child and educating the girl child. Giving girls a level playing field is not just morally right—it also makes economic sense. Tapping the potential of women can be a game changer in many countries. India is no different. In fact, we have just released a study, “Women Workers in India: Why So Few Among So Many?” that looks at female labor force participation issues in India. Here are a few numbers from that study: • 33 percent—this is India’s female labor force participation rate. This is lower than the global average of 50 percent and well below the East Asia average of 63 percent. This means that only 125 million of the 380 million working age Indian females are currently part of the labor force. • 52 percent—this is India’s gender participation gap (the difference between male and female labor force participation). It is one of the widest among the G-20 countries. • Declining—India’s female labor force participation rate has been on a declining trend since 2005, in contrast to most other regions. These numbers represent a huge missed opportunity and should surely compete with an Indian victory in the Cricket World Cup as front-page news! Urgent remedies are needed! A good starting point is to make Indian labor markets more flexible. Our study suggests a number of legal and institutional barriers that should be removed to facilitate entry of women to the labor market. This would also allow women to move from the informal sector (where they tend to be disproportionately employed) to the formal sector. So today, I would like to call on all of you—men and women—to help your “sisters” to realize their full potential. (ii) Increasing financial inclusion Let me turn to the second priority—financial inclusion; that is, reaching out to the “unbanked.” Why is this important? Because financial inclusion is strongly rooted in empowerment. Access to credit is a key link between economic opportunity and economic outcome. By empowering individuals and families to cultivate economic opportunities, financial inclusion can be a powerful agent for strong and inclusive growth. There is already a lot that the world can learn from India. The Economist’s Global Microscope ranks India very highly for creating an enabling financial environment. This is not surprising. Under the Prime Minister’s Jan Dhan Yojana, financial services have been extended to more than 125 million previously unbanked individuals—an impressive achievement in such a short span of time! And India also expanded basic insurance coverage so people’s lives become more secure. What makes these achievements even more remarkable is that this financial inclusion approach is embedded in a broader strategy to use these accounts to provide cash transfers to those who need them. Programs in other countries such as Mexico’s Prospera also capitalize on the link between financial inclusion and targeted transfers. India can build on these steps and go further, for example, by increasing access of small and medium size enterprises to the formal financial system so as to boost investment and jobs growth. (iii) Investing in infrastructure The third and final priority is investing in infrastructure. What do I mean by that? I mean efficiently connecting people and markets domestically and globally. It means being both cyber-connected and highway-connected. I know you are all very connected on social media, but the same level of interaction is needed to connect you and other consumers to your country’s ports, shops, and factories! “Make in India” and “Make for India” are very laudable objectives. But they require an open and competitive business environment to flourish, and they need reliable and affordable sources of energy, transportation, and communication. India’s infrastructure needs are immense. By some estimates, an additional US$1 trillion in infrastructure investment is required over the medium-term. So while increasing public spending on infrastructure is a step in the right direction, more needs to be done to crowd in additional private investment. Resolving outstanding issues in public-private partnerships in infrastructure is critical in ensuring that India’s needs are addressed. Many of these projects were delayed due to regulatory uncertainty and bureaucratic holdups. Much needs to be done in easing land acquisition, expediting clearances, and establishing a stable regulatory regime so that the private sector can invest. These issues are on the radar of policymakers, which is promising, they must be on the action list. Let me conclude. At the current juncture, the world needs a vibrant India and India needs the world! As one of the largest commodity importers in the world, an open and transparent multilateral system for trade and financial flows will be essential to support India’s vibrant economy. With growing economic size and power come greater leadership expectations. We look forward to seeing India becoming even more active on the global stage—in fora such as the G-20 and the IMF. The IMF is a global multilateral institution where countries like India deserve a bigger say. We are working precisely on that—on implementing reforms that would lift India to the top 10 shareholders at the IMF. I look at you and I recognize the massive potential of India’s huge pool of youth. I would also like to acknowledge the many talented Indian staff at the Fund and the contribution they have made over the years. Your very own central bank governor, Raghuram Rajan, was one of our most distinguished economic counselors! There is an old Indian proverb that says: “Yesterday is but a dream, tomorrow but a vision. But today well lived makes every yesterday a dream of happiness, and every tomorrow a vision of hope. Look well, therefore, to this day.” Today, the elements are all aligned to make India a global powerhouse. This is India’s moment. Seize it. Chak De India! IMF COMMUNICATIONS DEPARTMENT

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Submit TipsSend FeedbackTerms of ServicePrivacy PolicyObama Proposes New Agency to Oversee Financial SectorFed would have sweeping new powers to protect consumers By JIM KUHNHENN and MARTIN CRUTSINGER NEWSLETTERS Receive the latest archive updates in your inboxPrivacy policy | More NewslettersGetty ImagesPresident Obama speaks during an East Room event to unveil his administration's plan on regulating the financial system.WASHINGTON - President Barack Obama proposed sweeping new "rules of the road" for the nation's financial system Wednesday, casting the changes as a critically important response to the economic crisis and the greatest regulatory transformation since the Great Depression. Blame Them For Your Empty WalletObama blamed the financial crisis on "a culture of irresponsibility" that he said had taken root from Wall Street to Washington to Main Street, and he said regulations crafted to deal with the depression of the 1930s had been "overwhelmed by the speed, scope and sophistication of a 21st century global economy."The Obama plan would give new powers to the Federal Reserve to oversee the entire financial system and would also create a new consumer protection agency to guard against credit and other abuses that played a big role in the current crisis.Unveiling his proposal before an East Room audience, Obama blamed the financial crisis on "a culture of irresponsibility" and outdated financial rules that were created in the wake of the Great Depression of the 1930s but had been "overwhelmed by the speed, scope and sophistication of a 21st century global economy."The Obama plan would give the Federal Reserve new powers to oversee the entire financial system, hoping that the central bank will be able deal with the kinds of problems that were allowed to build to such an extent that they ended up overwhelming the system last year, resulting in the collapse of some of America's largest financial institutions.The Obama proposal would also create a new consumer protection agency to guard against the kind of mortgage and other credit abuses that played a major role in the current crisis.Two lawmakers whose committees will play a major role said they would move quickly."We'll have it done this year," Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, said after Obama's address."Absolutely," agreed Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee. He joked that the White House had "threatened us with a severe chastening if we don't.""There will be maybe some debate ... but I think we're all seeking the same results," Dodd said. He has advocated an alternative plan to strip the Federal Reserve of its regulatory role entirely and create a new consolidated bank regulator who would assume the roles that the Fed and Federal Deposit Insurance Corp. now play in helping regulate state-chartered banks. "There's not a lot of confidence in the Fed at this juncture," Dodd said.Asked about Dodd's criticism of the Federal Reserve, Treasury Secretary Timothy Geithner told reporters at a briefing that the administration had looked at a range of alternatives to giving the Fed expanded powers as a systemic risk regulator and had come to the conclusion that "we do not believe there is a plausible alternative."Lawrence Summers, head of the president's National Economic Council, said that those who believed this power should not reside with the Fed had the responsibility to make the case for some other agency.The Fed's expanded authority and the rest of the new rules would reach into currently unregulated regions of the financial markets such as hedge funds and exotic instruments like credit default swaps.The plan, laid out in an 88-page white paper, was the result of extensive consultations with members of Congress, regulators and industry groups and represented a compromise from bolder ideas that the administration had examined but ended up abandoning because of heavy opposition.The regulatory overhaul would eliminate only one agency, the Office of Thrift Supervision, generally considered a weak link among current banking regulators. The beleaguered OTS oversaw the American International Group, whose business insuring exotic securities blew up last fall, prompting a $182 billion federal bailout. OTS also oversaw other high-profile blowups like Countrywide Financial Corp., IndyMac Bank and Washington Mutual Inc."There's still going to be holes in the system," said Douglas Elliot, a fellow at the Brookings Institute and a former investment banker. "The problem with having too many regulators is that things can slip through the cracks. Banks will find ways to move businesses into units that are regulated by the softest regulator."The creation of the new consumer agency is aimed at guarding against the kinds of lending abuses which resulted in many Americans being saddled with far more mortgage debt than they could handle. That caused a record flood of mortgage foreclosures and billions of dollars in losses on mortgage loans and securities backed by subprime mortgages, failures which shook the financial system to its core."It was easy money," the president said. "But these schemes were built on a pile of sand."Under Obama's plan, the Federal Reserve would gain power to supervise holding companies and large financial institutions considered so big that their failure could undermine the nation's financial system. But even as it gained new powers, the Fed would lose some banking authority to the new Consumer Financial Protection Agency.Obama's proposal would require the Fed, which now can independently use emergency powers to bail out failing banks, to first obtain Treasury Department approval before extending credit to institutions in "unusual and exigent circumstances," a change designed to mollify critics who charged that the Fed needed to be more accountable in exercising its powers as a lender of last resort.Private analysts generally gave the administration good marks for the efforts it had put forward although some powerful lobbying groups, such as the U.S. Chamber of Commerce, expressed opposition to parts of the plan.Would the changes have prevented the current crisis?"The Obama plan might not have forestalled the current crisis but it would have made it less severe and certainly not as catastrophic as it turned out to be," said Mark Zandi, chief economist at Moody's Economy.com and the author of a recent book on the housing crisis.In conjunction with the Fed's authority over large financial institutions and the new consumer agency, Obama also proposed:• Additional protections for investors, including greater disclosure by hedge funds, regulation of credit default swaps and over-the-counter derivatives that previously operated outside of government oversight, and new conditions on brokers and originators of asset-backed securities.• A system for the orderly disposition of any troubled, interconnected firm whose failure would pose a risk to the entire financial system, together with rules that insist that financial institutions hold more capital for safety's sake.Published at 3:02 PM PDT on Jun 17, 2009

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your valid email and access the PDF download. * ← Free U.S. Shipping thru Oct. 2!This week’s letters (10/18/11) →Memories enfold Kennedy halves Posted on September 30, 2011 by Paul M. Green Quick, what’s the key Kennedy half dollar?Did you cite the 1970-D made only for the mint sets?Perhaps you cited the 1987-P&D coins for the same reason.Then there is the far rarer matte proof silver 1998-S that was struck as a companion piece for the Bobby Kennedy commemorative silver dollar. But many collectors might not even be aware of the existence of this coin.For many collectors, the Kennedy half dollar is permanently fixed in 1964 and the memories of 1963 and 1964 obscure all of the issues that followed. That understandable. For those who remember those years, they were troubled times.It could safely be said that in a number of ways the Kennedy half dollar was a coin that was created to mark an historic and tragic event and in the process the Kennedy half dollar became a part of history as well. Moreover, since its first issue in 1964, the Kennedy half dollar has created a great deal of U.S. numismatic history itself. For students of U.S. history and U.S. numismatic history, the Kennedy half dollar is an important coin and important collection that may well seem even more significant in the future.It can definitely be assumed that back in 1963 none of us ever thought that we would hold a Kennedy half dollar in our hands. As a still fairly young coin collector, I had knew about three Presidents of the United States who had been assassinated, but they were basically in the form of old drawings of Abraham Lincoln, James Garfield and William McKinley. To someone in 1963, it seemed like another era. While there might have been a few older citizens around who remembered the McKinley assassination of 1901 or perhaps even the Garfield assassination of 1881, they would have been very, very old.The series of events that then took place Nov. 22, 1963, remain all too vivid in my memory years later. It was a couple of hours from the first announcement that sent us packing from our English class to the final one that the President had died and that we were to head home acting appropriately. In those two hours, the world had changed and while we all knew something very big, tragic and important had happened none of us truly understood what it would mean to us at the time or in the future.The immediate impact was a series of images that are hard to forget. My father, a decorated World War II veteran who had voted for Richard Nixon instead of John F. Kennedy was in tears. Having watched so many of his friends die in World War II, losing friends was not unusual for him, but crying was and especially crying over the loss of a man he had not voted for in the first place, but he was typical of so many who had been touched by Kennedy and the Kennedy family without even knowing it.Maybe today the magic does not seem real but in the 1960s it was. A number of years later when the late President’s brother Robert F. Kennedy was running for the Senate from New York my father was working the security detail. There was an enormous crush of people in a solidly Republican town to hear Bobby Kennedy speak on the steps of city hall. At least one person fainted at the mere sight of Bobby Kennedy. She was a former baby sitter and the fact that she fainted even caused my father to chuckle as the woman’s father was the Republican county chairman.This easy-to-search pricing and identification download is solely focused on U.S half dollars.I will never forget my father’s response to my observation that it looked like Kennedy might be able to beat incumbent Sen. Kenneth B. Keating. He chuckled and observed, “the only way Kennedy will lose is if all his voters faint on their way to vote.” That didn’t happen and Robert F. Kennedy went to the Senate representing New York, but the whole thing was typical of the unique relationship between the family and the American people.In many ways what must always be remembered in trying to understand the impact of John Kennedy is that he was the first TV President. Every night as families gathered around their black and white TV sets, which is what so many did at the time, there was President Kennedy, his wife and children. Even if you did not agree politically with Kennedy, his family became an evening part of everyone’s family.Certainly, the tragic events in Dallas would have had a great impact on the country no matter who was President, but as the first TV President that impact was magnified as the entire nation felt like the two children now without a father. President Kennedy’s children Americans felt they actually knew and had watched grow up. It made things more personal and made the loss of their father so much greater for millions.The last days of 1963 were sad ones with the traditional Christmas colors being replaced by black. That Christmas virtually everyone in the country received something special relating to Kennedy for Christmas yet in many ways the tragedy seemed to somehow be one without any real closure. It may very well be that the closure came in the form of the Kennedy half dollar.In fact the idea of a Kennedy coin had been acted on with great speed. Chief Engraver Gilroy Roberts was told to be ready to make a coin although initially there was no certainty as to which denomination it would be. That was also changed quickly as according to Roberts he was told on Nov. 27, 1963, to begin work on a Kennedy half dollar.In fact, the decision to go with a half dollar was a bold one. The Franklin half dollar had not been in use 25 years, so its design could not be changed without an act of Congress. There were probably more than enough votes to have a change approved, but the real question with the holidays rapidly approaching was whether there was time enough to have the measure approved and to get a coin created.Like what you’re reading? Subscribe to our FREE email newsletter!* It was an interesting matter as Gilroy Roberts and his assistant Frank Gasparro, who would design the reverse, were actually busily at work on the Kennedy half dollar long before the measure was approved by the Congress. Roberts was to have a very delicate moment in his design of the obverse and that was going with Secretary of the Treasury Douglas Dillon to meet with Mrs. Kennedy and then Attorney General Robert F. Kennedy to show them the design and gain their approval of it before it was put into production.The Kennedys apparently liked the design, but raised the question of a half-length figure. That was delicate as it had to be explained to them that there was only time for minor changes as work on the proofs had to begin almost immediately and if the coin dies were not ready employees would have nothing to do. The Kennedys were apparently understanding and with a couple of minor changes the design went ahead with Dillon being able to officially approve the design on Dec. 27,1963 with the proof dies being delivered on Jan. 2,1964.That is the definition of speed in matters relating to coinage. President Lyndon Johnson had signed the congressional authorization on Dec. 23, making it law.There were official ceremonies to mark the striking of the first coins, but in reality production had already begun before that Feb. 11th event as officials correctly sensed that they would need a stockpile of examples to meet initial demand from the public. As it turned out, even the stockpile of 26 million coins was not enough.There were long lines for the official release in March 1964, bringing normal banking activities to a halt. My father with instructions to acquire two rolls stood in line a couple of hours and got all the coins he could, which were a grand total of two half dollars as there was a two-coin limit enforced to try to give everyone a chance to acquire the new coins.The Kennedy half dollar was quickly being sold in the streets for twice face value while in the streets of Europe they were bringing reported prices of $5 each, or 10 times face value. That was astounding to collectors, but it was understood at the emotional level.There was no logic to the situation as clearly more would be made, but the simple fact was that unlike other coins that people felt they wanted, the new Kennedy half dollar was needed by them. For many, it seemed like the closure they otherwise could not find of a national nightmare.The situation was to be short-lived. The government kept making 1964 Kennedy half dollars, as Denver and Philadelphia cranked them out as fast as they could. But because of the passage of the Coinage Act of 1965 and its being signed into law July 23, the Kennedy half dated 1965 would be in the minds of many collectors a cheap imitation as its composition was reduced to 40 percent silver from 90 percent and it would also have no mintmarks as part of the program to discourage collecting.The idea of discouraging collecting was seen as a solution to a national coin crisis. Collectors had not created the crisis, but they were being blamed. The ironic part is that the 1964 mintage of 277,254,766 Kennedy half dollars at Philadelphia and another 156,205,446 at Denver did not help the situation at all.The fact that silver was being removed from the dime and quarter and reduced in the half dollar caused a worsening of the situation as enormous mintages were required to replace the silver coins being hoarded by the public. That was seen in the 1967 total of 295,046,978 half dollars. That total represented the combined output of Philadelphia and Denver, but the fact remains it was a huge half dollar total, which was typical of the period as the government tried to bring an end to the coin shortage. Of course, with such mintages and no division between coins produced at Philadelphia and Denver, collectors were not very interested in the new coins and the probability is that relatively few were saved.The 40 percent silver composition of the half dollar would last until 1970. After 1970 only special issues would contain any silver, but the presence of silver in the date prior to 1971 also potentially plays a role in what may be suspect supplies of the dates from 1964-1970 today.Whether it was 90 percent silver in the 1964 Kennedy half dollars or 40 percent in those produced later, the silver was enough to make the coins prime candidates for being melted when the price of silver rose to $50 in early 1980 and again due to the uptrend in silver that began in 2001. We cannot be certain how many Kennedy half dollars were melted, but it had to be significant as especially the 40 percent silver issues were seen as having basically no numismatic potential, making them one of the most likely coins to be sold for their silver value.We can see the impact of the lack of saving and the later melting on prices. The 1964 and 1964-D were just $3.50 in MS-65 in 1998, but today they are $13.50 each. The no mintmark dates that followed have had a similar pattern as in 1998 they were $2.25 to $2.50 each, but today They are $6.20 in MS-60, which to put into perspective, compare this to the $13 price of the key 1970-D, which had only 1 percent or 2 percent of the mintage of the 1965, 1966 and 1967.Mintmarks returned in 1968 but collectors in large numbers did not and that was not helped with a nearly 250 million piece mintage for the 1968-D just further convincing many that Kennedy half dollars had a very limited future. The 1968-D has acted much like the earlier dates rising from a 1998 price of $2 in MS-65 to $18 today. There was another new half dollar in 1968 in the form of the 1968-S, which like the dime and quarter from San Francisco was available only in proof sets, making it proof only. The collectors at the time were probably somewhat uncertain how to treat the 1968-S as proof-only half dollars were few and far between in U.S. numismatic history up to that point. The situation has been resolved as since 1975 all denominations in proofs sets are proof-only San Francisco issues and the dates have been included by many in their regular collections.Of course, to obtain a proof-only San Francisco half dollar for a specific date someone needs to break up a proof set and that has made for an uncertain supply and sometimes dramatically higher prices. The 1995-S for example has jumped from $13 in Proof-65 in 1998 to $35 today while the 1997-S has posted a gain from $13 to $34. These are very interesting especially in light of the fact that many collectors of the 1960s didn’t think clad coins could ever be desirable.Dramatic price movements are actually not that unusual in the case of the Kennedy half dollar as the 1970-D has been something of a sensation since it was announced that it would only be found in the mint sets of that year. The ordering period for the mint sets had passed by the time the announcement was made, meaning there would only be 2,150,000 examples of the 1970-D. That resulted in instant speculation and over the years the 1970-D has moved both higher and lower dramatically. It jumped from $13.50 in MS-65 in 1998 to its current $50.After 1970 the Kennedy half dollar like the other former silver issues would be produced only as clads in the case of business strikes and with mintages that tended to be in the 50 million range except for the San Francisco proof-only issues collectors and dealers continued to suspect that most dates had very little potential to be better.The special 1976 Bicentennial reverse featuring a Seth Huntington Independence Hall was one exception as the Bicentennial reverses for the quarter, half dollar and dollar proved to be very popular with the public and despite being saved in large numbers, the Bicentennial reverse coins have held up well and even in some cases increased in price. The fact there were 40 percent silver versions also helped.The regular design of the Kennedy half dollar returned in 1977 as did the general habit of overlooking new dates. That was probably even increased as the government began to market commemoratives, bullion coins and other special issues all of which at the time probably seemed like a better idea than saving uncirculated rolls of things like Kennedy half dollars. That has potentially produced a shortage and we are starting to see the impact as some dates have moved strongly in price with the 1986-P jumping to $25 in MS-65. The 1990-P and 1990-D were each $1.50 in MS-65 in 1998, but today they are at $18 and $15, respectively, and many other dates have reached $10 or more.In fact, the recent price increases may be just the start, especially if you consider the highest grades. The 1969-D, for example is $20 in MS-65 where it is available, but if you try to find an example in MS-67, that is another matter. PCGS has graded the 1969-D 253 times, but only one coin reached MS-67 and fewer than 50 were MS-66.The 1982-P is another where the grading service numbers suggest that the current $10 price in MS-65 may be too low and as time passes it would not be surprising to see an assortment of Kennedy half dollar dates post some surprising prices in the highest grades.The 1970-D would have company in terms of dramatic price movements with the 1998 matte-finish Kennedy half dollar, which was produced as part of a special set with the Robert F. Kennedy commemorative dollar. The set that cost $59.95 probably looked like another slick promotion from the Mint at the time and that is what it was, but since 1998 it has soared with the matte-finish half dollar alone now sitting at $$250.The silver proof sets, which were first offered in 1992, have proven to be another source of dramatic price increases in the case of the Kennedy half dollar in the sets. As proof-only silver Kennedy half dollars, some dates have taken off with the 1995-S and 1997-S exceeding $100 not too many years after issue. That is impressive when you realize that in 1998 they were just $13 each. Over the same period of time a number of other dates have nearly doubled and the probability is that the silver proof-only dates might well go higher if additional numbers of collectors decide to include them as part of their regular collections. But that will likely be the task of a future generation of collectors who do not remember the events of 1963 and 1964 and who instead will look only at the mintage figures.Under the circumstances, the Kennedy half dollar, which has seen wild swings in its popularity, has increasingly been getting attention. With rapidly rising prices in a number of cases and suspect supplies in others, the Kennedy half dollar may have finally reached a point in its history where it can be accepted and appreciated as the historic coin it is and as a potentially great collection of modern issues. For the many new collectors who started with 50 state quarters, the Kennedy half dollar might well prove to be an excellent choice for their next collection.More Coin Collecting Resources:• State Quarters Deluxe Folder By Warmans • Subscribe to our Coin Price Guide, buy Coin Books & Coin Folders and join the NumisMaster VIP Program• Strike It Rich with Pocket Change, 2nd Edition This entry was posted in Articles, General News, News. 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Business | National / World Business US wants Bank of America to pay $864M over loans The Associated Press | November 10,2013 NEW YORK � Federal prosecutors want Bank of America Corp. to pay about $864 million for losses incurred by the government after it bought thousands of home loans made by Countrywide Financial during the housing boom.New York U.S. Attorney Preet Bharara made the request in documents filed late Friday with the U.S. District Court in Manhattan.A jury last month found Bank of America, which acquired Countrywide in 2008, liable for knowingly selling thousands of bad home loans to Fannie Mae and Freddie Mac between August 2007 and May 2008.The panel also returned the verdict against Countrywide and a former executive, Rebecca Mairone.The trial related to mortgages the government said were sold at break-neck speed without regard to quality as the economy headed into a tailspin. The government had accused the financial institutions of urging workers to churn out loans, accept fudged applications and hide ballooning defaults through a loan program called the Hustle, shorthand for high-speed swim lane, which operated under the motto, �Loans Move Forward, Never Backward.� Bank of America, based in Charlotte, N.C., denied there was fraud.Thousands of loans made through the Hustle program were sold to Fannie and Freddie, which packaged loans into securities and sold them to investors. The companies were effectively nationalized in 2008 when they nearly collapsed from mortgage losses. In the filing Friday, Bharara asked the court to make the penalty on Bank of America equal to the maximum losses racked up from the Hustle program by the government-run mortgage buyers.Bank of America spokesman Lawrence Grayson said Saturday that the lender plans to respond to the government�s penalty filing before a Nov. 20 deadline.�We believe the filing overstates the volume of loans and the appropriate measure of damages arising from one narrow Countrywide program that lasted several months and ended before Bank of America acquired the company,� he said.Bharara also wants the court to impose a penalty on Mairone � who prosecutors say was the driving force behind the Hustle program � that is in line with her ability to pay.Mairone�s lawyer, Marc Mukasey in New York, said Saturday that he intends to file papers with the court arguing there should be no penalties imposed on his client.Countrywide, once the country�s largest mortgage lender, played a major role in the collapse of the housing market because of its heavy reliance on subprime mortgages. Facing serious financial challenges, it was acquired by Bank of America in 2008 in an all-stock deal valued at about $4 billion. In 2010, Bank of America agreed to pay $600 million to settle class-action lawsuits claiming that Countrywide officials concealed mounting financial risks as they loosened lending standards during the housing boom. That same year, former Countrywide CEO Angelo Mozilo agreed to pay $67.5 million to settle accusations by the Securities and Exchange Commission that he had misled investors and engaged in insider trading.

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Too Big To Fail, too many houses, and other unresolved financial dilemmas. SlateMoneyboxCommentary about business and finance.April 5 2011 5:24 PM A bouquet of dilemmas for the current economy. By Bethany McLean Neil Barofsky I keep a file of issues that I mean to write about one day. Since I'm about to take a short leave from this column—six weeks or so—I'm going to take the opportunity to do a little housekeeping. Here, in no particular order, are five questions that have been troubling me about our financial future. Bethany McLean is a contributing editor at Vanity Fair and the co-author of All the Devils Are Here: The Hidden History of the Financial Crisis. Bethany McLean writes a weekly business column for Slate and is a contributing editor to Vanity Fair. She is the author (with Joe Nocera) of All the Devils Are Here: The Hidden History of the Financial Crisis and (with Peter Elkind) "The Smartest Guys In The Room." Is TBTF really dead? Do you remember the never-ending series of Friday the 13th slasher films? No matter how many ways we killed Jason, he would never die. Well, the concept of "too big to fail" is the new Jason: We may never be able to kill it off. The Dodd-Frank financial reform legislation was supposed to fix TBTF. Remember President Obama's words when he signed the bill? "There will be no more taxpayer-funded bailouts. Period." But I can't find anyone—besides the bankers at the TBTF firms and a few politicians who are eager to defend their handiwork—who argue we don't need to worry about future bailouts. Skeptics say that once the government establishes, as Dodd-Frank does, a process to prevent failing big firms from taking down the whole economy—funded not by taxpayers but by industry—then by definition you already have a big, or rather a too-big, problem, because politics will enter into what should be purely market-driven decisions. (Speaking of horror films, the Dodd-Frank requirements are actually kind of spooky themselves. Firms that are deemed systemically important are supposed to create "living wills," or lay out a process for winding themselves down; the business can also be subjected to something called the Orderly Liquidation Facility.) Advertisement There's a pretty strong consensus that TBTF is alive and well. Indeed, it may be worse than ever, because the financial crisis led to even more consolidation in the financial sector. In a Feb. 23 speech, Thomas Hoenig, the president of the Federal Reserve Bank of Kansas City, said, "I am convinced that the existence of "too big to fail" institutions poses the greatest risk to the US economy." He noted that in 1999, the five largest U.S. banking organizations had about 38 percent of total banking assets. Now, the top five banks have 52 percent of all bank assets. In a recent paper, former Federal Reserve Chairman Alan Greenspan, who helped create the 2008 financial mess, wrote this: The American government, in response to the Lehman crisis, did what to most had been unthinkable previously. Henceforth, it will be exceedingly difficult to contain the range of possible [government] activism. Promises of future government restraint will not be believed by markets. Then, in an interview with the Wall Street Journal, hedge fund manager Paul Singer, the founder of Elliott Management, had this to say about the big banks: It's a very important part of this equation that a few survivors exist in the peculiar relationship with government, having to kowtow to government, make relationships with regulators. Are they puppets of the government? Are they cronies of the government? Will their lending be affected by the perceived shims or beliefs of the particular government regulators existing at a particular time? Yes. Advertisement And Neal Barofsky, who is leaving his position as the inspector general for the Troubled Asset Relief Program, or TARP, said in his final testimony before the Senate, "For all its help in rescuing the financial system from the brink of collapse, TARP may have left a truly frightening legacy. It has increased the potential need for future government bailouts by encouraging the 'too big to fail' financial institutions to become even bigger and more interconnected that before, therefore increasing their ultimate danger to the financial system." Stay tuned for Friday the 13th Part XIII: Jason Takes Manhattan. Do we really have a homeownership problem? One lesson many have derived from the financial crisis is that U.S. regulatory, economic, and tax policies put too much emphasis on homeownership. But I'm inclined to think that what many see as a homeownership problem is really a credit problem. Subprime lending started in the 1990s not as a way to put lower-income people into houses, but to turn people's equity in their homes into cash. Subprime lending was never really about the purchase of a home. As late as 2004, Ameriquest, the country's largest subprime lender, didn't actually make loans people could use to purchase a house; it just offered refinancing. Even in the late stages of the bubble, most of the business at the mega-lenders like Countrywide and New Century came from cash-out refinancings—adding to your mortgage in order to get cash to spend now—rather than home-purchase loans. "One of the major sparks on the kindling that become the housing inferno was the ability for borrowers to extract larger and larger shares of home-equity without any real cost or consequences," wrote David Zervos, head of global fixed-income strategy at Jefferies, in a recent email. Replacing equity with debt is replacing ownership with borrowed money. That's the opposite of homeownership. Advertisement Zervos went on to note that in the old days, the cost involved in getting a new mortgage—from application fees to title fees and closing fees—was so high that the interest rate on the existing loan had to be 1.5 to 2 percentage points higher than the prevailing rate for a refinancing to make sense. That was a high bar. But as the technology boom of the late 1990s shrank those costs to zero, the friction in refinancing went away, thereby negating what had been a built-in restraint. Time to reestablish some limits. One idea Zervos has to limit the amount of mortgage debt would be to cap the amount of equity people can take out of their homes. Another idea I've heard bruited about is that instead of the mortgage interest deduction, why not give people a tax deduction based on the amount of equity they've accumulated have in their homes? Now, those are policies that would reward homeownership! Do we really need to start spending again? A few weeks ago the Wall Street Journal ran a front page story that said the reduction in American consumers' overall indebtedness—our debt burden has shrunk to its lowest point in six years—meant that we could start spending again. (Or, as the Journal put it, we can "make a big contribution to the world-wide recovery.") But I'm not convinced that a return to previous bad habits is the path to prosperity. Start with the fact that baby boomers, who even before the financial crisis hadn't saved enough for retirement, must now contend with a drop in the value of their houses, stock portfolios, and 401(k)s. I'm not sure a buying spree is what the doctor ordered for them. Then there's the federal budget deficit, which will necessitate cuts to entitlement programs like Social Security and Medicare. Then there are the cuts to state and local pensions. Add in that home prices are sliding again. Unemployment is still high at 8.8 percent, and more than 13 percent of the U.S. population is on food stamps. Even the Journal piece conceded that the overall decrease in debt hardly meant that borrowers had sworn off the bottle. More than half of the drop was due to defaults! Advertisement Instead of pumping up debt, I say let's try living within our means. If we don't create debt, then Wall Street won't have anything to package up and sell off. Granted, this may not be realistic. Warren Buffett had this to say in his most recent letter to shareholders: "Leverage is addictive. Once having profited from its wonders, very few people retreat to more conservative practices." Why do we pay CEOs so much more than they deserve? "Ratchet, ratchet, ratchet," Buffett said in his interview with the Financial Crisis Inquiry Commission (transcript, audio). "That's the name of the comp[ensation] board." He continued: You've got this envy factor, I mean, you know, the same thing that happens in baseball. I mean, if you bat .320 you expect to get more than .310 and nobody knows in business whether you're batting .320 or not so everybody says they're a .320 hitter. And the board of directors has to say, well, we've got a .320 hitter because they couldn't be responsible for picking a guy that bats .250. So you have this ratcheting effect. In other words, most boards of directors don't want to even consider the possibility that they would ever hire anyone who wasn't first-rate. (Lake Wobegon has nothing on corporate America.) And if a company's executives are first-rate, well, they clearly need to be paid like they're first rate, so that the world knows that the company has first-rate executives! So the board—at the urging of compensation consultants—sets the executives' pay at the high end of what other star performers make. But of course, if everyone is paid at the high end of average, then the average goes yet higher. Advertisement Until we really pay for performance incentives will be messed up. (So-called "clawback provisions," which are in vogue now, and which allow regulators or companies to demand repayment of compensation in the event of disaster, are well-intentioned. But they only go so far, because most bad performance doesn't result in a catastrophic failure, but rather a slow drain.) If a CEO can make a lot in the short-term, regardless of what happens in the long-term, then he would require superhuman integrity to care sincerely about the long-term. A system that requires superhuman integrity on the part of CEOs is not a system that's going to focus much attention on the long-term. Will China start selling our debt? That's worth worrying about, because the lack of a big buyer would probably force U.S. interest rates higher. Already interest on our national debt is projected to rise from 2 percent of GDP, the average that prevailed from 1960 to 2010, to more than 3.5 percent by 2020. It's well within China's power to make that proportion rise still higher. Dennis Gartman, a long-time commodities trader and observer of the market, who has written the Gartman Letter for 26 years—he's never missed one day!—thinks China won't be a big seller. But he does think China will stop being a big buyer. Especially if China's trade surpluses turn into trade deficits, as unexpectedly happened in February, Gartman writes, China will "slowly, quietly but inexorably wind down its purchases of U.S. debt and will allow its current holdings to mature and run off. There will likely be no aggressive sales of U.S. debt; there simply won't be the buying that there has been in the past…" In other words, we'll get a slow leak, rather than a big boom. Now, isn't that reassuring? Let's hope he's wrong. That's my to-do list of questions and worries. See you in a month or two.

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Tesco agrees to Chinese deal as earnings flounder - Taipei Times Thu, Oct 03, 2013 - Page 15　News List Tesco agrees to Chinese deal as earnings flounder JOINT VENTURE:The deal first mooted in August has now been inked and gives CRE an 80% stake and Tesco 20%, which can rise to 25% after five years AFP, LONDON Britain’s biggest retailer, Tesco, has agreed to form a venture with China Resources Enterprise Ltd (CRE, 華潤創業), but first-half profit fell by a third amid “challenging” conditions in Europe, it said yesterday.The deal in China would create a market leader, Tesco said.“Tesco and CRE today announce that they have entered into definitive agreements to combine their Chinese retail operations to form the leading multiformat retailer in China,” a statement said.The companies revealed in August that they were in exclusive talks over a deal.London-listed Tesco — the world’s third-biggest supermarket group after US retailer Wal-Mart and No. 2 Carrefour of France — added that the move was part of its international strategy to tap further into fast-growing economies.Under the deal, Hong Kong-listed CRE will have a stake of 80 percent and Tesco will have 20 percent, but this can rise to 25 percent after five years.“We are delighted to work with CRE to create the leading Chinese retail business,” Tesco chief executive Philip Clarke said in the statement.‘STRONG PLATFORM’“Through this deal we have a strong platform in one of the world’s most exciting markets and it will move us more quickly to profitability in China,” he said.“This is very good news for customers and shareholders and a further demonstration of our commitment to build sustainable, profitable businesses, establish multichannel leadership in all of our markets and pursue disciplined international growth,” he added.The new venture will combine Tesco’s 134 Chinese branches, as well as its Chinese shopping mall business with the China Resources Vanguard business of 2,986 outlets. Tesco will make a cash contribution of ￡185 million (US$300 million) to the venture. It will also pay ￡80 million to CRE following completion and another ￡80 million on the first anniversary.The deal is expected to be completed in the first half of next year, but remains subject to regulatory and CRE shareholder approvals.PROFIT DIVEThe British supermarket chain also announced yesterday that after-tax profit dived 33.6 percent to ￡820 million in the first half of its fiscal year, or 26 weeks to Aug. 24. That compared with a net profit of ￡1.235 billion in the same period a year before.“The challenging retail environment in Europe has continued to affect the performance and profitability of our businesses there,” Clarke said in the earnings release.“The investments we have made to improve our offer for customers in the region are already starting to take effect and we expect a stronger second half as a result,” he said.

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In theory, practice is the same as theory. In practice, it differs. Ryan Avent speculates that the reason that Americans are opposed to a carbon tax, despite their avowal of support for action on global warming, is that they don't understand how the tax works very well.I'd say they understand it all too well: a tax will make it more expensive for them to drive, forcing them to do less of it. If they didn't like driving right now, they wouldn't be doing so much of it.This is true of a lot of policy plans for which advocates claim a groundswell of mass support: people support them in abstract, but in actual particulars, they are against them. People support universal healthcare--until the majority who are perfectly satisfied with their health care right now hear the details of the plans, and the taxes required to pay for the plans. People like wars, but not the part where we spend a lot of money and soldiers die. People think we should do something about the environment--but only as long as it doesn't involve driving less, or buying smaller, more fuel efficient vehicles and homes, or giving up the long-distance plane flight to Disneyworld, or . . . well, when you come right down to it, what Americans have so far proven willing to do is buy biodegradeable cleaning products once a year, and waste a lot of carbon dioxide talking about how the government should do something. Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down. previousThe FundamentalsnextThe Economics of RSS Feeds

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Recruiting Roundup: Wells Adds 31 FAs With $3.5 Billion LPL, Raymond James and Securities America also grab reps from rivals Wells Fargo (WFC) said Friday that it had recruited 24 advisors with $2.2 billion in assets this fall for its traditional Private-Client Group channel. Its independent-advisor channel, FiNet, said Wednesday that it added seven advisors with about $1.3 billion in assets in November. Meanwhile Raymond James (RJF) said Monday it recruited a Morgan Stanley (MS) team with about $80 million in assets and $1 in yearly fees & commissions. Also this week, LPL Financial (LPLA) said it attracted an advisor from Wells Fargo, and Securities America said it recruited a former-LPL affiliated team of FAs to its independent broker-dealer operations. Wells’ Latest Recruits One group coming on board Wells Fargo's employee advisor channel over the past few months is the ESH Group, which includes Robert Evans, Walt Shinault and Richard Hastings in Oxford, Miss. They joined from Bank of America-Merrill Lynch (BAC). The team has a total of 76 years of industry experience and prior AUM of $250 million. Also moving to Wells from Merrill was W. Howard Humphrey. The Parkersburg, W. Va.-based advisor has 20 years of industry experience and prior assets of $101 million. The Siegel Group, comprised of financial advisors Andrew Siegel, Nickolaus Roeschley and William Kulesh, joined Wells in Scottsdale, Ariz., from Morgan Stanley. The team members have 52 years of industry experience and prior AUM of $231 million. In Irvine, Calif., financial advisors Nancy Johnson and Susan Ellena joined from Morgan Stanley. They have a total of 60 years of experience in the industry and prior AUM of $210 million. The Willow Bend Group, comprised of financial advisors Chris Queen, Peggy Etheridge and Jason Hofnagel, came on board Wells in Plano, Texas, from Morgan Stanley. The team members have 49 years of total industry experience and prior AUM of $206 million. The Meeks-Coburn Group, comprised of financial advisors Curtis Coburn and Wade Meeks, moved to Wells in Little Rock, Ark., from Morgan Stanley. The reps have a total of 55 years of industry experience and prior AUM of $127 million. Robert Shwedel and Andrea Roth joined Wells from UBS (UBS) in Walnut Creek, Calif., which is part of the Bay Area. Combined, the father and daughter have 39 years of industry experience and prior AUM of $196 million. Rich Ceffalio also moved from UBS to WFA. He is based in Arlington Heights, Illi. He spent four years at UBS but had previously spent 11 years at Wells. Ceffalio has 19 years of experience in the industry and prior AUM of $165 million. He brought a financial advisor in training, Jim Cox, with him. Susan Gallagher joined WFA in Bethesda, Md., from UBS with 29 years of experience in the industry and $146 million in assets. Curt Coulter joined the Pittsburgh branch of WFA from UBS. He has 17 years of experience and prior AUM of $134 million. Greg Moore came to Wells in Portland, Ore., from Webush Morgan. He has 17 years of experience in the industry and a prior AUM of $139 million. The Hart Investment Group, which includes Robert Hart and Thomas Tonkovich, joined the Spring Lake, N.J., Wells branch from RBC Capital Markets. Combined, the team members have 23 years of industry experience and prior AUM of $107 million. Allen Wilson, joined Wells in Morristown, N.J. from Stifel Nicolaus (SF). He has 19 years of experience in the industry and prior AUM of $212 million. Also joining from Stifel is Bradley Gummow. Chicago-based Gummow has 30 years of experience in the industry and prior AUM of $100 million. FiNet Additions The independent-advisor channel of Wells Fargo picked up the KBT Group in Westlake Village, Calif., comprised of financial advisors Michael Kazmer, Larry Bernstein and Abby Dinkins. The team joined FiNET from Merrill Lynch with about $620 million in assets. Trailhead Wealth Management, comprised of financial advisors Bryan Pieper and Gregory Stringari joined FiNET in Louisville, Colo., with some $270 million in assets. Michelle Lavigne, in Stamford, Conn., moved to the already existing FiNET practice of Adaptive Wealth Management. She has 24 years of experience in the industry (including work for UBS and Merrill) and AUM of $128 million. B. Scott Wilson joined FiNET in Dorset, Vt., with 16 years of experience and AUM of $110 million. Raymond James’ Recruiting Raymond James announced Monday that it recruited Karl Rothermund as senior vice president of investments in the Scottsdale, Ariz., office of Raymond James & Associates the traditional employee broker-dealer of Raymond James Financial. “I am pleased to welcome Karl to Raymond James,” said Pat Allison, division director of the firm’s Southwestern Division, in a statement. “Clients are sure to benefit from his years of investment experience and the expertise he brings to the Scottsdale location.” A 35-year financial services industry veteran, Rothermund came to Raymond James from Morgan Stanley, where he managed $80 million in client assets and had about $1 million in annual production. (He joined Smith Barney 19 years ago and left to join Morgan Stanley in 2006.) “I was looking for a firm that really puts its clients first,” said Rothermund, in a statement. “Raymond James’ fee structure is one feature that attracted me to the firm. I am now able to translate multiple savings to my clients through lower fees, including those on IRAs, Capital Access and discretionary asset management.” LPL’s New Affiliated Advisor Sovereign Coast Wealth Advisors, of Corpus Christi, Texas, recruited Michael Koletar from Wells Fargo to join the LPL-affiliated group, which manages about $800 million in assets, according to an announcement made on Wednesday. Koletar will be a senior vice president of investments. “The Sovereign Coast Wealth Advisors and Sovereign Investment Group teams are elated to have Michael Koletar join our family of [20-plus] financial professionals,” said Sovereign Coast President William Vaseliades, in a press release. “His expertise in investment and wealth management, along with his dedication to clients, will integrate seamlessly with our philosophy of providing personalized service and unbiased advice with our clients’ best interests in mind.” “I am very pleased to be associated with a firm that has access to the resources and technology I need to ensure optimal service for my clients,” said Koletar, in a statement. “The range of strategies I can now offer them has expanded dramatically.” Move to Securities America Michael Mullis, formerly affiliated with LPL Financial, and his team became registered representatives with Securities America Inc., an independent broker-dealer located in La Vista, Neb., on Thursday. “It is important to us to be with a broker-dealer that provides our clients with the stability of a large broker-dealer without losing any of our firm’s independence,” Mullis said in a press release. “Securities America’s commitment to its advisors stands out amongst broker-dealer firms across the nation. This reassures us that we have found a partner that will provide our clients with the highest quality service.” The team of Kelley & Mullis Wealth Management in Vestavia, Ala., has more than $223 million in client assets. It includes four advisors. “Securities America gives specialized attention and resources to its advisors that we feel is an important role for our broker-dealer,” Mullis explained. “We are very excited about working with their business consultation group, and bringing the latest technology, CRM and support for all levels of management to our firm.” “We are excited to welcome Michael Mullis and his practice to the Securities America family,” said Gregg Johnson, senior vice president of branch office development and acquisitions, for Securities America, in a statement. “We look forward to working closely with Kelley and Mullis Wealth Management to ensure a smooth transition and to provide this practice with our extensive technology, practice management and business growth resources.” Securities America is a unit of Ladenburg Thalmann Financial Services (LTS). Beyond Meyers-Briggs: Assessment Tools for Hiring Advisors What Advisors Can Learn From the Gravedigger's Dilemma Is Private Equity IBDs’ Savior or Sorcerer? Wirehouses Bank of America-Merrill Lynch

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Fidelity Measures Advisors’ Impact Through Financial Crisis Investors with advisors felt more prepared, optimistic than those without advisors The financial crisis has had a measurable effect on investors, but advisors have as well, a report released Wednesday by Fidelity found. Surveying investors who are at least sophisticated enough to have more than simply a savings account or certificate of deposit, Fidelity found that those who used an advisor felt more prepared both before and after the crisis, and were more likely to say the economy has improved from where it was five years ago. GfK Public Affairs and Corporate Communication polled 1,154 household decisionmakers over 25 for the survey on behalf of Fidelity. Nearly half of respondents who work with an advisor said they felt prepared before the crisis began in 2008, compared with 37% of those without an advisor. Two-thirds of those with an advisor said they felt prepared after the crisis, compared with 53% of those without. During the crisis, advisors were indispensable to their clients. They were the leading source of financial guidance, which was rated as most helpful by 90% of respondents with an advisor. Nearly a quarter of respondents rely on their advisor now more than ever. “The financial crisis created an opportunity for financial professionals to provide much needed context and clarity to investors,” Scott Couto, president of Fidelity Financial Advisor Solutions, said in a statement. “While investors are feeling more engaged and accountable for their finances, many are still too conservatively allocated. Financial professionals have an opportunity to help investors regain confidence with taking on an appropriate amount of risk to meet their financial goals.” When asked where the blame lay for the financial crisis, respondents were split between banks and lenders, and Americans who overextended themselves. However, 56% recognize that saving for retirement is their responsibility. To that end, 42% have increased their contributions to their retirement accounts and 64% said they were interested in guaranteed income products like annuities, more so than they were before the recession. “Emerging from the depths of the crisis, many investors found resolve and started taking control of their personal economy,” Kathleen Murphy, president of personal investing at Fidelity Investments, said in a statement. “Whether it was increasing contribution rates to a 401(k) or IRA, adjusting asset allocation or increasing the frequency of financial discussions with family, the silver lining of this crisis is that it spurred investors to reassess and take action to improve their finances.” Read Does Fiduciary Coverage for 401(k) Rollovers Lie Ahead? on AdvisorOne. Fidelity Financial Advisor Solutions guaranteed income products Scott Couto

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Suong Ho Chi Minh City, Vietnam / Printing A loan of $950 helped to buy paper and ink. Suong's story Suong, 28, lives in a small house in Ho Chi Minh City with her family, including one daughter and her husband. She and her husband earn money through their business of printing. She would like to get a loan to buy a larger stock of papers and ink and increase her production to meet her customers' needs. She also hopes her business will ensure that her family members, and especially her child, will have a better education and a better future. More from Suong's previous loan » About Capital Aid Fund for Employment of the Poor (CEP): Capital Aid Fund for Employment of the Poor (CEP) is a non-profit Vietnamese microfinance institution that operates in the provinces of southeastern Vietnam and the Mekong Delta. CEP's head office is located in Ho Chi Minh City. This institution’s mission is to work with, and for, the poor and poorest to realize sustained improvements in well-being through the provision of financial and complementary non-financial services in an honest, efficient, and sustainable manner. The non-financial services CEP offers to complement its basic credit and savings products include financial education, raising awareness of health and sanitation issues, and education scholarships for children. Capital Aid Fund for Employment of the Poor (CEP) Kiva supports CEP’s commitment to reaching the underserved, including rural women, urban migrant workers, single mothers, and women whose husbands have left them. CEP also maximizes its poverty-alleviation impact by providing borrowers with training in areas of health, sanitation, budgeting, and saving. It also strives to provide education scholarships to borrowers with children at risk of leaving school, helping whole families build a brighter future. More about Capital Aid Fund for Employment of the Poor (CEP)

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2016-30/1376/en_head.json.gz/16379

House Prices Better For First-Time Buyers A stagnant housing market means new buyers can get a better deal - as long as they want to live in the north of England or Scotland. The south of England is still much more expensive than anywhere else The share of UK towns and cities that are affordable to first-time buyers is at its highest in a decade due to the sluggish housing market, a study has found. People taking their first step on the property ladder will find homes within their means in 54% of local authority districts, the highest proportion since 2002 when 64% of districts were within buyers' reach, Halifax found.This is up from 40% a year ago and almost eight times the proportion of affordable districts at the peak of the housing market in 2007, when just 7% were in this bracket.A widening north-south divide was highlighted, with London being the only region where there were no affordable areas found for would-be buyers on average earnings.In contrast, all districts in the north east were within a first-time buyer's grasp.Just 9% of the affordable districts are in the south east, the south west or the east of England, compared with 15% 10 years ago.This means 91% of the affordable districts are in the north east, north west, Yorkshire and the Humber, east Midlands, west Midlands, Scotland, Wales or Northern Ireland, up from 85% in 2002.House prices have been holding up in London, which has had strong interest from overseas buyers, as well as some commuter belt areas, compared with the patchier market in the rest of the UK.House prices in Northern Ireland, for example, which saw a steep increase before the financial crisis, have fallen by around 10% over the last year.Brent in London was named the least affordable district in the UK, where homes cost 8.8 times average earnings, while South Ayrshire in Scotland is the most affordable, with average property prices at just 2.5 times the local annual wage.Districts were deemed "affordable" if the average house price for a first-time buyer there was lower than what someone on typical earnings living there could pay.Local average earnings were multiplied by four and if the average price paid by a first-time buyer was lower than this sum, it was classed as affordable.The study warned that aspiring home owners still face "significant hurdles" amid the uncertain economy.Lenders have been tightening their loan criteria and the Bank of England has said borrowing will get tougher this year, especially for those with lower deposits to put down.Rents have soared as those unable to get on the property ladder have remained trapped in the rental sector. Halifax found the average first-time deposit of £27,857 this year was 1% lower than a year ago, but a huge 59% increase compared with 2002.Londoners need to find the biggest deposits, typically putting down nearly £60,000, while those in Northern Ireland put down the lowest deposits at just over £16,000.Halifax housing economist Martin Ellis said the findings suggested there could be an increase in first-time buyer numbers this year, although this would still be a low level.He said: "This partly reflects the substantial improvement in home affordability for first-time buyers since 2007, following the fall in house prices over the period."However, the continued uncertainty over the outlook for the UK economy and the difficulties faced by many in raising the necessary deposit remain significant hurdles for those wishing to buy their first home."First-time buyers faced a setback in March with the withdrawal of a stamp duty concession which had been running for two years, leading to a bunch-up in the market as people rushed to beat the deadline.Halifax estimated there were 114,000 first-time buyers in the first six months of this year, a rise of just over a third on the same period last year, with the boost likely to have come from the ending of the concession.However, first-time buyer numbers stand at less than half, when compared with 244,700 buyers during the same period a decade ago.A string of lenders, including Halifax, have recently raised their mortgage rates, and while HSBC announced a five-year fixed-rate mortgage with a record low rate of 2.99%, borrowers would still need a hefty 40% deposit to take it up.The National Association of Estate Agents recently reported that the proportion of sales made to first-time buyers dropped to a seven-month low in May to 17%, well below the "healthy" long-term 40% average.However, the Council of Mortgage Lenders suggested a more positive forecast going ahead, as it saw a bounce back in first-time buyer activity in May, with a month-on-month increase of 43% in the number of loans advanced.Researchers also found that 44% of first-time buyers will now pay stamp duty, compared with just 5% when the exemption on homes worth between £125,000 and £250,000 was in place.The survey used Halifax's own database as well as CML and government studies. Related Stories Nationwide Gives Boost To Home Loans By 44% Coalition Urged To Sort Britain's Housing Top Stories

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Excessive Heat Watch & Hazardous Weather Outlook Details for Central Illinois Madoff Aides Found Guilty For Role In Massive Ponzi Scheme By Jim Zarroli Originally published on March 24, 2014 5:46 pm Five of Bernie Madoff's former employees were found guilty of helping him fleece investors of $17 billion. They were convicted on charges of securities fraud, conspiracy and tax evasion. Related Program: All Things Considered © 2016 Peoria Public Radio

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2016-30/1376/en_head.json.gz/16501

This Just In Federal money tough to pin down By PETER HIRSCHFELDVermont Press BureauMONTPELIER — Economists for the state can forecast with surprising accuracy the tax revenues expected to flow into the treasury over the next fiscal year. But predicting one of the largest sources of funds to Vermont’s $5.2 billion budget — federal revenues — has proven a more difficult task. And despite a recent analysis done by experts for the Legislature, pinning down the federal funds on which the state so heavily relies is still something of a guessing game.“There are just so many unknowns at this point,” said Steve Klein, chief fiscal officer at the Legislature’s Joint Fiscal Office. “And there are a lot of political choices that are going to get made that are totally outside our control.”Official state revenue forecasts, the most recent of which arrived Tuesday, are historically reliable, deviating by only about 2 percent on average over actual revenues. That record of success gives lawmakers a high degree of confidence in the $1.56 billion in general fund revenues forecast to flow into Montpelier over the next 12 months.Getting similarly reliable estimates for money flowing from the federal government is more difficult. But Klein said one thing is clear: risk for Vermont is to the downside.In a report titled “Federal Funds — Reductions Today and Tomorrow,” Klein surveyed the federal landscape in an attempt to divine how decisions in Washington, D.C., will affect Vermont. From health care and transportation to grants that support human services, Klein said Tuesday that federal funds coming into Vermont will likely shrink in the coming years.“And one area where that could be extremely noticeable is in transportation,” Klein said.The reauthorization of the five-year federal transportation bill will likely overhaul a state-by-state allocation formula that has until now been favorable for the state. Vermont gets $2.85 cents from the feds for every $1 in gas tax it sends to the federal treasury, a ratio Klein said he expects will narrow in the next five-year bill.Projected declines in federal discretionary spending, according to Klein, also imperil some of the federal dollars coming into Vermont. Non-defense discretionary spending supports everything from assistance for low-income populations and energy investments to public safety grants and environmental protection. As a share of gross domestic product, according to Klein’s report, non-defense discretionary spending is expected to drop by a third over the next 10 years, from 8.3 percent to 5.5 percent. The reductions will come at a time when Vermont is more reliant on federal funding than at anytime in recent memory; federal funds now account for 46 percent of Vermont’s non-education budget.For the complete story, see Wednesday's Rutland Herald.

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2016-30/1376/en_head.json.gz/16511

Another important thing that you need to consider is the financial condition of the company in question. You want to know if the company is able to continue paying its bills, and how much debt it carries. The balance sheet is one of the most effective tools that you can use to evaluate a company's financial condition. In this article, I will discuss the balance sheet of Johnson & Johnson (NYSE:JNJ) in order to get some clues as to how well this company is doing. I will go through the balance sheet, reviewing the most important items, in order to assess the financial condition of Johnson & Johnson. The information that I am using for this article comes from J&J's website here. Note that this article is not a comprehensive review as to whether Johnson & Johnson should be bought or sold, but rather, just an important piece of the puzzle when doing the proper due diligence. This article might be a bit too basic for some and too long-winded for others, but I hope that some of you can derive benefit from it. Johnson & Johnson is a company whose products and services are familiar to just about everyone. The company's operations are split into three segments. Their Consumer division offers baby care, wound care, oral care, and skin care products, along with over-the-counter medications. Notable brands include Johnson's, Aveeno, Band-Aid, Listerine, and Tylenol. This segment accounts for 21% of the company's sales. The Pharmaceuticals segment produces prescription drugs for a wide variety of purposes, such as treating infections, gastrointestinal problems, dermatological issues, and contraception. This segment currently accounts for 38% of J&J's sales. Their Medical Devices and Diagnostics division produces everything from blood glucose monitoring and insulin delivery products to orthopedic joint reconstruction to disposable contact lenses. This segment contributed 41% of the company's sales in 2012. Johnson & Johnson has a market capitalization of $211B and has recorded over $67B in sales over the last 12 months. 56% of the company's sales came from outside the United States. The first line in the Assets column of the balance sheet is for the amount of cash and cash equivalents that the company has in its possession. Generally speaking, the more cash the better, as a company with a lot of cash can invest more in acquisitions, repurchase stock, pay down debt, and pay out dividends. Some people also value stocks according to their cash positions. Some of the larger and more mature companies tend not to carry a lot of cash on their balance sheets, as they might be more inclined to buy back stock with it, or pay out dividends. As of Dec. 31, 2012, Johnson & Johnson had $21.1B in cash and short-term investments, which can be easily converted into cash. This is a lot of cash for a company that has a market cap of $211B. This means that the company is trading for just ten times its cash position, which may be very attractive for value-oriented investors. Over the last 12 months, J&J paid out $6.61B in dividends, which are well-supported by the company's free cash flow of $12.5B. While the company does have over $21B in cash and short-term investments, this is significantly less than the $32.2B that it reported one year before. This is due to the company's decision to repurchase $12.9B worth of stock in order to finance its acquisition of orthopedic device manufacturer, Synthes, in June 2012. Net Receivables Receivables constitute money that is owed to a company for products or services that have already been provided. Of course, the risk with having a lot of receivables is that some of your customers might end up not paying. For this reason, you usually like to see net receivables making up a relatively small percentage of the company's sales. Johnson & Johnson had a total of $11.3B in net receivables on its balance sheet, which represents 16.8% of its 2012 sales of $67.2B. For 2011, 16.3% of its sales were booked as receivables, while that percentage was at 15.9% for 2010. While 16.8% might be considered a relatively high percentage for receivables, it appears to be pretty consistent with the company's history over the last couple of years, so I'm not too worried about this. Another factor that I like to look at is the current ratio. This helps to provide an idea as to whether or not the company can meet its short-term financial obligations in the event of a disruption of its operations. To calculate this ratio, you need the amount of current assets and the amount of current liabilities. Current assets are the assets of a company that are either cash or assets that can be converted into cash within the fiscal year. In addition to cash and short-term investments, some of these assets include inventory, accounts receivable, and prepaid expenses. Current liabilities are expenses that the company will have to pay within the fiscal year. These might include short-term debt and long-term debt that is maturing within the year, as well as accounts payable (money owed to suppliers and others in the normal course of business). Once you have these two figures, simply divide the amount of current assets by the amount of current liabilities to get your current ratio. If a company's operations are disrupted due to a labor strike or a natural disaster, then the current assets will need to be used to pay for the current liabilities until the company's operations can get going again. For this reason, you generally like to see a current ratio of at least 1.0, although some like to see it as high as 1.5. The current ratio of Johnson & Johnson is 1.90, which is outstanding. Property, Plant, and Equipment Manufacturing, like any other industry, requires a certain amount of capital expenditure. Land has to be bought, factories have to be built, machinery has to be purchased, and so on. However, less may be more when it comes to outlays for property, plant, and equipment, as companies that constantly have to upgrade and change its facilities to keep up with competition may be at a bit of a disadvantage. However, another way of looking at it is that large amounts of money invested in this area may present a large barrier-to-entry for competitors. Right now, Johnson & Johnson has $16.1B worth of property, plant, and equipment on its balance sheet. This figure is higher than the $14.7B that it reported at the end of 2011. In its 10-K filing, the company said that most of that money is in buildings, machinery, and equipment. Goodwill is the price paid for an acquisition that's in excess of the acquired company's book value. The problem with a lot of goodwill on the balance sheet is that if the acquisition doesn't produce the value that was originally expected, then some of that goodwill might come off of the balance sheet, which could, in turn lead to the stock going downhill. Then again, acquisitions have to be judged on a case by case basis, as good companies are rarely purchased at or below book value. Johnson & Johnson has $22.4B worth of goodwill on its most recent balance sheet, which is significantly higher than the $16.1B that the company reported at the end of 2011. Of this $6.3B increase in goodwill, $6.0B comes from the company's purchase of Synthes for $20.2B. The company says that this goodwill is for expected synergies that will result from the merger. Overall, goodwill accounts for about 18.5% of J&J's total assets of $121B. This is a jump from the 14% of assets that were goodwill at the end of 2011. Usually, I don't like to see goodwill account for more than 20% of a company's total assets for the reason that I discussed above. Since Johnson & Johnson is below that threshold at this time, I don't see much need to panic here, but we need to monitor this in the years and quarters to come. Intangible assets that are listed on the balance sheet include items such as licensed technology, patents, brand names, copyrights, and trademarks that have been purchased from someone else. They are listed on the balance sheet at their fair market values. Internally-developed intangible assets do not go on the balance sheet in order to keep companies from artificially inflating their net worth by slapping any old fantasy valuation onto their assets. Many intangible assets like patents have finite lives, over which their values are amortized. This amortization goes as annual subtractions from assets on the balance sheet and as charges to the income statement. If the company that you are researching has intangible assets, with finite lives, that represent a very large part of its total asset base, then you need to be aware that with time, those assets are going to go away, resulting in a reduction in net worth, which may result in a reduction in share price, unless those intangible assets are replaced with other assets. Johnson & Johnson currently has $28.8B worth of intangible assets on its balance sheet. This is a huge jump from the $18.1B that it had 12 months prior. This increase is due to the $12.9B of intangible assets that were acquired with the purchase of Synthes. Of the $12.9B involved here, $11.4B represent intangible assets that have finite lives, with a weighted average life of 21 years. $9.9B of these assets come from acquired customer relationships. Of the total $28.8B of intangibles, half of it comes from customer relationships, while 30% comes from acquired trademarks, and 20% comes from acquired patents. 70% of these assets have finite lives that range from 17 to 24 years. Over time, most of these assets will come off of the balance sheet, as they are amortized. This may result in a significant decline in the company's asset base and net worth if the assets are not replaced. With intangible assets currently accounting for 24% of Johnson & Johnson's total assets, this is a very real concern. We need to monitor this percentage in the years and quarters to come. The return on assets is simply a measure of the efficiency in which management is using the company's assets. It tells you how much earnings management is generating for every dollar of assets at its disposal. For the most part, the higher, the better, although lower returns due to large asset totals can serve as effective barriers to entry for would-be competitors. The formula for calculating return on assets looks like this: Return on Assets = Net Income / Total Assets. For Johnson & Johnson, the return on assets would be $14.3B in core earnings over the last 12 months, divided by $121B in total assets. This gives a return on assets for 2012 of 11.8%, which is really good, especially when considering that a huge asset base of $121B serves as a good barrier-to-entry. I also calculated J&J's returns on assets over 2011 and 2010 for comparative purposes. This can be seen in the table below. Table 1: Decent Returns On Assets From Johnson & Johnson These are good returns on assets that are fairly consistent, although they are creeping in the wrong direction. This is due to the fact that while their earnings are growing, their asset base is growing slightly faster, which isn't necessarily a terrible thing. I see nothing to worry about here. Short-Term Debt Versus Long-Term Debt In general, you don't want to invest in a company that has a large amount of short-term debt when compared to the company's long-term debt. If the company in question has an exorbitant amount of debt due in the coming year, then there may be questions as to whether the company is prepared to handle it. However, Johnson & Johnson doesn't have much to worry about here, as it reported $4.68B of short-term debt on its most recent balance sheet. And, as I discussed earlier, J&J has more than enough current assets on hand to meet this, along with other current obligations. Long-term debt is debt that is due more than a year from now. However, an excessive amount of it can be crippling in some cases. For this reason, the less of it, the better. Companies that have sustainable competitive advantages in their fields usually don't need much debt in order to finance their operations. Their earnings are usually enough to take care of that. A company should generally be able to pay off its long-term debt with 3-4 years' worth of earnings. Right now, Johnson & Johnson carries $11.5B of long-term debt. This is lower than the $13.0B that it carried one year before. Of the company's long-term debt, a little over half of it is due within the next five years, while some of it isn't due until after 2030. The average interest rate on this debt is 4.1%. In determining how many years' worth of earnings it will take to pay off the long-term debt, I use the average of the company's core earnings over the last 3 fiscal years. The average core earnings of Johnson & Johnson over this period is $13.8B. When you divide the long-term debt by the average earnings of the company, here is what we find. Years of Earnings to Pay off LT Debt = LT Debt / Average Earnings For J&J, here is how it looks: $11.5B / $13.8B = 0.83 years This is fantastic for Johnson & Johnson, in that it can pay off its long-term debt with less than one year's worth of earnings. Due to the earnings power of Johnson & Johnson, I believe that the company's long-term debt is very manageable. In the equity portion of the balance sheet, you will find the treasury stock. This figure represents the shares that the company in question has repurchased over the years, but has yet to cancel, giving the company the opportunity to re-issue them later on if the need arises. Even though treasury stock appears as a negative on the balance sheet, you generally want to see a lot of treasury stock, as strong, fundamentally-sound companies will often use their huge cash flows to buy back their stock. For this reason, I will usually exclude treasury stock from my calculations of return on equity and the debt-to-equity ratio in the case of historically-strong companies, as the negative effect of the treasury stock on the equity will make the company in question appear to be mediocre, or even severely distressed, when doing the debt-to-equity calculation, when in reality, it might be a very strong company. Johnson & Johnson, which we can all agree is a historically-strong company, has a treasury stock figure of $18.5B. Debt-To-Equity Ratio The debt-to-equity ratio is simply the total liabilities divided by the amount of shareholder equity. The lower this number, the better. Companies with sustainable competitive advantages can finance most of their operations with their earnings power rather than by debt, giving many of them a lower debt-to-equity ratio. I usually like to see companies with this ratio below 1.0, although some raise the bar (or lower the bar if you're playing limbo) with a maximum of 0.8. Let's see how Johnson & Johnson stacks up here. Debt To Equity Ratio = Total Liabilities / Shareholder Equity For JNJ, it looks like this: $56.5B / $64.8B = 0.87 A variation of this ratio that I like to use takes into account the presence of treasury stock on the balance sheets of very strong companies (like J&J). While the regular debt-to-equity ratio of Johnson & Johnson isn't bad, the negative impact of treasury stock on the equity positions of some companies may make them appear to be mediocre or financially-distressed when they're really not. Here, I add the treasury stock back into the equity, as treasury stock can be re-issued at a later date if the need arises (although you hope that never happens). I call this ratio the adjusted debt-to-equity ratio. It's calculated like this: Adjusted Debt To Equity Ratio = Total Liabilities / (Shareholder Equity + Treasury Stock) For J&J, it looks like this: $56.5B / $83.3B = 0.68 From looking at both regular and adjusted debt-to-equity ratios, it looks like Johnson & Johnson is in pretty decent shape in regard to its debt. In the two tables that follow, you can see how these ratios have changed over the last couple of years. Table 2: Debt To Equity Ratio At Johnson & Johnson Table 3: Adjusted Debt To Equity Ratio At Johnson & Johnson From these two tables, you can see that the debt-to-equity ratios are fairly consistent and indicate that J&J is not in any state of major financial distress. Like the return on assets, the return on equity helps to give you an idea as to how efficient management is with the assets that it has at its disposal. It is calculated by using this formula. Return On Equity = Net Income / Shareholder Equity Generally speaking, the higher this figure, the better. However, it can be misleading, as management can juice this figure by taking on lots of debt, reducing the equity. This is why the return on equity should be used in conjunction with other metrics when determining whether a stock makes a good investment. Also, it should be mentioned that some companies are so profitable that they don't need to retain their earnings, so they buy back stock, reducing the equity, making the return on equity higher than it really should be. Some of these companies even have negative equity on account of buybacks. The return on equity for Johnson & Johnson is equal to $14.3B in net income, divided by shareholder equity of $64.8B, which is equal to 22.1%. To strip out the equity-reducing effect of treasury stock that I discussed earlier, here is how you can calculate what I call the adjusted return on equity. Adjusted Return On Equity = Net Income / (Shareholder Equity + Treasury Stock) So, the adjusted return on equity for J&J is as follows: $14.3B / $83.3B = 17.2% To illustrate how the returns on equity of Johnson & Johnson have changed over the last couple of years, I have created one table for the return on equity, and another for the adjusted return on equity. Table 4: Returns On Equity At Johnson & Johnson Table 5: Adjusted Returns On Equity At Johnson & Johnson Whether you calculate the return on equity like most people, or strip out the treasury stock, you can see that J&J has very strong and consistent returns on equity. I see nothing to worry about in this department. Retained earnings are earnings that management chooses to reinvest into the company as opposed to paying it out to shareholders through dividends or buybacks. It is simply calculated as: Retained Earnings = Net Income - Dividend Payments - Stock Buybacks On the balance sheet, retained earnings is an accumulated number, as it adds up the retained earnings from every year. Growth in this area means that the net worth of the company is growing. You generally want to see a strong growth rate in this area, especially if you're dealing with a growth stock that doesn't pay much in dividends or buybacks. More mature companies, however, tend to have lower growth rates in this area, as they are more likely to pay out higher dividends. Johnson & Johnson has a very impressive figure of $86.0B. In the table below, you can see how this figure has grown over the last three years. Over this time frame, retained earnings grew by more than 22%, which is very impressive for a mature dividend-paying company like Johnson & Johnson. $86.0B Table 6: Retained Earnings At Johnson & Johnson After reviewing the most recent balance sheet, it can be concluded that there is much to like about the financial condition of Johnson & Johnson. It has a sizeable amount of cash and short-term investments that can be used for acquisitions, debt retirement, dividends, and share repurchases, in addition to a strong level of free cash flow. An excellent current ratio shows that the company can meet its short-term financial obligations, even in the event of an unlikely disruption of its operations. J&J's short and long-term debt positions are easily managed by its cash position and earnings power. The company has shown very good returns on assets and returns on equity, along with good growth in retained earnings over the last three years. The two concerns that I have here are the amounts of goodwill and intangible assets that are currently on the balance sheet. Goodwill, as a percentage of the company's total assets, has jumped over the past year, due mostly to its acquisition of Synthes. If Synthes or other acquisitions that Johnson & Johnson has made in previous years don't work out the way that they should, then we may see write-downs that could hurt the company's balance sheet and stock price. The same can be said for the intangible assets that the company acquired, which account for almost a quarter of the company's total assets. While this is not a comprehensive review as to whether Johnson & Johnson should be bought or sold, I think that its overall financial condition is pretty good. To learn more about how I analyze financial statements, please visit my new website at this link. It's a new site that I created just for fun, as well as for the purpose of helping others make good financial decisions. Thanks for reading and I look forward to your comments! About this article:ExpandAuthor payment: $35 + $0.01/page view. Authors of PRO articles receive a minimum guaranteed payment of $150-500. Become a contributor »Tagged: Investing Ideas, Long Ideas, Healthcare, Drug Manufacturers - MajorProblem with this article? Please tell us. Disagree with this article? Submit your own.Top Authors|RSS Feeds|Sitemap|About Us|Contact UsTerms of Use|Privacy|Xignite quote data|© 2016 Seeking Alpha

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2016-30/1376/en_head.json.gz/16623

Progress report: Vox’s Global Crisis Debate Richard Baldwin 16 February 2009 The world is in the midst of an unprecedented economic crisis – a global event unfolding at extraordinary speed and in unanticipated directions. Now more than ever, the world needs research-based policy analysis: i) to understand this global and insanely interconnected event, ii) to formulate plans for alleviating its worst effects, and iii) to fix the system so it doesn’t happen again. Vox’s Global Crisis Debate is a vehicle for agglomerating ideas on these issues. The world is in the midst of an unprecedented economic crisis – a global event unfolding at extraordinary speed and in unanticipated directions. Born as the ‘subprime crisis’ in Fall 2007, the crisis metastasized in September 2008. Almost overnight, it transformed itself from a landmine, which threatened to do horrible but localised damaged, into a cluster bomb throwing explosive projectiles at a frightful pace in every direction. Credit markets froze and equity prices plunged globally. Emergency measures by governments and central banks stabilised financial systems, yet credit markets continued to malfunction. Sharp credit contractions almost everywhere – combined with precipitous declines in business and consumer confidence – tipped the industrialised world into recession with unexpected speed. The crisis has spread to the emerging markets and developing nations – again at an unexpectedly abrupt pace and in unforeseen ways. This is now a truly global economic event. Indeed, we are not far from the point where every form of economic activity on the planet will be touched in one way or the other. A regime shift in global governance From an international relations perspective, this crisis has moved the international system into new areas with unanticipated speed. Without ceremony, the G7 was “relieved of duty” and leadership responsibilities were placed in the G20’s untested hands. Its first action came with the G20’s November Summit in Washington, where leaders promised cooperation and coordination on many fronts. So far, deeds have not followed words, and the G20’s credibility is under threat. The implications of this regime shift are poorly understood, but the shift is likely to change all manner of international relations for decades to come. From a macroeconomic perspective, the crisis has thrown into question the standard models employed by academics, governments, central banks, and the private sector. Quite simply, this crisis could not have happened in the mainstream macro models. The world’s macroeconomy, it seems, is radically more interconnected than we thought. Macroeconomists need a new Keynes, or at least a new Phelps or Lucas, to provide a parsimonious model where financial sector disturbances can be transmitted globally, producing recession and disinflation in their wake. On the trade side, the unexpectedly rapid decline of trade flows – both imports and exports (this is no standard Keynesian trade shock) – has reminded us how trade today is different. Things are no longer made in one nation and shipped to another. Nations make bits and pieces and ship them on to be combined with more bits and pieces. One fewer Japanese car exported to the US reduces trade volumes among a complex international supply chain in East Asia, Mexico, and beyond. And nations are starting to respond with new and worrying forms of protectionism. The WTO’s bulwark against 1930s style protectionism is proving its worth, but governments are getting inventive when it comes to policies that shift aggregate demand towards domestic firms and workers. On the finance side, there is now almost universal recognition that the world needs a better regulatory framework. The nature of modern finance has changed – much of it in reaction to the last round of regulatory changes – and with it so has the nature of financial crises, systemic risk, and the macroeconomic consequences. Much more than their macro colleagues, the finance professors have taken up the intellectual challenge with great vigour and rigour (see Philippon 2009). Maybe it’s because they all know that this will be a once-a lifetime opportunity to make the world a better place using their highly specialised knowledge. A generation-defining opportunity This global crisis is undoubtedly the economic policy challenge of our generation. It is also one where academic economists are making a unique contribution. This is a crisis where the unthinkable happens monthly and the improbable is an almost daily event. It is no exaggeration to say that governments are making it up as they go along, and they know it. They are, consequently, unusually and extraordinarily open to outside analysis. Vox’s Global Crisis Debate In January 2009, Vox launched the Global Crisis Debate in partnership with the UK government’s own website devoted to what is sometimes called the G20 Summit that they are hosting on 2 April. The UK government is currently in the process of crafting the agenda for that summit – to be known as the London Summit. The partnership with Vox is helping them broaden the catchment area for economic thinking on the crisis beyond the usual suspects that dominate the main Western media outlets, the Financial Times, Economist magazine, and other major national papers. One of the contributions to Vox’s Global Crisis Debate is featured every day on the front page of UK government’s site www.LondonSummit.gov.uk. (see screen shot). The Global Crisis Debate has two types of contributions. “Lead Commentaries” are standard Vox columns, written by leading economists. “Commentaries” are shorter pieces, 200 – 1000 words, written by professional economists from a variety of nations, institutions, and schools of thought. The Global Crisis Debate started with 5 themes and moderators: Development (Dani Rodrik), Macro (Philip Lane), Regulation (Luigi Zingales), Institutional reform (Francesco Giavazzi), Open Markets (Richard Baldwin). The Scientific Committee consists of Hadi Soesastro (Jakarta) and Barry Eichengreen (Berkeley). The response has been great. During the two weeks since the Global Crisis Debate was launched, the contributions have been viewed a collective total of 55,000 times. At first, the Development theme took the lead in readership – perhaps reflecting the lack of a global platform for the sort of commentary that Dani Rodrik rounded up to launch the conversation, or the truly stellar line up of the ‘pump priming’ Commentaries. More recently, however, the Financial Regulation and Macro themes have surged ahead with 19,000 reads and 18,000 reads, respectively, reflecting their role at the heart of the crisis. The number of contributors to the debates is still modest, with fewer than 200 authors across the five themes. I hope that more will join as the debate evolves. Vox, in partnership with the UK’s Foreign Office, has invited Commentaries from well-known economists from all G20 nations that were identified by local British Embassy officials. The response to these invitations has been modest to date, but of very high quality. A typical reply to these invitations suggested that these economists had their hands too full with “fire-fighting” the crisis to spend much time writing about it on public forums. Call to the keyboards Plans for the London Summit suggest that the main outlines of the world’s policy responses will be agreed in April 2009. After that, it will be much harder to influence the debate on, for example, the nature of financial regulatory reform or the role and shape of the IMF. Vox readers around the world should leap to their keyboards and share their knowledge and insight. Now more than ever, the world needs research-based policy analysis i) to understand this global and insanely interconnected event, ii) to formulate plans for alleviating its worse effects, and iii) to fix the system so it doesn’t happen again. Below are screen shots of Vox’s global readership at two points in a 24 hour cycle (you can follow this live here). Topics: Global crisis Tags: vox, global crisis debate 14574 reads Richard Baldwin Professor of International Economics, Graduate Institute, Geneva; Director of CEPR; Vox Editor-in-Chief Don't Miss

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Arizona Corporation Commission Approves Fortis Acquisition of UNS Energy August 12, 2014 03:31 PM Eastern Daylight Time TUCSON, Ariz.--(BUSINESS WIRE)--The Arizona Corporation Commission (ACC) today issued its final written approval of the acquisition of UNS Energy Corporation (NYSE:UNS) by Fortis Inc. (TSX:FTS), Canada’s largest investor-owned electric and gas distribution utility holding company. By a unanimous vote, the ACC concluded the acquisition will serve the public interest by generating benefits for UNS Energy subsidiaries Tucson Electric Power (TEP) and UniSource Energy Services (UES) and their customers. Both companies will have stronger balance sheets and improved access to capital, while customers will receive bill credits totaling $30 million over five years under terms of a settlement approved by the ACC. “TEP and UES will gain new financial strength through this transaction while preserving local control over utility operations that will continue to provide our customers with safe, reliable and affordable service,” said David Hutchens, President and CEO of UNS Energy, TEP and UES. The ACC’s vote came just seven months after TEP and Fortis filed a request for review and approval of the $4.3 billion acquisition, which includes the assumption of $1.8 billion in debt. Now that all necessary regulatory approvals have been secured, the transaction is expected to be completed before the end of August. “The Commission’s approval affirms the benefits of the merger for customers of TEP and UES,” said Fortis President Barry Perry, who will succeed H. Stanley Marshall as the company’s CEO effective December 31, 2014. “We look forward to working with UNS Energy to ensure the continued operation of sound utilities and the delivery of quality service to customers.” Under terms of the settlement approved by the ACC, TEP and UES will remain headquartered in Tucson under local control with current management and staffing levels. The settlement includes provisions intended to protect each regulated utility and its customers, including a requirement that UNS Energy be overseen by an independent board of directors, a majority of whom are Arizona residents. Once the transaction is completed, TEP and UES will proceed with plans to apply “acquisition credits” to customers’ bills from October through March for the next five years. The resulting savings will range from about $1 per month for residential customers to $200 per month for the largest commercial and industrial customers. Additional first-year savings will be realized through temporary reductions in usage-based charges from October 2014 through March 2015; those savings will vary with consumption. About UNS Energy: UNS Energy is a Tucson, Arizona-based company with consolidated assets of approximately $4.5 billion. UNS Energy subsidiary Tucson Electric Power serves approximately 414,000 customers in southern Arizona. UNS Energy subsidiary UniSource Energy Services provides natural gas and electric service for approximately 243,000 customers in northern and southern Arizona. UNS Energy shares are listed on the New York Stock Exchange and trade under the symbol UNS. To learn more, visit uns.com. About Fortis: Fortis is the largest investor-owned electric and gas distribution utility in Canada, with total assets, prior to the closing of the acquisition of UNS Energy, of approximately C$18.6 billion and fiscal 2013 revenue exceeding C$4 billion. Its regulated utilities account for approximately 90% of total assets and serve approximately 2.5 million customers across Canada and in New York State and the Caribbean. Fortis owns non-regulated hydroelectric generation assets in Canada, Belize and Upstate New York. The Corporation's non-utility investment is comprised of hotels and commercial real estate in Canada. For more information, visit fortisinc.com or sedar.com. Statements included in this news release and any documents incorporated by reference which are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbor provided by Section 21E of the Exchange Act. Forward-looking statements may be identified by words including “anticipates,” “intends,” “estimates,” “believes,” “projects,” “expects,” “plans,” “assumes,” “seeks,” and similar expressions. Forward-looking statements including, without limitation, those relating to UNS Energy’s and its subsidiaries’ future business prospects, revenues, proceeds, working capital, investment valuations, liquidity, income, and margins, as well as the timing and consequences of the Fortis acquisition, are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements, due to several important factors, including those identified from time-to-time in the forward-looking statements. Those factors include, but are not limited to: the possibility that various conditions precedent to the consummation of the Fortis transaction will not be satisfied or waived; the ability to obtain regulatory approvals of the Fortis transaction on the timing and terms thereof; state and federal regulatory and legislative decisions and actions; regional economic and market conditions which could affect customer growth and energy usage; weather variations affecting energy usage; the cost of debt and equity capital and access to capital markets; the performance of the stock market and changing interest rate environment, which affect the value of our pension and other retiree benefit plan assets and the related contribution requirements and expense; unexpected increases in O&M expense; resolution of pending litigation matters; changes in accounting standards; changes in critical accounting estimates; the ongoing restructuring of the electric industry; changes to long-term contracts; the cost of fuel and power supplies; cyber attacks or challenges to our information security; and the performance of TEP's generating plants; and certain presently unknown or unforeseen factors, including, but not limited to, acts of terrorism. UNS Energy and its subsidiaries undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. Given these uncertainties, undue reliance should not be placed on the forward-looking statements. UNS Energy CorporationMedia Contact:Joseph Barrios, 520-884-3725Financial Analyst Contact:Chris Norman, 520-884-3649

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Browse backgrounders by: Lectureships HomeFinancial Regulation2008 Plus 5: What Has Been Achieved and What Remains to Be Done Connect With Us: CFR Events 2008 Plus 5: What Has Been Achieved and What Remains to Be Done Speaker: Wolfgang Schäuble Minister of Finance, Federal Republic of Germany Presider: Carla A. Hills Chairman and CEO, Hills and Company; Co-Chairman, Board of Directors, Council on Foreign Relations Read transcript <iframe width="560" height="315" src="//www.youtube.com/embed/w4JwVLIhzyU" frameborder="0" allowfullscreen></iframe> Please join Dr. Wolfgang Schäuble for a discussion on financial market regulation and the current state of the European Union. For further reading, please visit CFR Senior Fellow Robert Kahn's blog Macro and Markets. CARLA HILLS: Well, ladies and gentlemen, I'm Carla Hills. I'm co-chair of the Council on Foreign Relations. And we are privileged indeed to have with us the Honorable Wolfgang Schaeuble, a highly experienced German government official, who is currently serving as minister of finance. You have his resume, and we're running late, so to maximize our time for conversation, I will be undiplomatically brief. But let me simply say the minister has held four Cabinet positions. Under Chancellor Kohl, he served as a federal minister for special tasks and head of the Federal Chancellery, and he served as minister of the interior. Under Chancellor Merkel, 2005 to '9, he again served as minister of the interior. And he is a long-standing leader of the Christian Democratic Union, serving as its chair in 1991. He's been a member of the Bundestag since 1972, serving as parliamentary whip between 1981 and '84. And in 1990 he led the negotiations for the reunification of East Germany. He is proficient in economics and law, holds a doctorate of law, and he's written a number of books, most recently "The Future of Modernization: What We Can Learn from the Crisis." Mr. Minister, we are delighted you could be with us. We look forward to your remarks, and then we will pepper you with questions. MINISTER WOLFGANG SCHAEUBLE: Thank you very much. Sorry for being late. I think today we are all -- our hearts and our minds -- with the people in Boston. And I hope this nightmare will be over very soon. And nevertheless, I have to make some remarks on financial markets, and then things are going well in Europe, as you all know. (Laughter.) I may be very brief, too brief, all the time for discussions. Therefore, I just would -- wanted to say we all remember the crisis -- by the way, started in the United States, so-called Lehman Brother, 2008. And in 2008 we all agreed it will never happen again. We have to draw lessons. We have to learn our lessons. From the Washington summit to London and Pittsburgh and Toronto and -- (inaudible) -- up to G-20 meeting today in Washington, we have made a lot of progress in drawing lessons since then. We agreed all that the reason -- there are three reasons: too much public indebtedness, too much liquidity in market, financial markets, and too less regulation. Those are three main issues we are working on again and again. And I think in regulation markets, we made a lot of progress since last couple of years. I will not mention in detail all what we achieved, but let's say we have been achieved a lot. But it's not enough. In reduction indebtedness and liquidity in financial markets, we have a little bit different opinions all over the world, to be very frank, that this was the reason we -- I am a little bit late. And -- (laughter) -- we have to continue this discussion as well. What learned in Europe, and with all the world, what the rest of the world learned, that Europe is very complex and complicated. And one of the consequences of the banking and financial crisis in 2008 has been that financial markets became aware that the euro, the European currency union, is a very complicated structure. And if I'd -- and if sometimes I try to explain someone abroad how it works, but after two minutes I always give up because everyone said, please, shut up. (Laughter.) It will never work. My only remaining question, then, has been have you ever tried to build a common market, a political union, a fiscal union, by 27 sovereign nation-states? Have you tried to build a common currency by 17 sovereign member states? And would you really think it would be easy to get it? It's not easy. I am quite convinced, if I -- if I (suffering ?) all the meetings on a global level -- G-20 and IMF and so on and G -- oh, don't know what else -- what we need in the 21st century is some form of -- some kind of new global governance. I bet we are not -- we are not at the end; we are at the very beginning to find better global governance. And in this dimension maybe a very difficult way of -- and complex way of European integration into last 60 years has been a major success, and maybe, in some way, an example how to go on in building more international, global, whatever governance (so on ?). Since markets detected that the European currency union is very complex, we suffered major problems, and all the problems we didn't have really solved in the European currency were -- became on the table, (and they have ?) been solved. Therefore we fight the euro crisis in the last couple of -- three -- in the last three years, in my understanding, very successfully. But we have to fight it in three ways. We have to fight the three reasons we had in the global crisis as well. Too high indebtedness and a common currency without a common fiscal policy -- it's a major problem. Therefore we are working again and again. The last occasion was yesterday in federal parliament in Germany, when we approved with -- by broad -- by broad majority, about 500 -- close to 500 votes, from 600 members of Bundestag, the program for the assistance for Cyprus and the (prolonging ?) programs for Ireland and Portugal to support both countries in regaining access to financial markets. But in any -- in any program, decisive force that the member states fight themselves the real causes of the problems. That means we're using deficit and regaining increasing competitiveness, because a lot of member state underestimated in the first years of the common currency that the pressure on competitiveness in a common currency without the possibility of devaluation is huge. And if you don't improve your competitiveness, you will -- you will get major problems. It has happened in Germany. You will not feel it in the first years, but it will happen, and it did. Therefore we always have to force member states, oblige member states to stick to European rules, to reduce deficits in a, of course, balanced way, to enhance their competitiveness by structural reforms, and then we can -- we have -- we have built European mechanisms to give systems to buy time until they get reaccess -- I could say they'll regain access to financial markets. These programs work very well in Ireland, in Portugal, and work rather well in the last year in Greece, by the way. I think it will work in Cyprus as well. And if you look (at -- through your ?) figures, we have halfen (ph) the average deficit -- the average national deficit in the eurozone in the last three years, exact -- delivering the -- (inaudible) -- commitments, by the way, half the deficit. We have halfen (ph) the difference in the labor costs in between different member states of the eurozone. It's halfened (ph) in the that couple of years. The countries under reform program made significant progress. Ireland, Portugal are doing very well. They will regain access to financial markets at the coming years, as has been agreed. Increase -- unemployment is going down, slowly, but going down, not increasing. Greece has risen its exports in third countries in the last quarter of last year. Greece has made a lot of progress in reducing deficit as well. Therefore we are regaining confidence. If you look at markets, markets are very -- have regained a lot of confidence, and bonds for all member states, including Italy, Spain, all the (continental ?) countries, are below they used to be before the crisis. Therefore markets have regained. What we are doing now is the next step, building a banking union -- (audio break) -- that is, we have already agreed on a single supervisory mechanisms because we need a strong and a European supervision of banks because our bankings work not only in the framework of one member state but -- (inaudible) -- we need a European mechanism and a European supervision. We have implemented -- we will -- and we will implement single supervisory mechanisms in the coming -- in the coming weeks. It has been already decided. In Europe, we will build -- we have a European regulation on deposit insurance. We have a European regulation on -- (inaudible) -- it is not yet decided, but it's drafted, and it is on the way, on regulation and restructuring mechanisms as well. And therefore we are working step by step in the direction of a European banking union as well, to split, to separate the risk of sovereign debts and the banking system as well. And then we have improved all the regulations for the financial sector in Europe as well, and therefore I think we are on a -- we are generally on a good way. We have what is -- remains the remaining problem -- and we discussed it yesterday evening and this morning, again and again -- growth in Europe is actually not very convincing. But if you suffer such a crisis, we did five years -- but you need some time to overcome the crisis. It's unavoidable. If you promise to deliver immediately growth, you will only create the next bubble. That's what we are decided not to do. Therefore, we need time. The forecast of the European Commission is that we will -- we will -- we will get the turnaround in 2014. I'm quite sure we will. Everything -- every economic figures are saying that we will get this turnaround in regaining growth for the eurozone as a whole in 2014. But I would like to add what I have said this morning and in our G-20 meeting. No one should expect that Europe will deliver high growth rates in the coming years. If you look at the real situation, if you look at demography, if you look at the standard of living at social -- these social systems, the costs of social insurance in Europe are about double compared to other industrialized countries. If you want to -- want it to change, you will be killed, because you have to -- you have to make your policy on behalf of the experience of every society, and Europe is quite diverse. If you look at what we're just as -- discussing between U.S. and Europe, it's a new energy fracking and so on -- if you look -- the reaction in Europe, it's totally different to United States. Of course I will not compare United States -- we can't -- between -- to Europe. Therefore, if we are honest on behalf of our demography, our population is not increasing, and it's becoming older. We are aging. Sometimes we are saying Europe is aging, old, rich and risk-averse. (Laughter.) On this basis, we will -- if we will achieve a moderate sustainable growth -- (audio break) -- in Germany, for example, what I have said years ago publicly, I don't expect more than on -- the long-term sustainable growth be beyond 1.5 percent. Of course in some member state -- in the Mediterranean member states, in the Eastern member states of Europe, there's much more necessity for higher growth rates. But in the very developed members that we have to there -- and we have to tell this to the emerging countries as well -- if you need global growth, if you hope for global growth, don't expect that the most developed countries will deliver the highest growth rates. By the way, if we want to overcome global diversions, it will be better if the emerging countries have higher growth rates than the advanced economy. And therefore I think we to make us honest; we have to tell our friends -- not only in the BRICS states, all over the world -- that global sustainable growth may not rely on high growth rates in the advanced economies. My -- (rely on ?) -- at modest growth rates in Europe, higher growth rates, of course, in U.S., where it is much more dynamic. It's a totally different situation. I'll give no advice to United States, of course; I acknowledge the situation is different. In Europe we are working for sustainable growth, for stability. We have the most -- what we have been criticized in the last couple of year was that the euro creates so much nervosity in markets. This problem is nearly to be solved, and that is the main achievement we got. And on this way we will go on and we will -- I'm quite convinced that the support in European population for this way of European integration will sustain. You know, there's a lot of uncertainty in some member states. We have a lot of political problems and it's always the same, but even in (U.S. ?) it's sometimes not easy to get decisions. In Germany it's not easy because we have another majority in the second term, but it's in Federal Parliament. In Italy they prefer to have no government. They are much more successful -- (laughter) -- without government. Belgium, by the way, has been very successful for years without a real government. (Laughter.) And sometimes you need some government; they will get it. I will tell you, in Germany -- to end with one poll, what's quite interesting. You may know -- you may have known that of course there's a lot of concern in public opinion -- (oh, to Bilderber ?) -- was it not a wrong decision to go for European monetary -- to give up the D-Mark and all these things? If you look at polls, actually we have the highest polls we ever had in answering the question, should we stay in the euro or not. Seventy percent, which is really high in polls, of German public have said yes, we have to stay; we have to solve some problems, but we will stay. And that's a good -- (inaudible). Thank you very much. (Applause.) HILLS: Thank you very much. Let me just start the questions by asking you -- we have seen major initiatives in both the United States and Europe to regulate banks. Is more coordination needed between the two of us? And if so, how would you recommend that we could achieve that? SCHAEUBLE: I think it's always more coordination needed, but having said this, we try to find solutions in Europe for Europe. We know that U.S. has in some way gone ahead in some way, but we will work -- we discuss the global area. It's not the most problematic issue, to be very frank, actually, to have a common understanding in regulation, financial sector. Nevertheless, in financial regulation you can suffer what is normal in the history of -- as soon as you have some progress or some more -- the last crisis is far away, so less ambitious is to ongoing -- to stick in reforms. We have to. Look, what I tell to my European colleagues again and again is, if we will suffer another crisis like the crisis we suffered in 2008, my concern is in Europe. I don't know what is the situation in U.S., but in Europe my concern is another crisis in such dimension would not only take market economy in stake, but the democracies, the way of democracy and the rule of law we just said. And therefore, it's very important that we even oblige financial markets to understand that they must be regulated. We had a philosophy in the '90s and the early years of this century, the less regulation, the better for financial markets. And we had no regulation, and markets destroyed themselves. Therefore, without regulation, it doesn't work. We need regulation. And we have again and it's only possible on a global way. Look at the other issue we just raised, the issue on the erosion on tax bases and some profit shifting. It's not a minor problem. If we -- we have asked for an OECD report, and the outcome was (completed ?). Companies which are -- which work on a global level have a tax burden which is half compared to companies which are not on a global level, because simply possibilities. The options to avoid taxation are -- in this interconnected world of the 21st century is endless. And at the end, you need someone who pays for the public budget and for the social system. Otherwise, you will create major problems in Europe and on the legitimacy of our political order. And having said this, the real discussion in the -- in the framework of G-20 is whether market economy is more successful combined with political freedom and democracy and rule of law or whether market economy combined with a political system which is not so complicated like our Western democracy is more efficient. I am convinced more sustainable -- it's a political order on the basis of freedom, with the rule of law, democracy. And it may be a little bit more complicated, like Europe, but more sustainable as well. But we have -- we have to prove this again and again. HILLS: Let me ask you a -- quite a different question. And that is the U.S. and the European Union have announced that they're going to negotiate a Trans-Atlantic Investment and Trade pact -- Partnership. And several have suggested that the United States and Europe include Canada, which has in the final stages of negotiating a free trade agreement with Europe, and include Mexico, which already has a free trade agreement with Europe, so that we don't have different rules of origin and border red tape and all the mess that comes from three separate trade agreements. What are your views? Would Europe be accommodative to including Mexico and Canada? SCHAEUBLE: (Sighs.) (Laughter.) Look, I am -- I am -- as I just have tried to say, I am very in favor of thinking in global dimensions because I think we, especially United States, but even Europe as a minor partner of United States -- we have a common responsibility to make the world stable. And this will not happen if we fail in -- find better solutions to fight against global (shifts ?) and divisions. If that is right, of course a trans-Atlantic free trade agreement is very helpful. It may increase economic development in both sides of the -- of the Atlantic Ocean. If we will negotiate (in concrete ?), I bet we all will see, in Europe as well as in United States, huge and -- a lot -- (laughter) -- I don't know whether you ever suffered any lobbying by agriculture, by farmers. (Laughter.) We do in Europe. If you're -- if we -- if we negotiate a European partnership -- (chuckles) -- (laughter) -- first we all say, oh, we have to spend much more money for modern technology and innovation and so on and so on. But then -- but of course, you never might touch the (burden ?) -- (laughter) -- yes, it's -- that is the reality. And lobbying is very strong. If you look what's going -- if you, as a finance minister, have to work on financial regulation in the daily work, it's really interesting. And at the end, you cannot really make a division between expertise and lobbying. It is totally linked in our complex world. Therefore I am -- I am quite happy that these negotiations do not be to the -- in Germany, not to the -- to the responsibility of the finance minister but the minister of economy. And I am very happy -- (laughter) -- to see what (is ?) will happen. Having said this, I would -- I think it would be better in our common interest not to exclude Mexico and Canada from this. That would be the wrong signal because we are saying that a trans-Atlantic free trade agreement is not a no to the WTO, but it's only a first step in the -- in the direction. If we would say, but we don't want to have Mexico included, that would be not very (responsible ?). HILLS: Thank you. Professor Robini (sp). QUESTIONER: (Off mic.) HILLS: Microphone. QUESTIONER: I have a two-part question for you. One is how much would you be worried about what's going on in Italy? Nine out of 10 Italian voted against the Monti policies. There is not yet a president. There is not yet a new government. There may be new elections. We don't know the results of them. Populist forces might win. What happens if Italy drifts in the wrong direction? Do you accommodate Italy, or do you confront Italy? Second question, there has been ongoing debate in the eurozone on how much you rely on -- (quote ?), on bailouts as opposed to bail-ins of private credits or either the sovereign and all of the banks. And I understand that you've said that there is not a mechanical template but probably is needed, when necessary, bail-ins might be part of the solution. So what are the rules of the game in which cases bail-ins (are be there ?) creditors of banks insolvents are going to be necessary as part of a resolution of a crisis of another eurozone economy? SCHAEUBLE: Italy. Italy is much more flexible than Germany. Therefore, I am -- I trust Italy will always find a solution. The Germans would really be, oh, hopeless in that situation; Italy no. By the way, I don't share your interpretation of the outcome of last election, to say they voted against -- 90 percent against this policy of Monti. I think it was a vote against the political class. And if you look what's going on in Italy, you can imagine, you can understand (therefore ?) all over Europe, political class is a little bit doubted. It's one of -- one of the major concerns. Therefore, it's not -- I don't think it was a decision against the policy of Mario Monti. Mario Monti is a -- he's a -- he was a very successful prime minister. He was a very good member of European Commission. And -- (inaudible) -- I like him very much. But as a -- to be a political leader, it's a little bit different. When we discussed, will he -- will -- Mario, will you run for new elections? He said no. I am ready to stay as prime minister, but I will not run for election. (Laughter.) OK, it's fine. But -- (chuckles) -- that's democracy, difficult. (Inaudible) -- late he decided to run. Maybe it was the next mistake, do it or do it not. But so having said this, you will see they will -- they will elect the president. I don't know whether they have already as the -- aber -- but I'm quite optimistic they will do it in the coming hours to -- and new elect a president. And then they will find -- (inaudible). Italy is, in real economy, not my major concern in Europe. I will not tell what's my major concern in Europe. (Laughter.) But Italy not. They have huge private savings. They have -- in (real protection ?), Italy's number two in Europe, far ahead of France -- behind Germany, of course, but number two. So real -- so economy -- and they have a huge -- small or medium-sized economy -- situation in -- especially in the north with -- Italy has -- suffers the problem of north and south, but it's about 150 years since they suffer, and they have always survived so far -- (inaudible). Italy's totally pro-European. Italy's really -- and Italian population is really pro-European. Of course -- (chuckles) -- like George Soros, Berlusconi has recommended Germany should leave the eurozone. It's a quite good idea, yeah? (Laughter.) We will not do it. But you should ask why has Berlusconi been so successful for more than 10 years? It's an interesting question. Now, it will change, so. The story of the bail-ins, if you look what have been -- what has been agreed, even in Washington summit, "too big to fail" will never happen. We have to find solution. If you translate the principle of "too big to fail," in reality, it means the moral hazard that as long as it -- as things are well, the banking make a lot of profits and the bankers as well, and as soon as they have a problem, taxpayers pay. That is too huge -- "too big to fail," and we have decided it will never happen, and therefore it will not happen. And therefore we need a hierarchy of liability that will be even part of the European restructuring mechanisms -- first owners, then of course bondholders, later on secured depositors, and then the member state -- the taxpayers of the member state and then -- and, if needed, the community of European taxpayers. That is the hierarchy of liability we created. That is OK. But it's always the same in politics. In principle, everyone agrees. As soon as you make a principle concrete -- and in Cyprus that was a total different situation, for example, compared to Greece. In Greece we had a huge sovereign indebtedness by parliament, therefore said we need an haircut for Greece. What was also very disputed in all of the world -- actually, it's not -- it's not even disputed; it has been worked well -- it was without an haircut for Greece, it was -- Greece would never have been -- have the chance to regain access to markets (and sustainability ?). In Cyprus the situation was totally different. The Cyprus business model relied on banks which attracted deposits with high interest and low transparency -- high interest, low transparency, low (taxation ?). And the Cyprus banks bought an huge amount of Cyprus bonds. In the U.S. you've got a lot of interest for Cyprus -- for Greek bonds, but the speculations went -- (audio break) -- it -- and then what -- should the European taxpayers pay the bill for this? It was totally clear, but in the very beginning, when it became concrete, there were only two who were in favor of (unbailing ?), to make it concrete. In general, everyone is agreed. In concrete it was the IMF and it was the German government. And then we had to wake -- to go a long way to try compromises and on all -- all this nonsense, and at the end we got it. And now it's fine. And it will work. And it gives a real chance for Cyprus to regain a competitive trust for business model. I am quite optimistic. Of course, they will suffer some years. That is unavoidable. But it will work. HILLS: I'll remind you to state your name and affiliation, and you're limited to one question. QUESTIONER: Jacob Frenkel, JPMorgan. Thank you, Mr. Minister, for a very sobering and refreshing analysis, which is in a stark contrast to some of the cheerleading statements that were made in some other meetings. So thank you for that. You started by saying that Europe will grow subpar, it will be for the long term, it's aging and the like. And so what bothered me is there is so much pressure on the ECB to expand further. And we all know that this will not help competitiveness of any country, where the focus on competitiveness has to do with structural measures, and with poor and weak politics, we know it's going to be very tough. And I agree that Italy is very flexible, maybe flexible in ideas but not flexible in the economy. So, well -- SCHAEUBLE: (Inaudible) -- economy -- QUESTIONER: -- I think -- OK. SCHAEUBLE: -- the new economy is (very large ?). QUESTIONER: I have a concrete question, which is the following. The Achilles' heel in the past crisis was the weakness of the financial system and the weakness of banks. The solution is to strengthen the banks, and the best way to strengthen the banks is by having them hold much more capital. And I think that's well-received. SCHAEUBLE: Mmm hmm. (Acknowledgement.) QUESTIONER: You have a problem with the suboptimal growth of Europe. If you increase capital requirement ratio now, as is required for long-term strength of banks, you reduce the ability of banks to lend and support growth. How do you square that circle? SCHAEUBLE: Until now, we have no problems to fulfill credit demand all over Europe. There's no -- there's no crunch in credit; therefore -- of course, central banks are watching very carefully. Second, European banks has already risen a lot of capital. I have to add, European banking -- Europe has been a little bit over-banked. Therefore, one of the advantages of the crisis is that we have some reducing of the banking sector in Germany. For example, what we used to have with the so-called Landesbank, you may remember it's hard to do. It's --oh, it created a lot of problems. But I will not discuss only German problems. Compared to others, we are relatively comfortable. The same has to happen in Cyprus, It does happen, actually. And it has to go on all over Europe. Therefore -- and can we do it in a reasonable way, in a balanced way? By the way, I agree, but we will not rely in Europe on monetary policy. Some would like to do it, but some others will not. And up till now we have never -- we haven't any case -- you can examine it. In all member states, we have achieved a lot of structural reforms. What Spain has decided, it would have never expected that it would happen in -- (inaudible). What Italy did, under Monti government is very (impressing ?). What Greece did -- it's totally adverse what has happened over decades. And of course I can tell you the story of Portugal and of Ireland. Even France has made a lot of reforms. France has made a social contract with major trade unions and entrepreneurs, what is totally new for France, because they learned, like some people in Anglo-Saxonian markets after the financial crisis, a so-called Bernanean (ph) model of market economy from Germany; has proved not so badly in overcoming the crisis because -- and reduction of a limitation of the confrontation between the different parts of the society. It's better to getting reforms. That is a new challenge for France because the French likes the revolution. If you have a French what is the biggest event in French history, what is the highest achievement, it is, of course, the revolution. But for a reform process, it's difficult to get. (Laughter.) Therefore, we move but we (give pressure ?) by our -- that is why I tried to tell you how we fight the euro crisis. There's no way beyond fighting the causes, the real causes, in the member states. And that's always not only deficit, financial policies, it's always economic policy, and therefore we need structural reforms. And we -- of course, maybe compared to U.S., our labor market remains very regulated. Yes, of course. Europe will remain different to United States. But together we will -- we know we need a strong United States. We need a strong United States because you are the undispensable for the global growth. yes, of course you have a huge responsibility, not only for United States but for the whole world. And you need partners, and we do whatever we can to be in some way a reliable partner but -- yes, but (not more ?). HILLS: Right at this front table here. Right there. QUESTIONER: Thank you. Thank you, Mr. Minister, for a very illuminating discussion. Let me ask you to -- HILLS: Your name and -- QUESTIONER: My name is Gerry Livingston from the Germany Historical Institute here in Washington. Let me ask you to discuss a German problem, and that German problem is the role of the federal constitutional court, the Bundesverfassungsgericht. In recent decisions, it has warned against -- strongly against -- the transfer of sovereign German powers, particularly fiscal powers, to the European Union. And this is a very admired institution, I guess most admired institution in Germany. Will this not be an obstacle to the transfer of fiscal powers to the European Union? SCHAEUBLE: You are right. You know the Germans believe in courts. And they believe especially in the constitutional court. And since political class is not very well estimated, constitutional courts is, even more than the German Bundesbank. And -- (chuckles) -- such a high expectation. And all this is always a temptation, even for judges. And of course, it's sometimes not really -- not really -- but it's a -- it's a long-term -- the constitutional court is very -- you -- we all can trust that he will rely on what is the constitution of Germany. And the constitution of Germany gives the constitutional court a special role but only on behalf of the constitution. And their -- and the constitutional court and the judges know, in German constitution, since the very beginning of -- 1949 is -- Germany want to be a member of a united Europe. It was in the very beginning of the Grundgesetz in '49 already. And therefore we have a clear basis in our constitution to transfer sovereignty towards European institution. That's not disputed by a constitutional court. So yeah, they will say they look very carefully vis-a-vis respect in all decisions of our constitution, the rule of our parliament, because constitutional court is saying as long as we have no fiscal policy in Europe, common fiscal policy, the final decision on budget has to be through the German parliament, and that must not be -- (inaudible). Therefore, German parliament has to be involved in European decisions. Without, it's not possible. Therefore a program for Cyprus needs approval before decide -- being decided formally the approval by German parliament, but we get it. And I think this decision is right. Otherwise, we should maybe have to change our constitution. Somebody we will do if needed. Up to now our constitution is fine to this way of European politics we are -- we are doing. Therefore, now our constitutional court is only a challenge for politics to -- and politicians to understand. We -- it's not a good way if public only trust judges. It's good that it trust judges, but it would be better if they even have a minimum of confidence to political leaders as well. (Laughter.) We are working on it. QUESTIONER: Thank you. (Inaudible) -- HILLS: Please. QUESTIONER: Doug Rediker at the Peterson Institute for International Economics. If we go back to banking union as the next, most important step towards, ultimately, potentially fiscal or political union, and if you look at the necessary components for this single supervisory mechanism, which you reference as an imminent step, but then the resolution mechanism and the deposit guarantee schemes that could be part of that broader banking union, it all really relies on the integrity of the bank balance sheets that are going to be subsumed within this union. So my question to you is, right now, whether it is considered the legacy asset issue or otherwise, there is a disconnect between the interest of national supervisors to dig into and disclose fully the asset quality issues that may be within their banks and the broader banking union, which might share that burden that would otherwise be borne by the national governments if they disclose the poor quality of those balance sheets before it becomes harmonized. How do you, as the strongest balance sheet in the European Union, end up reconciling that? Because the EBA doesn't have the access to the actual balance sheets. The ECB doesn't. It's still at the national level. To get real banking union, you need -- you need the bank balance sheets to be transparent and believable, and we're not there yet. SCHAEUBLE: We, in the single supervisory mechanism -- we have decided that a defined figure of banks in all European member states will be supervised not any longer by national supervision but by the single supervisory mechanism. And they will have this look on the balance sheet, which EBA does not have on behalf of the given situation of the -- and the legal basis and the -- extralegal basis of the European Banking Authority, but the single supervisory mechanism is -- will have. And it's a very complicated issue of legacy. We have -- we discussed it broadly in Dublin one week ago in our informal meeting in Dublin, and I can tell you -- not to mention all the details now, but I can tell you we are on the way, and we will find it and -- (inaudible). By the way, I will like to repeat, don't expect that as long as the situation in European treaties is as it is -- it's a given situation -- that the banking -- European banking union is the same like as the Federal Reserve in U.S. We -- Europe remains a very strange and very specific construction of combination between European authority, with a lot of competences, and member states which remain partly sovereign, not on -- not hundred percent. European member states -- no European state is really sovereign. It -- if you would explain in some -- American political leader, they would never -- they would never understand it, how it -- if this would -- could work. But Europe is of course totally different, and in Europe we need this new form of governments, and we all agree on this, in the principle. In details, we fight a little bit. But it works, and therefore the European banking union will rely on them. We will have -- and in European law, Basel III implemented. By the way, we would implement this this year, I hope U.S. as well. Then we will have the single supervisory mechanism and European restructuring mechanisms as well, and European (lets its license ?) for deposit insurance, and at the end we also have of course national responsibility. We'll say to the hierarchy -- they'll remind the hierarchy of liabilities, because otherwise we create the wrong incentives. These incentives -- if you tell a member state, don't care; Europe will take the bill -- by the Germany, will take the bill -- it's the wrong incentive. You have to tell them, no, no, no, the -- be careful. You take part of the risk. And if that is not enough, at the end, in the hierarchy, European -- we have the European Stability Mechanism, as ever we will have it -- and we have the ECB. By the way, we -- someone who follows the discussion in Germany may have news that there was a huge discussion on the so-called TARGET2s. They have (happened ?) in the last couple of years. What is it -- what is the proof? That the imbalances in competitiveness are going down. We have a lot real progress in the real figures. QUESTIONER: Ambassador -- SCHAEUBLE: He was ambassador when I was member of Kohl government. QUESTIONER: Yeah. You -- HILLS: But now you leave without him asking you a question. QUESTIONER: -- you helped me solve a lot of problem. SCHAEUBLE: (Chuckles.) Yeah, we did, eh? QUESTIONER: We did. SCHAEUBLE: In times you can -- you mentioned today -- Cold War. QUESTIONER: Right. SCHAEUBLE: Exchange of -- QUESTIONER: We'll have a second session after this one to talk about that. (Laughter.) HILLS: You only get one, Richard. QUESTIONER: Yeah. Richard Burt, McLarty Associates. SCHAEUBLE: Yeah. QUESTIONER: Mr. Minister, I think I speak for a lot of people in this room, actually, that recognize the role that you and the chancellor have played in exercising leadership on the -- on the whole eurozone/euro crisis issue. But this is not solely a German responsibility. And so my question is really about two partners of Germany. One, France -- one has the impression from Washington that the French don't necessarily have the political or the economic strength to continue to be a close partner of Germany in the construction of the -- of Europe. And secondly, there's the question of Britain. Now, they're not a member of the eurozone, of course, but in talking about the evolution and the future of Europe, the British obviously have a role to play. But are the Europeans and are the Germans prepared to make the concessions necessary to keep Britain in the EU? SCHAEUBLE: Look -- (chuckles) -- that's Europe. The answer is that's Europe. As a German -- member of German government, I am condemned -- (laughter) -- to cooperate closely with France. I will tell you -- (laughter) -- you can't -- no, I -- that's not a joke. Not a joke. It's European history. It's the core of European integration. You can't -- (inaudible) -- once I had a discussion with a good friend as -- actually, he's prime minister in Finland, Jyrki Katainen. He told me, oh, Wolfgang, shouldn't we divide the eurozone? I said, oh, Jyrki, how? Well, how do you divide? Oh, in a northern part and a southern part. It's quite interesting, but please answer one question: In which part is France? (Laughter.) He thought about it a minute, and then he said, you are right, we can't. (Laughter.) If you look at a map of Europe, it's -- the answer is clear. Cooperation between France and Germany is a key for European integration. It was the very beginning after World War II, and it remains. Therefore when Pierre Moscovici, my French colleague, came to Berlin the day after he was appointed, we told, oh, what a silly decision of French voters to vote for a Socialist government. And he said, yes, and it's the opposite in Germany -- (inaudible) -- he would never vote for my party. I said, yes, but we will have to work together. We are condemned to work together. We do it. Therefore that's what the French and the German know. So I just have mentioned that France has -- you have to understand. You have to understand Germany, which is maybe the most difficult thing. You have to understand France. And in France, it's difficult to make social reforms. It's -- to -- it's really difficult. It's easy to give the advice. You have to do, ba-ba-ba-ba-ba-ba. (Laughter.) You can make a lot of jokes, but it's France. France is a wonderful country, but by the way -- well, yes -- don't -- it's -- it make -- look, if you look at foreign policy, security policy, you can see it. Europe is as it is. Germany is as it is, and then much more, some ask us for what we never can do, because we have our history, France its own. So it's therefore we have to work on this basis. Italy is crucial for European integration as well. But without France, it will never happen. So we (will do it ?). So of course I would prefer to have a stronger position of France, actually. But by the way, I am optimistic that they will -- they have -- they got it. They are doing a lot of making reforms. They implemented some legislations. They make a lot of decisions. They would not have campaigning for Hollande when they campaigned, but now they have to implement, to cut expenditures. They will reduce their deficit by cutting expenditures, and the relation is two-third cutting and one-third raising taxes. Maybe you can send from -- someone from the negotiation teams on the Hill to Paris to help them to find current solutions and to overcome the (difficult ?) position. So U.K. -- of course it would have been better from the very beginning if U.K. have -- would have defined itself as part of the European continent. But U.K. didn't. (Chuckles.) Churchill gave the founding speech -- delivered the founding speech in Zurich. You know this. But of course, he mentioned continental Europe, not U.K. If you look at the real situation in -- it's fine to criticize David Cameron, but if you look at the real situation in the majority party -- and he has to be careful. I think it's -- and my answer's always quite easy. The more we succeed, for example, in our common European currency, the sooner Europe -- U.K. will join. The more we have difficulties, there will be a little bit -- they have a major -- (they suffer ?) a major discussion in British society. You can follow it again and again because it's -- even history has changed. And France and U.K. had to learn in a much more different way the change of history after World War II. The Germans had nothing to learn. We were by then -- because it's totally different. I pay respect to France and U.K., and so this is why Europe is complex, but nevertheless, we (can own it ?). If you look at the role of Poland, for example, the role of the new member states in Europe, it's a real success story. Don't underestimate. Of course, you can see, even in member states, some heritage from former times, in Hungary as well as in Czech Republic or in Slovakia and so on. But having said this, if you look what has been achieved in separating Czechoslovakia in a peaceful way, no one would have expected that it would be doable. They did it, and now Czech Republic and Slovakia are very close friends, close friends. And even the former Yugoslavia, after all this terrible war in the '90s, we -- is on the way to achieve -- (inaudible). Europe is a success story, but it remains very complex, complicated, but attractive. HILLS: Minister, we could keep you here all afternoon. We're enthralled. All I can say is we're going to invite you back and hope you will come. Thank you so much. Join me in thanking the minister. (Applause.) CARLA HILLS: Well, ladies and gentlemen, I'm Carla Hills. I'm co-chair of the Council on Foreign Relations. Thank you so much. Join me in thanking the minister. (Applause.) Read more November 25, 2008 McKinsey Executive Roundtable Series in International Economics: Beyond Firefighting: Rethinking Financial Market Regulation (Audio) Listen to experts including former Securities and Exchange Commission Chairman William Donaldson discuss what implications the 2008 financial crisis is likely to have for securities regulation. Transcript January 6, 2010, Washington D.C. C. Peter McColough Series on International Economics: Reforming Over-the-Counter Derivative Markets The C. Peter McColough Series on International Economics is presented by the Corporate Program and the Maurice R. Greenberg Center for Geoeconomic Studies. Terms of Use: I understand that I may access this audio and/or video file solely for my personal use. Any other use of the file and its content, including display, distribution, reproduction, or alteration in any form for any purpose, whether commercial, non commercial, educational, or promotional, is expressly prohibited without the written permission of the copyright owner, the Council on Foreign Relations. For more information, write [email protected].

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Raymond James Reps Reflect on Women and the Industry By Janet Levaux October 12, 2012 • Reprints Boosting the number and role of women is an objective of Raymond James and other firms in the wealth management business. But how do you make that happen? During the 18th annual Women’s Symposium hosted by the firm in St. Pete Beach, Fla., a roundtable of six advisers discussed that issue with AdvisorOne over lunch on Thursday. Of Raymond James' 6,000-plus advisers, about 14% are women. In the first year of its training program for new reps, the Adviser Mastery Program, 35% of its participants were women. READ MORE about women leaders in the credit union industry. An important part of supporting women in the business, they say, is having the right culture. This includes taking steps to support female advisers and other women throughout the firm and doing as much as possible to encourage the formation of adviser teams. “I am pleased with the program that — through a system of competency points — recognizes support staff,” said Kathleen Crowley of Raymond James Morgan Keegan in Panama City, Fla. “The culture is very different from what I experienced in the past at some places.” “I see it as family friendly and as more than a corporation,” added Cheryl Peschke, an employee adviser with Raymond James & Associates (RJA) in Houston. The support advisers need in the field, they note, can mean shaking things up a bit at headquarters — which Raymond James has been willing and able to do — and talking up such challenges openly. “At the corporate level, some people had gotten very comfortable in their jobs, but they had to improve. So Raymond James is taking these employees that are seen as “nice but …” and moving some along,” said Margaret Starner with RJA in Coral Gables, Fla. “It’s uplifting to those of us looking for [top] service. And we had heard about what Raymond James was doing, but then we heard more about it here today with coherency and continuity,” Starner said. “It was well articulated, and it never crossed my mind that it would be discussed like this.” Others agree. “The fact that it was spoken about is very good,” said Rachel McNeil, an adviser and participant in the company’s training program in St. Petersburg, Fla. “It’s not about changing the culture but addressing these issues.” Starner sees the move to boost service and performance at the corporate level as a renewed drive for accountability led by CEO Paul Reilly. “It’s a big morale lifter,” she added. For those joining the firm, these measures translate into positive results. “I was afraid when I would dial the 800 number at some other firms,” said Sarah Komischke, who is part of the bank channel and works at the United Nations Federal Credit Union. “Raymond James is very helpful in the back office, which is a very positive surprise,” said the ex-JPMorgan Chase and Merrill Lynch employee. “You get an answer very quickly.” Glass Ceiling? As for women having the influence and presence they would like to have in wealth management, “We and the industry are not quite there yet, but we hope to get there,” said McNeil. And the firm they’re with supports this effort, they add. “We see with what [RJA President] Tash Elwyn and others are saying that there is big commitment to it,” explained Starner. Do they feel, as women, that they are an equal part of the Raymond James organization? “We have brought that up every year,” said Starner, whose practice manages $350 million in assets. “And there are women executives, like Bella” Loykhter Allair, head of technology and Operations for RJA. “The leadership wishes we had more [women in management] and aspires to that goal,” the veteran adviser noted. “This is a situation common to all firms and to the industry.” When it comes to increasing the number of women advisers in the business, some female reps say this can best be supported through team building and succession. “My theory is that women are more comfortable giving advice if they feel they have a high degree of competency,” said Starner. If they know they are set to be part of experienced teams, “Women will be more comfortable joining and being advisers.” McNeil says that is certainly the case for her. “As part of my training, I joined a team one year ago,” she said. “I decided I wanted to join an established group and not go out on my own.” For her—as well as for other advisers, young and old alike—it’s an issue of watching their own finances while striving to help their clients do the same. “It’s tough to be out on your own, in terms of financial stability. For me, it’s helpful that I can join a team through the training program.” The team support can also help advisers better serve clients, other reps say. “Many young people have not had the life experience of going through different markets and seeing lots of volatility,” said Jodi Perez, an affiliate of Raymond James’ independent channel in Land O’Lakes, Fla. “It’s a good choice to join a team.” Generally speaking, women know they can’t do everything and be experts of everything, Perez says. And like their clients, they want to have backup at all times. With the market’s low returns today, “We are busier than ever. This is tough,” said Starner. “But it’s an opportunity, and we don’t know how long this opportunity will last.” This article was originally posted at AdvisorOne.com, a sister site of Credit Union Times. Page 2 of 2 « Prev 3 Useful Tips for On Camera Appearances for Credit Union CEO’s Mar 02 | Candice Reed

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Members Choice of Central Texas Starts Fund for West VFD April 29, 2013 • Reprints The $160 million Members Choice of Central Texas Federal Credit Union in Waco, Texas, has created a fund to help West Volunteer Fire Department rebuild in the wake of the tragic fertilizer plant explosion on April 17. The blast killed 14 people, including volunteer firefighters. Funds will be used to help the devastated department replace equipment and rebuild. “No change is too small, no bill too large. The first responders in West are heroes, and their selfless service to the entire community is inspirational,” said Members Choice President/CEO Don Cox, The credit union is encouraging its members to donate at any of its three branches in Waco. TDECU also has helped in the relief effort for the community of West, located a 20-minute drive north of Waco. « Prev

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Home > Bank Robbers Beware Each September, Northfield, Minn., celebrates the foiling of the legendary James-Younger gang’s 1876 raid on the First National Bank. Citizens of Northfield banded together to stand up to and repel the assault, and historians record that a bank employee—killed in the raid—had refused to open the safe, which may not have even been locked. Bank security has changed in many ways since those rough-and-ready days: structures, systems, materials and strategies have evolved with the passage of time. And while banks and other financial institutions most often retain their traditional appearances with thick steel vault doors and solid, substantial walls and windows, security has gone high tech and beyond. In place of traditional steel padlocks are electrical systems. Technologic advancements, in the form of modular vault walls, bullet-resistant acrylic panels and cameras that can be programmed to focus on (as well as store) all that transpires within the building and the protected premises, show that financial institutions are doing their best to keep pace with the demands of the times and an often more sophisticated type of thief. About 45 miles north of Northfield, in Minneapolis, Franklin National Bank is in an expansion mode from its origins as a neighborhood bank south of the city. It recently decided to build a new “flagship branch” in what is known as the warehouse district, adjacent to the city’s center. Part of that successful effort (the building won a local business publication’s Best in Real Estate 2001 award for redevelopment of a space under 30,000 square feet) was, of course, careful attention to security. Security Products Co., a 32-year-old business located in nearby Blaine, and a dealer for Hamilton Safe in Fairfield, Ohio, provided the security installation for Franklin National Bank. Shingobee Builders of Loretto, also in Minnesota, was the general contractor on the project. No banker’s hours Don Ayd was Security Products Co.’s manager on the job. He said that, in general, working with a bank means meeting the challenge of the institution’s hours of operation, not only during construction, but as the institution requires ongoing service. “We offer traditional security products and services such as vaults, safes, safe deposit boxes and alarms,” he said. “Different banks have different requirements, often depending on such things as card access to vault doors, day gates, etc.” “We do a lot of remodels,” he continued, “and banks want to be open, so we have to work after hours and on weekends, making staffing a challenge.” Perhaps even more than other clients, banks require prompt, 24-hour service. Security Products Co. meets that need with a staff of some 30 technicians among its 60-plus employees. Security Products Co. provides a warranty on the products it installs and maintains the installation with a service contract. Since they are a Hamilton dealer, Ayd pointed out that most of the equipment they install, including alarms, is from Hamilton. The video cameras they install are from Sony Electronics. Cable is “always plenum cable,” he added, for fire safety and the company shops for that necessity from local distribution. Because of wiring needs, one of the trickiest parts of meeting a bank’s security requirements is getting the door strikes on the vault doors properly located. “Getting the wire into where the door strike is laid out demands expertise in that area,” he said. Installing the day gates (the secondary access to a vault, after the thick steel door) is also a matter of importance and requires getting the wire to the strike and also, to system control and power. Day gates are not always the traditional units made of bars, Ayd said, but can be acrylic panels, offering a more modern, aesthetic appearance, another plus for the banking facility and its customers. In fact, the days when a bank prided itself on the image of being impregnable have slipped into history, too. Building design may have to conform to neighborhood code or the bank might have a corporate “look” that it needs to meet. Security with style Appearance is certainly more important now than it was 30 years ago, he pointed out. Bullet-resistant acrylic is used more often because it doesn’t discolor and provides a softer look. In the same way, banks can choose from colors of steel, polished stainless or, at less cost, painted steel for such installations as safe deposit boxes. If a client wants it, Ayd said, a vault door can be fabricated from steel, engraved and the engraving filled in with black. The Franklin installation, under the direction of Minneapolis-based HTG Architects, used dark brick to blend the outside of the structure with the surrounding warehouse buildings; the interior, however, made use of curves, soffit lighting and upholstered wooden furniture for a feeling of warmth and comfort. Ayd said that many banks are taking advantage of five-inch-thick modular vaults; using these panels, the size of the vault can be expanded if the need arises. The bank’s video system employs the latest technology, Ayd said, with digital signal processing color cameras that record images on a hard drive for efficient and instant access and playback. “We handled the camera work, with digital motion detection in specific areas, such as around the vault door, programmed to red-flag unusual (such as after-hours) activity. The drive-through video is remote and two-way.” Bank security has come a long way since the days of the James-Younger gang’s antics and ultimate demise. It is a high-tech solution that requires an experienced contractor and the latest products to get the job done right. Source URL: http://www.ecmag.com/section/systems/bank-robbers-beware

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Oil Prices Climb on Geopolitical Tensions Brent crude oil rose above $109 per barrel on Thursday as escalating tensions between Syria and Turkey raised more concerns over the security of oil supplies from the Middle East. Turkey's military hit targets inside Syria for the second day on Thursday after a mortar bomb fired from Syrian territory killed five Turkish civilians, marking the most serious cross-border escalation of the 18-month-old uprising in Syria. Turkey's government said "aggressive action" against its territory by Syria's military had become a serious threat to its national security and sought parliamentary approval for the deployment of Turkish troops beyond its borders. Traders said the violence raised concerns about the stability of the whole of the Middle East at a time when Iran is at loggerheads with Israel and the West over its nuclear programme and both sides have threatened military action. Brent crude for November rose to a high of $109.61, up $1.44, before returning to trading levels of around $109.50 by 1130 GMT. The contract fell to an intra-day floor of $107.67 on Wednesday, the lowest since Sept. 20. U.S. light crude oil for November rose 70 cents to $88.84 a barrel, after dropping to its lowest since Aug. 3 in the previous session. "The hostilities between Syria and Turkey reinforce supply fears, as a number of pipelines cross the region," said Carsten Fritsch, oil analyst at Commerzbank in Frankfurt. "We therefore envisage prices recovering provided that the general market environment does not deteriorate." "OVERSOLD" On Wednesday, Brent dropped 3 percent and U.S. crude fell 4 percent as fears a delayed recovery in China and recession in the euro zone would limit energy demand, but futures began to recover during Thursday's session. "It (the market) was oversold and then ratcheted up by tensions between Turkey and Syria," said Christopher Bellew, a broker at Jefferies Bache. "It was quite a steep fall, so it could go back up to levels we saw two days ago." The skirmishes between Turkey and Syria added to worries that oil supplies from the Middle East, a major energy exporter, could be disrupted if tensions escalate. The dispute over Iran's nuclear programme has triggered tough sanctions from the United States and the European Union and plunged the Iranian rial to a record low this week. Adding to the tensions is social unrest in Iran over the weakening currency, another blow to citizens already reeling under the impact of the sanctions. The euro rose to a two-week high against the yen, gold gained for a fourth day and copper rallied. Stock markets and the euro rallied ahead of U.S. jobs figures on Friday that were expected to show the world's biggest economy recovering slowly. Jobs numbers from the U.S. Labor Department are expected to show a slight improvement from the previous month. Employers are expected to have added 113,000 jobs to their payrolls, an increase from 96,000 in August, with the unemployment rate edging up by a tenth of a percentage point to 8.2 percent, according to a Reuters survey. Economic worries remain at the forefront of all asset markets this week as a series of surveys across the world pointed to increasing weakness, casting doubts over the still-fragile recovery of the global economy and oil demand.

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All Topics Fund launches & closures New funds survey Hedge fund launches make a comeback, with 72 new funds raising $14 billion By Eric Baum If there were doubts that investors would continue to throw money at hedge funds after Amaranth Advisors and MotherRock imploded with more than $9.5 billion of assets last year, a bumper crop of new fund launches has put those concerns to rest. New launches in the first two quarters exceeded the number of new funds and assets raised during the same period in 2006, and nearly matched what was considered a banner year in 2005. At least 72 new funds launched with $14 billion Signup

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HOME > WORLD Fate of the U.S.-Indian Partnership Until the late 1990s, the United States often ignored India, treating it as a regional power in South Asia with little global weight. India's weak and protected economy gave it little influence in global markets, and its nonaligned foreign policy caused periodic tension with Washington. When the United States did concentrate on India, it too often fixated on India's military rivalry with Pakistan. Today, however, India is dynamic and transforming. Starting in 1991, leaders in New Delhi--including Manmohan Singh, then India's finance minister and now its prime minister--pursued policies of economic liberalization that opened the country to foreign investment and yielded rapid growth. India is now an important economic power, on track (according to Goldman Sachs and others) to become a top-five global economy by 2030. It is a player in global economic decisions as part of both the G-20 and the G-8 + 5 (the G-8 plus the five leading emerging economies) and may ultimately attain a permanent seat on the United Nations Security Council. India's trajectory has diverged sharply from that of Pakistan. With economic growth, India acquired the capacity to act on issues of primary strategic and economic concern to the United States. the United States, in turn, has developed a growing stake in continued Indian reform and success--especially as they contribute to global growth, promote market-based economic policies, help secure the global commons, and maintain a mutually favorable balance of power in Asia. For its part, New Delhi seeks a United States that will help facilitate India's rise as a major power. Two successive Indian governments have pursued a strategic partnership with the United States that would have been unthinkable in the era of the Cold War and nonalignment. This turnaround in relations culminated in 2008, when the two countries signed a civil nuclear agreement. That deal helped end India's nuclear isolation by permitting the conduct of civil nuclear trade with New Delhi, even though India is not a party to the Nuclear Nonproliferation Treaty. Important as the agreement was, however, the U.S.-Indian relationship remains constrained. For example, although U.S. officials hold standing dialogues about nearly every region of the world with their counterparts from Beijing, Brussels, and Tokyo, no such arrangements exist with New Delhi. The future scope of the U.S.-Indian relationship will depend, then, on choices made in both Washington and New Delhi: the United States looks to India to sustain its economic and social change while still embracing a partnership with Washington, and India looks to the United States to respect Indian security concerns. And the countries will need to carefully manage looming disagreements between them, including on Afghanistan, Pakistan, and China. A TRANSFORMED RELATIONSHIP U.S. President Barack Obama and Indian Prime Minister Manmohan Singh can pursue an enduring partnership because they do not face any of the three principal obstacles that constrained U.S.-Indian cooperation in the past: Cold War politics, a stagnant commercial relationship, and disagreements over India's nuclear program. During the Cold War, India's policy of nonalignment struck many in the United States as tantamount to alignment with the Soviet Union, especially after the Indian-Soviet treaty of friendship was signed in 1971. And nonalignment was as deeply rooted in India as it was lamented in Washington: the policy dated back to India's first prime minister, Jawaharlal Nehru, who viewed nonalignment as a way for India to exercise international leadership after the end of British rule. But after the collapse of the Soviet Union--one of its largest trading partners and its primary security partner--India began to reassess its priorities, and opportunities emerged for greater cooperation with the United States. Yet even after India began to abandon nonalignment, there was little economic exchange between the two countries. Until the reforms of the 1990s, India was not well integrated into the global economy. It pursued protectionist policies, such as bars to foreign investment in many sectors, that made trade with the United States difficult. As recently as 2002, Robert Blackwill, then the U.S. ambassador to India, complained that U.S. trade flows to India were as "flat as a chapati" (chapati is a thin Indian bread).For all of India's growth in manufacturing and increased trade volume over the 1990s, the country remained disconnected from the global supply and production chains that linked so many Asian economies to the United States. But further reforms in recent years have made India one of the United States' fastest-growing commercial partners. Annual two-way trade more than doubled between 2004 and 2008, from just under $30 billion to $66 billion. And investment has begun to flow both ways. According to the Office of the U.S. Trade Representative, Indian direct investment in the United States reached $4.5 billion in 2008, just over a 60 percent increase from 2007. Still, the thorniest obstacle to U.S.-Indian cooperation was India's nuclear program. In the years after India's first nuclear test, in 1974, Washington imposed sanctions on India that severely restricted its access to technology, fuel supplies, and technical assistance in the nuclear field. After India's subsequent tests, in 1998, the United States cut off direct foreign assistance, commercial export credits, and certain technology transfers. As U.S.-Indian relations began to warm in subsequent years, Indians of all political persuasions condemned the United States as hypocritical for seeking a strategic partnership with India while simultaneously targeting it with punitive sanctions. the United States abandoned this approach during George W. Bush's first term and had completed a total reversal by the end of his second, when the civil nuclear agreement lifted restrictions on nuclear commerce. Although negotiated by a Republican administration, the deal passed a Democratic-controlled Congress with overwhelming bipartisan backing (including the votes of then Senators Joe Biden, Hillary Clinton, and Obama), demonstrating that support for strengthened U.S.-Indian relations extends across party lines in Washington, much as it does in India. Also bolstering the relationship are both American and Indian businesspeople, the nearly 100,000 Indian students currently studying in U.S. schools, some three million Indian Americans, and the tens of millions of Indians with relatives in the United States. Through their civil nuclear negotiations, the United States and India developed unprecedented habits of cooperation. To earn the approval of the nearly 50 other countries on the International Atomic Energy Agency's Board of Governors and in the Nuclear Suppliers Group, the United States and India coordinated more closely than ever before on their diplomatic and political strategies. Partly as a result, officials in Washington and New Delhi can now work better together on vital issues such as counterterrorism, defense, and intelligence cooperation--as demonstrated by the joint U.S.-Indian response to the November 2008 terrorist attacks in Mumbai. Still, a number of hurdles remain before the United States and India can build a more enduring, strategic, and global partnership. First, India needs to bolster its emergence as a major power--not least by sustaining high rates of economic growth. This will require India to further open its economy to competition and investment and advance ongoing reforms aimed at relieving inequality, expanding the middle class, and strengthening the country's physical infrastructure. Second, India's emerging global influence will be sustainable only if India develops new doctrines and diplomatic capacities. The country has moved beyond nonalignment, to be sure, but has not yet coalesced around a new foreign policy vision. And although New Delhi may ultimately settle on a strategy that is conducive to a more open and global partnership with the United States, that is not assured. Third, the United States needs to be sensitive to Indian concerns in a number of areas that directly affect Indian interests. Differences loom between Washington and New Delhi regarding U.S. policy toward Afghanistan and Pakistan, China, climate change, and other issues. Managing such disputes--by reaching agreement or at least by mitigating the effects of disagreement--will be vital to effective cooperation. INDIA'S PIVOTAL TRANSFORMATIONS Just as Indian reforms in the 1990s paved the way for the recent transformation of U.S.-Indian relations, Indian policy choices in the coming years will shape both the country's rise and its relationship with Washington going forward. The most consequential factor of all may be whether India grows economically and integrates further with the world's other major economies. Unless it does so, India is unlikely to exert decisive influence on international economics or politics. It is fitting, then, that Singh's government--which earned a fresh mandate and expanded its parliamentary majority in elections last year--is focused almost entirely on domestic considerations. The government's top priority is to restore the nine percent annual growth rate that India enjoyed before the recent global economic crisis. As the crisis was unfolding, many Indians argued that their economy was safely decoupled from global trends because it did not depend heavily on foreign demand for Indian exports and its relatively closed financial sector had little exposure to toxic assets. But during the crisis, exports collapsed, capital left the country, and corporate India lost access to many sources of overseas financing. Although Singh's government adopted a fiscal stimulus plan in December 2008 that included heavy capital and infrastructure spending, Indian growth slowed from nine percent in 2007-8 to 6.7 percent in 2008-9, which is around where it is likely to remain until at least 2011, according to the Organization for Economic Cooperation and Development. To win votes and broaden public support for growth-inducing reforms, India's government is seeking to expand various welfare measures. In the past, Indian voters have punished both major political parties for enacting reforms that appeared to benefit elites disproportionately. This was one reason why the Indian National Congress, after coming to power in 2004, pursued expanded welfare programs alongside measures to increase economic growth, especially in rural India. When the party won reelection in 2009, many commentators credited the Congress-led government's rural employment guarantee and debt waivers for farmers as the principal reasons for its larger than-expected margin of victory. Now, party leaders are all the more dedicated to raising the incomes of poor and rural Indians: the government's first postelection budget extended the rural debt waiver, boosted spending on the ongoing rural employment guarantee by 144 percent, and hiked the rural infrastructure program by 45 percent. To facilitate the kind of growth it seeks, India is also improving its physical infrastructure. Just two percent of Indian roads are highways, even though most freight and nearly all passenger traffic are carried by road. Rutted highways, old airports, decaying ports, and chronic electricity shortages weaken nearly every aspect of India's economy: the roads between India's four largest cities are poor, New Delhi's showpiece high-tech district of Gurgaon has gone dark and hot, and power for lights and air conditioning often fails even in state capitals. For India to sustain high GDP growth, Singh told Parliament in 2008, it will have to increase its electricity generation by eight to ten percent annually. By 2012, the government aims to increase infrastructure-related spending from four percent of GDP to nine percent, on par with the rate that gave China the world's third-largest road and rail networks. India's plans include completing construction on the Golden Quadrilateral, a multibillion-dollar superhighway linking New Delhi, Kolkata, Chennai, and Mumbai. India's success or failure in developing its physical infrastructure will say much about its broader potential, because the stakes are high and the obstacles are many. State seizures of land are difficult, cost overruns and political horse-trading are endemic, and violence between the dispossessed and the land-takers is increasingly common. A further impediment to India's economic ambitions is social: although the country has world-class talent in some areas, such as information technology, it still faces daunting challenges in its labor market and in its education system. Indian labor is disproportionately rural and heavily concentrated in unorganized activities and sectors. Manish Sabharwal, chair of the country's leading temporary-employment agency, has described a series of transitions that would strengthen the Indian work force: from farm to nonfarm, rural to urban, unorganized to organized, school to work, subsistence to a decent wage, and job preservation to job creation. But whether these transitions take place will depend in part on India's education system. Demand for education, especially from the growing middle class, vastly outstrips supply, and 160 million Indian children are out of school. And a UNESCO index recently ranked India 102 out of 129 countries on the extent, gender balance, and quality of its primary education and adult literacy. Thus, as Europe, Japan, and others pay a price for their aging work forces, India risks missing the opportunity to benefit from its significantly younger population. Finally, there is the challenge of domestic security. The November 2008 attacks in Mumbai dominated headlines around the world, but other major Indian metropolises were bombed throughout 2008: Jaipur in May, Ahmadabad and Bangalore in July, and New Delhi's most famous shopping area, Connaught Place, in September. Indian security is challenged not only by the threat of terrorism--which often emanates from inside Pakistan--but also by the domestic insurgency of the leftist Naxalites. India's effectiveness in combating these threats is weakened by the highly federalized structure of its government. Indian intelligence and law enforcement have weak traditions of cooperation; policing is largely a state, not a federal, matter; and there is insufficient coordination among the states. The government is working to centralize aspects of the security system, promote coordination, expand personnel, and boost budgets, but the situation is improving only slowly. Although these security threats could greatly affect India's fate, its economic and social choices will be the principal determinant of its success. And choices about economics, infrastructure, and human capital, in turn, will largely determine India's capacity for global influence and thus the potential scope of U.S.-Indian cooperation. BETWEEN G-20 AND G-77 Ever since India's growing economic weight began yielding new strategic possibilities, Indians have been debating their evolving interests. One still unresolved question--which is politically explosive to many in India--is how best to pursue partnerships with the advanced industrial countries, especially the United States. The issue of climate change has brought this debate to the fore. In a memo leaked last October, India's environment minister, Jairam Ramesh, argued that India should curb its emissions without regard to whether advanced industrial countries provide India with the technology and funding to do so--a reversal of long-standing Indian policy. The reason, said Ramesh, was that India should act "in self interest" and "not stick with G77 [a group of developing countries, including India] but be embedded in G20 [a grouping of the world's major economies, also including India]." The memo prompted a political firestorm. Although the interests of a more powerful and economically integrated India are increasingly overlapping with those of the United States and other G-20 countries, many Indians do not believe that their interests lie primarily with the world's developed countries. Faced with a backlash from politicians, including some of his colleagues, Ramesh backtracked at the Copenhagen summit on climate change in December, and Indian negotiators aligned themselves closely with China and other G-77 partners. The 2008 civil nuclear deal with the United States ignited even broader debates about what sort of international company India should keep. As Shiv Shankar Menon, who served as Indian foreign secretary during the U.S.-Indian nuclear negotiations, said in 2009, the deal was "about the merits of trusting the [United States] or the consequences of a particular line of policy rather than about the substance of the agreements themselves." India's Communists opposed the deal largely for this reason; Prakash Karat, the head of India's leading communist party, argued in 2007 that as a result of the deal, "India would be locked into a strategic tie-up which would have a long lasting impact on India's foreign policy and strategic autonomy." Even some stalwarts of the ruling Indian National Congress were skeptical of the deal. Yet in order to overcome its nuclear isolation, the Congress-led government moved forward with the agreement, aligning itself overtly with the United States. Indeed, many of India's recent foreign policy decisions have been unprecedented: It has backed three U.S.-supported resolutions against Iran in the International Atomic Energy Agency and is enforcing UN Security Council sanctions against Tehran. It stopped a North Korean ship in Indian waters in August 2009 and inspected its cargo, a move supportive of U.S. (and United Nations) nonproliferation objectives. It is the fifth-largest donor of reconstruction assistance to Afghanistan. It is participating in nearly every U.S.-supported multinational technology initiative for tackling climate change, including projects on hydrogen, carbon sequestration, and nuclear fusion. It has harmonized its export controls with the guidelines of the Nuclear Suppliers Group and the Missile Technology Control Regime and has committed to adhere to future changes in these guidelines. It provided tsunami relief to Indonesia in 2004 through an ad hoc naval partnership with the United States and two of Washington's closest military allies, Australia and Japan. Its military has conducted exercises with every branch of the U.S. armed services. And it has engaged in trilateral military exercises with the United States and Japan, despite Chinese protests. For a country that long cherished its nonalignment policy, such public associations with the United States represent a break from long-standing reflexes. Whether the break will be enduring will depend on the outcome of wider debates over India's foreign policy vision. A TALE OF INFLUENCE India's global aspirations are constrained by its geography. Although India is the most stable country in South Asia, events in less stable neighboring countries threaten to occupy its attention and derail its aspirations: Pakistan is confronting institutional weakness and growing extremism;Nepal may fail as its elites jockey for power and struggle to integrate former Maoist insurgents into the political mainstream; Sri Lanka is struggling with ethnic and constitutional challenges; and Bangladesh and Myanmar (also known as Burma) are yielding unwelcome exports, such as economic migrants, refugees, and extremists. India's relationship with Pakistan is particularly worrying, as it has deteriorated significantly in recent years. In the early years of this century, India made substantial strides in its relationship with Pakistan, including a cease-fire in 2003, enhanced trade and travel links, and a back-channel dialogue with the government of Pervez Musharraf that arrived at broad parameters of understanding on the most contentious issues, including Kashmir. But politics in both countries, especially Pakistan, were not conducive to normalizing relations, much less reaching a final peaceful settlement. Major terrorist attacks on India planned in Pakistan, particularly the November 2008 attacks in Mumbai, soured the atmosphere for negotiations. And today, political power in Pakistan is splintered, and extremism is spreading to major Pakistani cities from the tribal areas bordering Afghanistan. Thus, even as India's interests increasingly reach beyond South Asia, these dangers may force New Delhi to focus less on global issues than on priorities closer to home. To become a bigger player on the world stage, New Delhi will need to achieve two major goals: first, break the confining shackles of South Asia and become a truly Asian power that is integrated into the East Asian economic system and influential throughout the wider region; and second, project its power and influence globally, whether by assuming a role in protecting the global commons, shaping international finance, becoming a more significant aid donor, or leveraging its seat in the G-20 and other leading international institutions. India is already beginning to meet the first challenge. Having played an insignificant strategic and economic role in East Asia from the 1960s through the mid-1990s--partly because it rejected the successful model of export-led growth that linked other Asian economies to the United States during the Cold War--India is now more involved in East Asia. One reason for this is that many in the region (and in India) are wary of China's growing strength and view a large, wealthy India as a buttress for the region's balance of power. In recent years, New Delhi has signed free-trade agreements with Singapore, South Korea, and the Association of Southeast Asian Nations (ASEAN) and has joined regional institutions, such as the East Asia Summit and the ASEAN Regional Forum. India has also deepened its defense ties with Australia, Japan, Singapore, and Vietnam--four countries that are also wary of China's rise and maintain close, or have deepening, security ties with the United States. But the economic dimension of India's integration is lagging: India constitutes just 2.7 percent of ASEAN's total trade volume, whereas China constitutes 10.4 percent. India's second challenge may prove tougher still. Although New Delhi has increased its profile in the Persian Gulf, Africa, and (to a lesser extent) Central Asia, its ability to project influence globally will depend on how it integrates its various efforts into a coherent strategy. The principal challenge will be to leverage its economic strength for strategic gain, as China has. So far, India's record of global power projection has been mixed. One example is foreign aid, which both China and Japan have used to gain influence in Africa. India recently joined the fray by increasing its annual aid to Africa and offering $5 billion in credit at the 2008 Indian-African summit. But such aid has produced few strategic or commercial gains for India. Nor has it made India more powerful in Africa-focused institutions. India has been a member of the African Development Bank since 1982 but has less voting weight than nearly every other non-Western donor, including China, Japan, Saudi Arabia, and South Korea. Various leading or emerging powers--including China, the European Union, Japan, and even Russia--demonstrate their strength by providing public goods, joining clubs of leading economies, leveraging their voting weight in international financial institutions, or deploying economic and financial tools to move global markets. India does less in these areas than Beijing, Brussels, or Tokyo. Consider the global commons. Although Indian interests are growing on the seas and in space and its antipiracy activities off the Horn of Africa are unprecedented, India remains more a beneficiary of public goods than a producer of them, especially when it comes to security. Likewise, India is now part of some of the world's most exclusive clubs, including the G-20, but some Indian decision-makers remain wary of other institutions that would welcome greater Indian involvement, including the International Energy Agency, which coordinates global oil stockpiles. India's quest to join the world's most exclusive club, the UN Security Council, has so far been stymied. Over the next five years, India is likely to make its mark on international financial institutions and global markets. At the G-20 conference last September, the members increased developing countries' representation in the International Monetary Fund and the World Bank, giving India greater clout in two important global institutions. India is also beginning to move markets and prices. Corporate India has gone global, acquiring leading brands, including Jaguar, Land Rover, and the aluminum maker Novelis. And the Indian government's purchase of 200 tons of gold from the IMF in 2009 signaled that Asian central banks were beginning to diversify their U.S. dollar holdings, boosting gold prices by as much as 2.2 percent. A final challenge in India's drive for global influence will be for New Delhi to strengthen its ability to implement its foreign policy. As the former State Department official Daniel Markey has written, India's foreign policy "software" is underdeveloped and risks underperforming: India's foreign service is tiny; seniority often trumps other criteria for promotion in the foreign service; and think tanks and university area-studies programs are underfunded and small. Improvements in these domains will be important if India is to fashion and implement more global strategies. LOOMING DISAGREEMENTS Although India's choices in domestic and foreign policy will be the most important factors affecting its power, stature, and partnerships in the coming years, decisions made by the United States will also matter greatly. This is especially true in areas that tangibly bear on Indian interests, such as Afghanistan. Washington and New Delhi must sustain momentum on the issues they have made progress on over the last decade, including cooperation on defense, trade, energy, the environment, and education. The tougher challenge will be to manage looming disagreements on five potentially divisive strategic issues: Afghanistan-Pakistan strategy, China policy, arms control, climate change, and high-technology cooperation. Washington and New Delhi need to move their disagreements toward compromise, without reverting to the acrimony that characterized an earlier era in their bilateral relations. Indians are asking three questions about the Obama administration's policy toward Afghanistan and Pakistan:Will the United States stay and fight in Afghanistan over time? Will it apply sustained pressure on Islamabad to crack down on groups and individuals that target India? And will it resist the temptation to call for Indian concessions to Pakistan, in the hope that this will encourage the Pakistani government to change its priorities and focus on defeating terrorism? Obama's decision to deploy 30,000 additional troops to Afghanistan should reassure those Indians who view the fight there as a test of U.S. staying power in South Asia. But many Indians are concerned with Obama's emphasis on setting a timeline for withdrawal, scheduled to start in 2011.Washington's approach to Pakistan is even less reassuring to many Indians. How would the United States respond if another Mumbai-like attack occurred on Indian soil and New Delhi asked Washington to step up its pressure on Islamabad? And what if India responded militarily? Since the 2008 Mumbai attacks, the United States has increased its pressure on Pakistan to crack down on militant groups that target India; still, many in India want even greater U.S. pressure and fear that Washington might revert to its historical focus on the groups that target U.S. interests more directly. There is a broad perception in India's strategic community that despite the many new elements of U.S.-Indian cooperation, the United States has recently been tilting toward Pakistan by ramping up its aid to the country and its military-to-military cooperation with Pakistan. Particularly concerning to many Indians is the suggestion made by some influential U.S. commentators that Washington should push New Delhi to alter its military posture toward Pakistan--or even make lasting concessions on Kashmir--in the hope that Pakistan would then remove resources from its eastern border and focus them instead on fighting al Qaeda and the Taliban. Most Indians see this approach as blaming the victim. They also view it as unnecessary and unwelcome U.S. interference in what had been, until recently, a constructive back-channel negotiating process between India and Pakistan. Such U.S. pressure would be flatly rejected in New Delhi and would set back U.S.-Indian relations. It might also undermine the Indian-Pakistani peace process. And it would be unlikely to persuade Pakistan to redeploy its forces: after all, even during the period of greatest progress between New Delhi and Islamabad--which ended with the terrorist attacks in India in 2006 and then the fall of Musharraf 's government in 2008--Pakistan did not substantially alter its priorities or redeploy its forces from east to west. China poses additional challenges to India and the U.S.-Indian partnership. Many in India believe that the Obama administration has tilted its policy toward Beijing in a way that undermines Indian interests. Yet Obama's China policy is broadly consistent with that of every U.S. president since Richard Nixon. This Indian concern is based on a fear that China's increasing weight could lead Washington to pursue a U.S.-Chinese condominium--a G-2, some have called it--which would sideline New Delhi even on issues of direct concern to India. Given China's close relations with Pakistan and continuing claims on Indian territory (including Arunachal Pradesh, a state twice as large as Switzerland), India does not view Beijing as an honest broker. And as U.S. officials are devoting increasing time and energy to cultivating the U.S.-Chinese relationship, Indians are asking whether Washington envisions a role for India in maintaining a balance of power in Asia, or whether the Obama administration views India as tangential to U.S. priorities there. More concretely, Indians worry that Washington may be unwilling to help India relieve the pressure from China if, for instance, tensions were ratcheted up further along the Chinese-Indian border. China is particularly important because it has begun to replace Pakistan at the center of Indian defense planning. Although China considers India a third-tier security priority at best--far behind internal insecurity and challenges in the East Asian littoral--India views China as a first-tier priority. Developments in Chinese-Indian relations are central to India's internal debate about the reliability of its strategic deterrent and whether to test nuclear weapons again. This is one important reason why arms control is another potential source of tension between Washington and New Delhi. The Obama administration is preparing to renew U.S. efforts to ratify the Comprehensive Nuclear Test Ban Treaty. If China does so, too, India will be pressured to follow suit. But many Indians argue that the country cannot sign the CTBT in light of its nuclear competition with China; several Indian nuclear scientists have even sought to prod the government into conducting new nuclear tests by raising questions about whether India's 1998 tests really succeeded. For now, India is unlikely to conduct new tests. But it is equally unlikely to sign the CTBT or similar treaties, even if the Obama administration pressures it to do so. Climate change is another potentially divisive issue. Both Washington and New Delhi support investment in green technologies, but internationally mandated and monitored emissions reductions are political dynamite in India, where they are often seen as a drag on growth and an affront to Indian sovereignty. India has agreed to emissions goals that would be subject to international "consultation and analysis" but not scrutiny or formal review. It has also offered to allow international monitoring of those of its mitigation activities that are supported by international funds or technologies but not of those that are domestically funded. Thus, although the United States and India may continue to cooperate on green technologies, their general approaches will likely limit the range of possible cooperation in global climate negotiations (as was evident at Copenhagen). Finally, issues surrounding the transfer of technology (including for clean energy) are also contentious. India's government and its industrial sector have long complained that the United States' emphasis on national security export controls and intellectual property protection has excessively restricted licenses and transfers. Indians expect that if Washington views India as a partner, it should stop denying India so many dual-use and defense-related technologies. This complaint will almost certainly bleed into discussions of climate change and commercial cooperation on technology. One way to mitigate the debilitating effects of these differences between the United States and India is to enrich bilateral cooperation in areas in which there is mutual agreement. On trade, for example, on which most discussions dwell on the failed Doha Round of multi-lateral trade talks, the United States and India could instead focus on completing their negotiations for a bilateral investment treaty. Although the United States is India's largest trading partner in goods and services, India ranks only 18th among trading partners of the United States, on par with Belgium. If the Doha negotiations remain a slog, a bilateral treaty with new investor protections would at least help enhance trade between the two countries. So, too, would removing structural impediments on both sides. India complains about strict U.S. export controls and visa policies; the United States complains about Indian caps on foreign investment in the sectors of greatest interest to U.S. firms, including insurance and retail. New policies on both sides could spur commerce and insulate the bilateral relationship amid multilateral disagreements. Washington and New Delhi could also enhance the level of transparency in their relationship. U.S. officials could brief their Indian counterparts on relevant talks between Washington and Beijing, for example, and India could brief U.S. diplomats on developments at its BRIC summits, meetings among Brazil, Russia, India, and China. And closer cooperation on counterterrorism would mean closer coordination on developments regarding Pakistan as well. the United States and India share important interests: both seek to restore global growth, protect the global commons, enhance global energy security, and ensure a balance of power in Asia. They must therefore increase the scope, quality, and intensity of their cooperation at every level. But the ultimate test of their relationship will be whether Washington and New Delhi can turn their common interests into complementary policies around the world. Europe U.S. Allies in Europe Begin to Pull Back Europe's Chance to Punch Its Weight: New Treaty New Influence The Progress of Man Winning the War to Secure the Peace India's Rise, America's Interest Enemies Into Friends: How United States Can Court Its Adversaries Global Energy After The Economic Crisis From The Sun King to Karzai Israel and Palestine: An Interim Agreement Obama's Hesitant Embrace of Human Rights Warnings of Violence Ahead of Iraq's Election New Latin American Group Unlikely to Have Teeth (C) 2010 Council on Foreign Relations, publisher of Foreign Affairs. All rights reserved. Distributed by Tribune Media Services. POLITICS & FOREIGN AFFAIRS Subscribe to Politics & Foreign Affairs Politics, Foreign Affairs & International Current Events Click Here to Continue Job & Career Search job title, keywords, company, location HOME WORLD USA BUSINESS WEALTH STOCKS TECH HEALTH LIFESTYLE ENTERTAINMENT SPORTS India's Rise, America's Interest | Global Viewpoint Services: RSS Feeds Shopping Email Alerts Site Map Privacy

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NewsBusiness MPs call for appointment safeguards in BoE Bill Lea Paterson Friday 23 January 1998 00:02 BST A cross-party lobby of MPs last night called for the right to scrutinise the top jobs at the Bank of England. In a debate on the Bank of England Bill, they said that without amendment, the Bill would compromise the Bank's impartiality. Lea Paterson reports.Key figures from both Tory and Labour benches last night called on the Government to amend the Bank of England Bill, which deals with the key issues of the Monetary Policy Committee (MPC) and banking supervision. Giles Radice, the Labour chairman of the Treasury Select Committee, said MPs should be allowed to assess the credentials of MPC candidates. Mr Radice said: "I think it is essential that the Monetary Policy Committee be seen to be competent, effective and independent". But the MP stressed he was not seeking the power to veto MPC appointments. Rather, Mr Radice wanted to be able to endorse suitable candidates and to ask the Chancellor to reconsider the appointment of candidates deemed unsuitable. Quentin Davies, a Conservative MP and Select Committee member, argued for a stronger amendment which would give MPs a say in the appointment of the Governor and Deputy Governors of the Bank. Mr Davies said the amendment would provide a "vital check and balance" and would help reassure those worried that the Chancellor would merely give jobs to his "cronies". These worries were echoed by David Heathcoat-Amory, shadow Treasury Chief Secretary, who said Select Committee confirmation of appointments would ensure candidates "measure up to the full standards of expertise and impartiality which the House expects". Michael Fallon, shadow trade and industry spokesman, also argued that "this Quango Bank" should be more accountable. But Alistair Darling, Treasury Chief Secretary, argued there were serious practical problems in allowing MPs a say. Although Mr Darling conceded the "calibre and quality of its members clearly matters" he said the Chancellor was "bound to appoint only those people who have sufficient expertise and knowledge". Mr Darling added: "If Select Committees are to be given the power of confirmatory hearings and - almost by definition - the power to choose who might or might not be on the MPC, then one could imagine a situation where the MPC appointed might not be the appointees of the Chancellor but in fact the appointees of the select committee or perhaps the House itself. There is an issue of principle here." The Bill, which followed Labour's surprise announcement in May, hands operational policy for the setting of interest rates to the MPC, which lies within the Bank of England. According to the Bill, the MPC should consist of nine members - the Governor of the Bank of England, the two Deputy Governors and six others. Four of these other members are appointed by the Governor, after consultation with the Chancellor. The other two are appointed directly by the Chancellor, as are the Governor and the Deputy Governors. Currently, the MPC consists of Eddie George, the Governor, David Clementi, a Deputy Governor, Sir Alan Budd, Willem Buiter, Charles Goodhart, DeAnne Julius, Mervyn King and Ian Plenderleith. Mervyn King, the Bank's executive director, will become a Deputy Governor after the Bank of England Bill becomes law. The MPC has been responsible for setting interest rates since June, and, since it was handed the reins, has increased rates four times. More about: Treasury Select Committee

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5/30/201312:53 PMDavid F CarrCommentaryConnect Directly1 CommentComment NowLogin50%50% State Street: Social Business Leader Of 2013Learn lessons from the global financial company, which will be honored at the E2 Conference for social collaboration on a large scale. 10 Social Business Leaders for 2013(read about them all) In June 2012, the global financial firm State Street Corp. introduced an "innovation rally" on its enterprise social network, and the response proved explosive. "That was really the catalyst -- the thing that got people to say, ah, I understand what this is, I understand it," said Kristin Z. Waryas, VP of enterprise social collaboration at the firm. The open brainstorming session was held over 72 hours with employees from around the world participating in eight online forums on ways for State Street to improve its business. The rally attracted 12,000 postings, which the coordinators filtered down to about 400 worthy of further investigation. "That's where the collaboration really came into play -- we took the best ideas and built communities around them so the people who had participated in the discussion could build a business case for executive management," she said. Of those, right now it looks like there are 16 ideas with a reasonable expectation of return on investment that will get a closer look. "A lot of those ideas were for things that already existed, but people didn't know about them," she added. Making an organization smarter about new ideas, as well as the assets it already has, is what social collaboration is all about. For what she and others at State Street have already accomplished, as well as her ambitions for what comes next, Waryas is our Social Business Leader of the Year for 2013 and will join me onstage at the E2 Conference in Boston to talk about her work and answer questions. Update: See the rest of our 10 Social Business Leaders For 2013 list. Social collaboration is important to support State Street's global operating model. Previously, Global Operations and Client Service teams used mass email distributions for what were essentially crowdsourcing activities -- trying to find the right person to answer a question. But email tends to drive either one-way responses, not shared with the group, or messy reply-to-all email threads. That translated into workplace inefficiencies, limited knowledge sharing, duplicate efforts, unfiltered information and untapped expertise, Waryas said. The State Street Collaborate internal social network launched in April 2012, following a year-long pilot. The pilot involved more than 1,500 employees who helped define business-driven use cases for the technology. The enterprise social network is now available to a global workforce of 30,000 employees in 29 different countries, with more than 10,000 active users and more than 600 communities. Although the current collaboration network, based on SharePoint 2010 and NewsGator Social Sites, is relatively new, that's not where the story begins, and the network that exists today is only the first chunk of the complete social intranet State Street is preparing to introduce later this year. Disclaimer: State Street does not endorse technology products. However, NewsGator made sense as an integrated SharePoint application because SharePoint was already so widely used at the firm, Waryas said. Founded in 1792, State Street is a global financial services firm based in Boston. It serves institutional investors through State Street Bank and Trust Company and provides registered adviser services through State Street Global Advisors. State Street is known for staking ambitious IT goals, such as a plan to save $600 million with a private cloud implementation. CIO Christopher Perretta briefly mentioned employee social networking in a 2010 InformationWeek interview on new initiatives. Kristin Waryas' profile on State Street Collaborate Employed by State Street for 22 years, Waryas started in a "very entry level job" in fund accounting before moving up the ladder to supporting clients of the fund group and eventually transitioning to an IT liaison role developing business requirements for technology programs. When State Street first began offering online services to clients in the late 1990s, Waryas became a product manager for those tools. State Street was an innovator in introducing online banking services, Waryas said, but eventually the proliferation of those services became a problem of its own. "What customers were looking for was one State Street," she said. Yet even after the bank's Web developers consolidated the platform, she thought it wasn't getting enough love. To turn that around, she developed a network of champions -- employees with in-depth knowledge of the tools who would take the lead on promoting them, both internally and externally. "For our customers to use the tools, our employees had to use the tools," she said. That is, they needed to take advantage of the Web-based tools where possible, rather than falling back on internal, proprietary tools. They needed to know the ins and outs of the customer Web portal so they could introduce it in all its glory to State Street clients. The 200 employees selected for that global team of champions needed a way to collaborate, and an IT architecture group suggested an enterprise social collaboration product called Lotus Connections (now IBM Connections). "That proved very valuable for what we were trying to achieve and gave us a use case to take to executive management" about the value of social collaboration, Waryas said. re: State Street: Social Business Leader Of 2013 Does your organization belong at or near the top of this list? What can I do to get more firms to nominate themselves next year? TSCS 2016: 4G, LTE, 5G NEW OPPORTUNITIES AND NEW CHALLENGESIndoor Network Densification at TSCS 2016Attend GTEC Conference & Exhibition in Ottawa, Nov 1-3, 2016

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UBS pays $1.5 billion over rate rigging AFP-JIJI Dec 20, 2012 Article history ZURICH – Swiss banking giant UBS said Wednesday it had agreed to pay about $1.5 billion to British, U.S. and Swiss regulators to settle allegations it manipulated Libor interest rates. The bank said it the settlement would likely push into a net loss of between 2 billion and 2.5 billion Swiss francs ($2.2 billion to $2.7 billion) in the fourth quarter. “UBS agrees to pay approximately 1.4 billion (Swiss francs) in fines and disgorgement to U.S., U.K. and Swiss authorities to resolve Libor-related investigations,” the statement said. The bank, Switzerland’s biggest, will pay more three times the amount of the settlement reached in June with Britain’s Barclays, another one of the more than dozen banks investigated for trying to rig global interest rates. As part of the one of the biggest fines ever slapped on a financial institution, the Swiss bank said it had agreed to pay £160 million ($260 million) in fines to the U.K. Financial Services Authority. It will pay 59 million Swiss francs ($64 million) as disgorgement, or compensatory penalty, of estimated profits to the Swiss Financial Market Supervisory Authority (FINMA). It also said it had agreed to payment schedules for a total of $1.2 billion to the U.S. Department of Justice and the Commodity Futures Trading Commission. UBS was the first bank to reveal problems in the rate-setting process of the Libor, an acronym for London Interbank Offered Rate, which estimates the rates at which banks lend money to each other and also affects huge numbers of contracts around the world. FINMA said it had found that “UBS severely violated organizational and proper business conduct.” It found that UBS traders made numerous requests to bank employees to make Libor submissions to benefit UBS’s trading position. FINMA said most of the requests were made by a trader in Tokyo, who also contacted employees at other banks and independent brokers to try to influence their Libor submissions. UBS said its Japanese subsidiary would plead guilty to a U.S. criminal offense as part of the investigations. “As part of a proposed agreement with the U.S. Department of Justice, UBS Securities Japan Co. Ltd. has agreed to enter a plea to one count of wire fraud relating to the manipulation of certain benchmark interest rates, including Yen Libor,” it said. FINMA also found that during the 2007-08 financial crisis “UBS managers inappropriately gave guidance to those employees charged with submitting interest rates, the purpose being to positively influence the perception of UBS’s creditworthiness.” TDK, NHK Spring searched over alleged price cartel Dollar dips below ¥104 in Tokyo trade Nikkei falls 237 points on stronger yen To support Kumamoto, Solaseed begins using Kumamon character on planes

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SEC official concerned with ‘back-door’ listings Ronald D. Orol Published: Apr 4, 2011 11:39 a.m. ET RonaldD. Orol WASHINGTON (MarketWatch) — A top U.S. securities commissioner on Monday said he was concerned about a recent wave in which private companies merge with shell companies as means of going public. “This is a disturbing trend in capital formation and investor protection,” said Securities and Exchange Commissioner Luis Aguilar at an event hosted by the Council of Institutional Investors. ECONOMY AND POLITICS | • U.S. homeownership at 18-year low Aguilar, one of the SEC’s three Democratic commissioners, raised concerns about the trend of so-called “back-door” listings where a private company seeking to go public has its assets injected into a dormant shell public company and new capital is raised. He noted that since 2007, there have been hundreds of such registrations in the U.S., including more than 150 by companies from China and in the China region. The Nasdaq has recently suspended trading in some of these companies. China Sky One Medical CSKI and China Green Agriculture CGA, +0.72% are among the shell companies that have had stock market slumps in recent months. “We are seeing increasing problems with shell companies. While the vast majority can be legitimate businesses, a growing number have proven to have significant accounting issues,” Aguilar said. He added that the SEC has set up an internal task force to look at fraud in overseas companies listed on U.S. exchanges including companies engaged in back-door registrations. “The task force had yielded and will continue to yield results,” he said. Aguilar added that Chinese companies employing a back-door approach to listing on U.S. stock exchanges have raised particular issues that bear scrutiny. ”There appear to be systematic concerns with quality of auditing and financial reporting,” he said. “Even though these companies are registered in the U.S., we have limitations when it comes to enforcing U.S. securities laws with them.” To illustrate his concern, Aguilar said the SEC and private companies may have a more difficult time enforcing remedies and recovering investor losses when it comes to back-door listings. “The persons to punish and assets that may satisfy a judgment may be located outside the U.S. and be harder to get to,” he said. “Remedies obtained in the U.S. may not be enforceable in other countries where the bulk of the assets are located.” Aguilar also said there should be more of an emphasis on traditional capital-raising systems, insisting that the traditional system of iInitial public offering in the U.S. “remains the gold standard.” “The SEC and public receives robust disclosures along with the time to review the material,” he said. Read about back-door listings China Unveils ‘World’s Largest Amphibious Aircraft’ DNC's Debbie Wasserman Schultz Booed Over Emails China Green Agriculture Inc. U.S.: NYSE: CGA

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Front Page » Top Stories » Real Estate Banking Industry Applauds Decision To Leave Foreign Visa Rules Unchanged Real Estate Banking Industry Applauds Decision To Leave Foreign Visa Rules Unchanged Advertisement Written by Susan Stabley on March 13, 2003 By Susan Stabley Miami’s luxury real estate market may get a boost from foreign investors now that a proposal to further limit the length of stay for international visitors has been withdrawn. Gov. Jeb Bush applauded last week’s decision by the Bureau of Citizenship and Immigration Services, formerly known as INS, to withdraw a rule that could have limited foreigners to 30-day visits instead of up to six months. According to the Governor’s Office, in 2001 more than 8 million international visitors came to Florida. Tourism is the state’s top industry, comprising 20% of Florida’s budgeted general revenue and generating more than $50 billion in economic impact annually. Just this month, the Immigration and Naturalization Service, was disbanded and absorbed by the new US Department of Homeland Security. The Department of Justice dropped the rule change before making its official transition, though it is still unclear whether the new department will try to revive the limitations. Alex Sanchez, CEO for the Florida Bankers Association, said the proposed rule could have cause a major divestiture of Florida holdings by foreigners. International visitors generated more than $500 million in sales tax revenue, Mr. Sanchez said. Substantial portions of the 8 million international visitors are part-time residents, he said, and own property, buy cars and invest in local businesses. "That’s a big part of the economic diversity in the state of Florida," Mr. Sanchez said. "This is important news for us." The immigration proposal has also been a serious issue for real estate insiders like Jean-Charles Dibbs, a real estate partner at the law firm of Shutts & Bowen, who represents domestic and foreign clients who buy and sell luxury waterfront single-family homes and condos. In the wake of 9/11, Mr. Dibbs said, he has had to move a significant amount of foreign-owned real estate – both vacation homes and income-producing properties. But balancing the demand to sell is a surge of buyers predominantly from Argentina, Colombia and Venezuela, many who move here with large investments. International clients make up 75% of Mr. Dibbs’ business. In the past six months, Mr. Dibbs said, he has handled transactions of properties valued from $2.7 million to more than $5 million. Most are in Key Biscayne, South Beach or the islands along the Venetian Causeway and the demand for waterfront property has cause a "feeding frenzy," he said. Toni Schrager, a long-time high-end real estate agent and one of the founders of Avatar Real Estate Services, agrees that many luxury buyers are from Argentina, Colombia and Venezuela, as well as Brazil and Mexico. Attitudes are split, though, with as many buyers and sellers taking a conservative stance, as are those who are operating like it’s "business as usual," she said. For real estate agents, the visa issue created "nervousness," Ms. Schrager said. "We didn’t see mass selling, but there was an undercurrent," she said. "Realtors talked about a concern." Still, among property owners a greater concern revolved around the ramifications of selling. "Many are afraid that they won’t be able to get back in the market if they sell, that prices would become much higher than they are comfortable with." "There’s a lot of uncertainty," she said. "But Miami seems to have its own economy. You can’t compare us to other places." "It’s a microcosm here. Miami is already the capital of Latin America," Mr. Dibbs said. "The economy is largely dependant on South American investment. We can be in a recession countrywide and my business will not feel it because of the investment coming from South America." Mr. Dibbs said he keeps asking himself when the bubble might break. "So far, it hasn’t slowed down. Interest rates are low and Miami is positioning itself as a world-class city and a cultural Mecca… It’s causing a lot if people to take notice." Venezuela leads Latin real estate splurgeGrove housing tight, prices risingMiami holds own in international sales of real estateHow does strong dollar impact housing sales?Strong dollar, soft condo market in Fed’s focusBillionaire buyers chased waterfront estatesForeign cash flow diversifyingForecast: 2 shining years for housing‘Smart money’ buys multi-million Miami homesStrong housing prices might dip

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Progress doesn’t have to come at the expense of preservation A home along Highway 17 was purcahsed a rennovated to house the Bosse Insurance Agency. The trademark red roof was added to this former residence so that Heather Bosse could move her State Farm Insurance Agency into it. The beams in the ceiling were uncovered and left exposed. This long hallway led to the four bedrooms in which Victoria Galliard raised her four children. The home’s original fireplace was left intact. State Farm Insurance Agent Heather Bosse at an entrance to her new office in Mount Pleasant. Heather Bosse, State Farm Insurance Agent Insurance agent Heather Bosse’s new State Farm office is on U.S. Highway 17 near S.C. Highway 41. Relocating one’s established business must be a strategic decision that will benefit the business owners, staff and clients in the long run. But as Heather Bosse quickly realized, there is much more to it than bricks and mortar - it’s about preserving and maintaining the very culture that so seemlessly enfolded her business.Bosse established her State Farm Insurance Agency on Longpoint Road in 2008. The agency quickly grew and as they outgrew their space, Bosse began contemplating a move, looking for more square feet.Through her banker, Seth Horton, she was introduced to commercial realtor David Seay. “Budget-wise, we were limited,” she said. “There were a lot of empty lots available where we wanted to be, but the cost was beyond what I could reason.”Bosse was looking to tap into the northern Mount Pleasant market. Obviously, location and visibility were important.Seay found some options but took it a step further and began researching properties and locations not necessarily for sale.He knocked on the door of Victoria Galliard and asked if she would be willing to sell her private residence.This property is not a traditional insurance office, but with the building located right on Highway 17, just past the intersection with Highway 41, it would be ideal.Galliard agreed to consider the idea, but wanted to meet the potential buyers.According to Bosse they sat down in her living room over sweet tea and discussed the details. “It was very old fashioned,” said Bosse. “We agreed to the deal with a hug and a handshake.”Part of the reason that Galliard agreed to sell her home is that Bosse promised to preserve the integrity of the house and stay true to the original design of the home. Galliard raised four children in that house. The walls were adorned with their military medals and other accomplishments,A sweetgrass basket maker’s stand stood outside. There was so much history about the residence that you could feel it, Bosse explained.As renovation work begun, the neighbors dropped by to see the progress. They all had a story to tell about parties and weddings and special memories regarding the house.It was as if it was meant to be, particularly when Bosse met the brick mason who arrived on the job. He was the original brick mason on the house when it was built in the 1970s.Pete McKellar, principal/owner of Harbor Contracting ,took on the renovation work. His workers found beams above the popcorn ceiling that are now beautifully exposed in the foyer of the agency.The only major change was the location of the front door, which was originally a bay window.The beautiful brick fireplace remains a focal point of the main waiting room, which was once a living room.And while an enclosed sun porch is not crucial to the operation of an insurance agency, it has come in quite handy.Bosse turned it into a break room for her staff, complete with a homework desk for their children.Conveniently enough, the school bus drops off right beside the building so the children can come straight to the office to be with their parents.The original hardwood floors were simply re-sanded and coated, and the four bedrooms were turned into offices.A receptionist desk was added and a red roof, indicative of State Farm’s trademark color, was added.Bosse is the daughter of two State Farm Insurance agents. She originally intended to become a certified financial planner but insurance provided her an opportunity to help families in all stages of their lives, particularly the fun milestones like marriage, new homes and babies.Her work is intricate to the life changes of her clients and those who she has had for the last six years will be with her for 30 more, realizing their dreams. “There is a sense of permanence in this industry,” she said.Bosse maintains the old fashioned ideal of main street, she said. She volunteers at local schools, sponsors recreation department teams and volunteers in many capacities.“I am proud we could preserve a home that has been part of this community for over 40 years,” Bosse said.“Progress doesn’t have to come at the expense of preservation.”Bosse has a team of six. Those team members can be reached 884-8119 or visit the bosseagency.com. They are open Monday through Friday from 9 a.m. to 5 p.m. Appointments can be scheduled and walk-ins are welcome.A grand opening is schedule for December.The new agency is located at 2917 Highway 17 North. Latest Videos

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Wealth Management > United States > What Matters to You > Managing a Non-Profit Organization > World-Class Resources Nonprofits. World-Class Resources for Non-Profits Benefit from Comprehensive Capabilities and Depth of Expertise Our experienced professionals proactively work with your organization to offer advice-driven solutions to help you achieve your objectives. Custody and Technology A top-tier global custodian is critical when working with multiple money managers and diverse asset classes to provide greater control in monitoring your assets and access to comprehensive, consolidated reporting. Northern Trust is one of the world’s largest global custodians, demonstrating robust, external asset aggregation capabilities. We offer institutional-designed reporting and monitoring tools that many organizations might not otherwise be able to access. Our systems are leading edge when it comes to compliance, regulatory and audit capabilities, and reflect the very latest industry requirements such as Form 990 and FAS 157. We have made a strong commitment to both new technology investments and continual infrastructure enhancements to meet our clients’ dynamic and ever-changing needs. Our clients have access to powerful reporting tools that can pull a wide variety of data and analytics right from their desktop. Capabilities include fully integrated accounting, tax and performance reporting and cash management reports. Planned Giving and Philanthropic Advisory Our long history of managing and administering assets for families and the charitable organizations they support enables us to provide a unique perspective. We can assist in structuring investment trusts to support donor contributions through charitable remainder trusts, charitable gift annuities or charitable lead trusts. We can also support your organization’s efforts toward responsible stewardship with consulting services for directors and trustees. Insights from Northern Trust Follow trends and stay current with the latest investment topics through our update calls, podcasts, white papers, publications and commentary. We provide analysis of political and economic developments in world financial markets along with the distinctive commentary of our globally renowned economist and our other experts. Marguerite Griffin National Director of Philanthropic Services Marguerite H. Griffin is a Senior Vice President at The Northern Trust Company, Chicago. As National Director of Philanthropic Services, Marguerite is responsible for the delivery and growth of Northern Trust's philanthropic services to Wealth Management clients. She specializes in administering charitable trusts, private foundations and other tax-exempt entities, and counsels clients regarding charitable giving strategies, nonprofit compliance and risk management, family succession planning, microfinance and international philanthropy. Marguerite most recently was a Senior Trust Administrator and Relationship Manager where she was responsible for the administration of large, complex trusts for individuals and families, including irrevocable trusts, charitable trusts and supporting organizations. Her duties involved working with sophisticated estate plans, sensitive family situations and complex property transfers.Prior to joining Northern Trust as a Vice President in November 1999, Marguerite was a Vice President and Trust Administrator within the Private Clients Division of First Chicago, Bank One. Before joining First Chicago, Bank One, she practiced law as an Associate with Vedder, Price, Kaufman & Kammholz where she specialized in estate planning, tax-exempt organizations, charitable trusts and private foundations.Marguerite received a B.A. degree from Washington University in St. Louis and a J.D. degree from Northwestern University School of Law. She is a member of the Chicago Bar Association and the Chicago Estate Planning Council. Marguerite is admitted to practice before the Illinois Supreme Court. She is a frequent speaker at industry events, addressing topics such as microfinance, nonprofit board governance, strategic giving and trends in philanthropy.Marguerite is an active volunteer, advisor and board member with several civic and cultural institutions, including the Art Institute of Chicago, The Institute for Learning, Access and Training at The Chicago Symphony Orchestra, The Chicago Community Trust, Donors Forum of Illinois, The Museum of Science and Industry, The Ravinia Festival and WTTW/WFMT. Katrina Pipasts Senior Institutional Relationship and Investment Manager Katrina M. Pipasts is a Senior Institutional Relationship and Investment Manager with Northern Trust’s Foundation & Institutional Advisors practice. She is responsible for client servicing, gift administration and execution of investment strategies for institutional planned giving assets. Katrina also manages the investment portfolios for Northern Trust's Donor Advised Fund program. Prior to her current position, Katrina was a Senior Equity Index Portfolio Manager with Northern Trust Global Investments overseeing a team of portfolio managers managing pension, foundation and endowment assets in customized equity portfolios, tax advantaged portfolios and cash overlay products. Prior to joining Northern Trust, Katrina worked as a Fund Accountant and Equity Index Portfolio Manager. She managed and traded Small Cap and International equity portfolios, as well as launched a proprietary Socially Responsible S&P500 Index Fund and a proprietary Emerging Markets Index Fund. Katrina received her B.S. degree in mathematics and statistics from the University of Western Ontario. She has a B.B.A. in accountancy from Western Michigan University. Other affiliations, past and present include: Treasurer, Chicago Council on Planned Giving, Member, Partnership for Philanthropic Planning, Member, American Council on Gift Annuities, Volunteer Tax Preparer, Center for Economic Progress, Member of the Advancement Advisory Council, Robert Morris University, Past Treasurer, Park Ridge Juniors Foundation, and Past President, Board of Directors of Brickton Montessori School. Currently, Katrina is pursuing her Certified Specialist in Planned Giving designation at the American Institute for Philanthropic Studies at California State University Long Beach. Legacy: Conversations About Wealth Transfer Preparing Children for a Life of Wealth Delaware Trusts: Safeguarding Personal Trusts White Paper Your Guide to Lifelong Health and Wealth Planning

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New Survey Shows 62% of Family Businesses Unlikely to Remain Family Owned A new survey conducted by The Alternative Board reveals 56% of family business owners are either unhappy with their succession plan or don’t have one at all -- 62% of owners believe it's unlikely their business will remain family owned by the next generation. Small Business Pulse Survey Infographic "Succession planning seems like a daunting task to family business owners, but the benefits of having one are undeniable." -Jason Zickerman CEO, The Alternative Board Denver, Colorado (PRWEB) The majority of owners believe their family-run business won’t remain in the family into the next generation, according to survey results released today by The Alternative Board (TAB). A recent article in Harvard Business Review found that nearly 70% of family owned businesses last just a single generation. As they point out, “the low survival rate has alarming consequences.” In their survey of small businesses, TAB also revealed that less than a third of owners have a succession plan for their family business. Could this lack of foresight be the reason so many families lose control of their companies as leadership shifts? Business advisors from The Alternative Board delved deeper to find out. “Entrepreneurs create these businesses because they want to do more than earn money -- they want to build a legacy their children and grandchildren can be proud to continue,” says David Scarola, Vice President of TAB. “So when we discovered exactly how few businesses are succeeding in passing down that legacy, we wanted to find out why.” Although America is a land of corporate giants, economic success still rests on the backs of families. In fact, between 80% and 90% of American businesses are currently owned and operated by families. Despite these staggering statistics, many families struggle to retain control of their businesses as owners retire and new leaders step up to take the reins. Only about 30% of businesses owned by families will remain that way when their current owners retire, according to the Family Business Alliance. What causes this massive shift and what can families do to prevent it? “Perhaps the most surprising statistic we uncovered was that 29% of family business owners do not have a succession plan,” says Scarola. “Without one, it’s easy to understand how owners of family businesses can lose the legacy they’ve worked so hard to build.” Another issue facing family business succession seems to be a lack of training. Although 45% of owners say their children are involved in their business, 62% say it's unlikely their business will remain family owned when they sell or retire. A lack of confidence in leadership abilities could account for this gap. When asked who they would consider most qualified in their respective positions, 42% of family business owners say non-family employees are more qualified. This indicates that although family members may have the technical skills needed to accomplish functional duties, the leadership skills needed to move into leadership positions are lacking. “Training family members early and thoroughly can go a long way to building confidence,” says Scarola, “even if retirement is years or even decades away.” Part of the problem could be a lack of planning. Survey results indicate that only 45% of family business owners say their children are directly involved in the business. Although children may be young, pursuing education or running their own companies, business owners who want their families to retain ownership through generations should get children involved in management as early as possible, even if just through job shadowing and mentoring. Despite the challenges facing family businesses, their owners remain positive. In fact, TAB’s survey found that 59% of owners reported an increase in profits last year and 73% believe their profits will climb this year. Although the odds may seem stacked against family-owned businesses, these results show a silver lining: that many of the barriers to successful succession are internal and are entirely within the owner’s control. Through mentoring, training and developing a succession plan with the help of a professional, unbiased peer advisory board or business coach, family businesses can remain family businesses for generations. “Succession planning seems like a daunting task to family business owners, but the benefits of having one are undeniable,” says TAB President & CEO, Jason Zickerman. “TAB peer advisory boards have helped family-owned businesses successfully transfer to the next generation by providing objective advice and feedback from business owners who have already been there, or are currently working on their own succession plans.” To read a full review of the survey’s findings and learn more about what they mean for your business, visit http://www.TheAlternativeBoard.com. For more information, or to schedule an interview with David Scarola, contact Jason Myers at jason(at)contentfac(dot)com. Jason Myers The Alternative Board +1 (412) 580-1812 @TAB_Boardssince: 05/2009 The Worldwide Headquarters of The Alternative Board The Alternative Board (Worldwide)

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Explaining annuities ELOISE GIBSON KiwiSaver market becomes more concentrated, but returns remain positive Businessman perplexed by 25c Inland Revenue bill Ray White signs deal with Lianjia as it launches into China House prices could fall 11 per cent by late 2019, as building catches up: Infometrics Swamp kauri case in Auckland High Court Rich people move to New Zealand for safety Reserve Bank mandate no longer cutting it - Labour Borrowers told income makes more difference than deposit A Lotto First Division win, a house fire, and an engagement - all on her birthday You've probably dreamt about what you would do if you won $1 million dollars on Lotto. But what if someone handed you $600,000 and said it had to support you for the next 30 years? That's the situation today's young and middle-aged KiwiSavers will be facing when they retire. The conundrum about what they should do with the money is sparking renewed debate about annuities - one of the easiest, and most endangered, ways to make sure your money lasts as long as you do. An annuity is essentially a bet with an insurance company. You hand over a lump sum in return for receiving set monthly payments until you die. You are betting that great-grandpa's genes will keep you alive so you can go on collecting the money long after the original lump sum would have run out. The company is betting that you, or at least enough of your peers, will die young enough to make them a profit. And therein lies the problem. It turns out that people are much better at predicting their life spans than insurance companies, and in markets like New Zealand, where annuities are not popular, only the long-livers tend to take up the option. Something as simple as the discovery that taking an aspirin a day can prevent heart disease throws all of the company's calculations out. Insurers have to build that into their pricing, making rates less attractive - to the point where annuities are all but dead in New Zealand. In 2008, we had just 3277 annuitants, most of them older than 75. The rate of sign-up is said to be as low as 17 new customers a year. Roland Hughes, a consultant at the only company still offering annuities, Fidelity Life, says people ring up full of enthusiasm for the idea but are quickly put off by the rates. "I tell them what it is going to be and they say, 'No thanks'," he says. For a man aged 65 handing over $500,000, the monthly payments are $2582, with a minimum payment period of 10 years (meaning your estate gets some money back if you die sooner). A woman gets $2384. That includes no allowance for inflation, meaning the buying power of your payments will drop every year. (Fidelity offers an inflation-proof option, but starting payments are just $1865 for a woman, in return for building in 2 per cent inflation a year). "When annuities were more attractive, people would retire at 65 and die at 75," says Hughes. "At the moment we assume that everyone that takes an annuity must be in good health or else they wouldn't take one." It's not just living longer that makes annuities a hard sell. There is a tax penalty: annuities are taxed at the corporate rate, rather than the lower marginal tax rate a canny retired person could probably pay using a Portfolio Investment Entity. The tax issue would be relatively easy for the Government to fix, says Tower Investment CEO Sam Stubbs. But there is another issue. "Let's say you give us a lump sum - what do we invest it in?" asks Stubbs. "The problem with New Zealand is that it's very hard to make very long term investments. The Government has said it wants to list inflation-indexed bonds, which will mature in 2025, and that's fantastic. But it's still only 14 years away. A lot of annuity writers are looking for 30-year investments." All of which leads retirement commissioner Diana Crossan to describe pushing for better annuities as "flogging a dead horse." She likes the idea, but says she has given up hoping for a stronger market. New Zealand's population is just too small. "You need a large population to make them work....otherwise the few people that use them pay," she says. Making them work in New Zealand would probably require Government intervention - such as in the United Kingdom, where for decades people have been required put part of their pension into an annuity (a scheme the UK Government now plans to scrap). Crossan says she has seen no appetite for intervention in Wellington. Still, she would love to see more companies offering annuities, especially for people who retire with no experience of managing investments. "Usually you could manage your money better yourself. But for some people they (annuities) work because they don't want to manage their money or they don't know how to, and they'd like the sureness - the security that you get with knowing that you're going to get an income every day for the rest of your life." So where to from here? Crossan says there is an urgent need for companies to come up with products that help us manage our money in retirement. After all, even at the minimum 3 per cent savings rate that will apply to all KiwiSavers from 2013, a 30-year-old earning $60,000 a year will have $509,878 when they retire aged 65. Many of us will never have managed half a million dollars before. Making that money last, and protecting its spending power in the face of 20, 30 or 40 years' worth of inflation, is a challenge. At the same time, both retirees and investment companies are grappling with the changing nature of retirement. People are living longer, and the old assumption that you would die after 10 or 15 years in retirement is changing. Also changing is the traditional advice that retirees should immediately put all their money into low-yield, virtually risk-free investments, to be eked out over their remaining years. "If you were to live for more than a hundred years - and let's say you didn't get into your first job until you were 25 - there is a potential you might actually be in retirement for longer than you were in the workforce," says Investment Savings and Insurance Association CEO Peter Neilson. With researchers predicting that more than half of British people born in the year 2000 will reach their 100th birthday, that is not out of the question. "Unless you are doing better than inflation you will have a problem,'' says Neilson. ''You would virtually have to save half your income (for retirement).'' Stubbs agrees. "The concept that when you retire you could put all of your savings into a virtually riskless investment and then retire happily are probably going," he says. "Annuities are quite a traditional way to look at funding your retirement, and I'm not actually sure that people won't continue to have money in balanced funds well into their retirement,'' he says. ''Annuities and fixed interest aren't going to provide them with the sort of returns they need.'' Crossan envisions that companies will invent new products that look like an annuity, but with the money held specifically for that person. "We need a DIY annuity, where you manage your money yourself [and] don't put it into a pool," she says. For example? "Finding a way of using six term deposits that roll over, so if you've got $100,000 they don't all come up at once. If you don't need it that year, it goes back on (deposit) and so on." Other retirees might choose to keep their money in KiwiSaver-like investments, where they can access the money but portions are invested at varying levels of risk and return. As we KiwiSavers age, Stubbs has no doubt that companies will come up with new products, with or without the Government. "There's no question that the financial markets are very good at innovation, and because there will be so much demand for long-term fixed interest-type returns from people coming into retirement, the market is going to find a way of cracking this nut," he says. "But right now, if it was in the form of traditional annuities, it's a pretty hard nut to crack." Annuities in New Zealand How they workYou pay a lump sum to an insurer or investment company in return for monthly payments until you die. How much will I get?At the moment, a man aged 65 handing over $500,000 gets $2582 monthly, with a minimum payment period of ten years. A woman gets $2384. BenefitsA guaranteed income for the rest of your life, so you can't outlive your savings. DrawbacksTax, risk and other issues make payments unattractive relative to other investments. If your circumstances change, you can't get the lump sum back. Countdown will stave off rivals says retail expert Mortgage lending hits record levels as national house prices soar High profile Hamilton building with history for sale

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Financial sector reflects the nuances of the Thatcher inheritance By Howard Davies / Thu, Apr 18, 2013 - Page 9 In the US, for people of a certain age, former British prime minister Margaret Thatcher was a superstar, and Americans have been surprised at the sharply divided views on display in the Britain that she governed for 11 years. However, Britons were not astonished. Like former British prime minister Tony Blair, Thatcher has long been a British product with more appeal in export markets than at home.All aspects of her legacy are earnestly disputed. Was she prescient about the problems of European monetary union, or did she leave Britain isolated on the fringes of the continent?Did she create a new economic dynamism, or did she leave the UK bitterly divided, more unequal, and less cohesive than before? Did she destroy the power of vested interests and create a genuine meritocracy, or did she entrench bankers and financiers as the new elite, with disastrous consequences?Indeed, one issue that has come under the microscope is Thatcher’s reforms of the City of London in the late 1980s. In 1986, her government was instrumental in what is known colloquially as the “Big Bang.” Technically, the main change was to end “single capacity,” whereby a stock trader could be a principal or an agent, but not both.Before 1986, there were brokers, acting for clients, and jobbers, making a market, and never the twain could meet. This system had been abandoned elsewhere, and the reform opened London to new types of institutions, especially the major US investment banks.The first and most visible consequence was the demise of the long lunch. Beginning with a gin and tonic just after noon, and ending with a Napoleon brandy at three o’clock, lunch prior to the Big Bang was often the most arduous part of a stockbroker’s day. That cozy culture ended soon after the thrusting, brash Americans, who worked even over breakfast, hit town.However, some believe that there were downsides, too. Philip Augar, the author of The Death of Gentlemanly Capitalism, argues that “Good characteristics of the City were thrown out along with the bad,” and that Thatcher’s reforms “put us on a helter-skelter course towards the financial crisis.”How justified is this charge? Can we really trace the roots of today’s malaise back to the 1980s? Was the Iron Lady an author of the world’s current misfortunes?Nigel Lawson, Thatcher’s chancellor of the exchequer at the time, denies it. (Full disclosure: I was an adviser to Lawson in the 1980s). He points out that the reforms were accompanied by new regulation. The Financial Services Act of 1986 put an end to the pure self-regulation regime. Financial interests opposed it vigorously at the time, viewing it as the thin end of a dangerous wedge, though they could not have guessed just how thick that wedge would eventually become.It is also difficult to trace back to the 1980s the origins of the credit explosion and the proliferation of exotic and poorly understood financial instruments that lay at the heart of the 2007-2008 crisis.The most dangerous trends, including the upsurge of global imbalances and the dramatic financialization of the economy, accelerated dangerously from about 2004 onward.Thatcher herself was not an enthusiast for credit, once famously saying: “I don’t believe in credit cards.” Indeed, she espoused a rigorous philosophy about borrowing: “The secret of happiness is to live within your income and pay your bills on time.”However, perhaps there is a deeper level on which we can see some connections between Thatcherism and the crisis. Her mantra, “You can’t buck the market,” did contribute to a mindset that led governments and central banks to be reluctant to question unsustainable market trends.Thatcher was referring specifically to the dangers of fixed exchange rates, and can certainly not be counted as one of the principal architects of the so-called “efficient markets hypothesis.”However, she was a strong believer in the expansion of private markets, and was instinctively suspicious of government intervention. As the late economist and European central banker Tommaso Padoa-Schioppa once put it, Thatcher “shifted the line dividing markets from government, enlarging the territory of the former at the expense of the latter.”Padoa-Schioppa regarded this as a factor contributing to the US and UK authorities’ reluctance to step in at the right time before the 2007-2008 crisis.Thatcher was certainly no friend of central bankers. She remained, to the end, hostile to central-bank independence, regularly rejecting the advice of her chancellors to allow the Bank of England to control interest rates. She feared that independent central banks would serve the interests of their banking “clients,” rather than those of the economy as a whole.She was especially hostile to what she saw as the excessive independence of the European Central Bank (ECB). In her last speech in parliament as prime minister, she attacked the ECB as an institution “accountable to no one,” and drew attention to the political implications of centralizing monetary policy, accurately forecasting the dangers of a “democratic deficit,” which now worries many in Europe, and not just in Cyprus or Portugal.So, in the financial arena, as elsewhere, there is light and shade in the Thatcher inheritance.Her Alan Greenspan-like belief in the self-correcting features of financial markets, and her reverence for the integrity of the price mechanism, do not look as well-founded today as they did in the 1980s. So, in that sense, she can be seen as an enabler of the market hubris that prevailed until 2007.On the other hand, it is difficult to imagine that a Thatcher government would have run a loose fiscal policy in the 2000s. And it is equally unlikely that, had she had her way, the eurozone would be the camel — a horse designed by committee — that it is today.Howard Davies, former chairman of Britain’s Financial Services Authority, deputy governor of the Bank of England and director of the London School of Economics, is a professor at Sciences Po in Paris.Copyright: Project Syndicate http://www.taipeitimes.com/News/editorials/archives/2013/04/18/2003560003

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This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, click the "Reprints" link at the bottom of any article. October 2, 2013 How Heritage Financial Uses Withdrawal Rates and Alts for HNW Clients Everyone has budgetary issues, regardless of net worth, says Heritage’s Bean “We let clients know when it’s time to get selfish,” said Chuck Bean, when referring to one of the five high-net-worth markets his firm currently serves. Bean, President and Director of Wealth Management with Boston-based Heritage Financial Services, was commenting on inherited wealth, and the tendency for high-net-worth families to want to help their children and grandchildren. All well and good, Bean noted, until it starts to negatively affect the parents. It’s all part of a larger pattern Bean and his team are currently seeing. “We’re managing clients’ cash flow and spending habits regardless of portfolio size,” he told ThinkAdvisor on Monday. “Managing their expectations is the single biggest challenge we face right now. It’s something that comes up on a weekly basis during our client review meetings and the financial planning committee meetings we hold at our firm.” "With the stock market up nicely this year, he added, clients feel that their spending habits can increase. But, clients need to realize that within their diversified portfolio, there are other asset classes that are not performing as well. Their spending level must be consistent with a prudent withdrawal rate based on a long term expected return from the entire portfolio." “Everyone has budgetary issues, regardless of net worth,” he emphasized. “For this reason, we employ a simple green, yellow and red light system to show them where they are using our financial planning spreadsheets. We tell them what they can afford and not afford to spend in order to secure or maintain their retirement.” Heritage manages $825 million in assets for about 300 core families with investible assets “in the low singles of millions to low tens of millions” range. In addition to inherited or family wealth, the other four markets they serve include retirees; single and widowed women; business owners and entrepreneurs; and professionals (with a heavy emphasis on physicians). Sophisticated clients typically require sophisticated strategies. “As far as alternative investments, depending on the client, we allocate anywhere from 10-25% of the portfolio in total,” Bean explained. “We have about 10% in managed futures, which have been a sore spot in the portfolio since 2009, but historically has helped hold up the portfolio in bear markets. We also have about 2.5% in gold, which has also been down, surprisingly, even with the government shutdown. And, some clients have small allocations to hedge funds, private equity and private credit to help enhance risk adjusted returns." Aside from alternative investments, he noted, the firm allocates to multi-asset-class funds. While not technically alternative investments, they still act to reduce correlation. These managers have the flexibility to dial up and down exposure to global stocks, bonds, currencies and commodities." “All of these things provide more diversity in the portfolio, but more importantly, they also provide more opportunities to rebalance.” As to the appropriate withdrawal rate for clients — even high-net-worth clients — Bean doesn’t buy the academic mumbo-jumbo, specifically as it relates to “rules of thumb” for retirement income. “We don’t adhere to something like the 4% rule because it was constructed at a time when expected rates of return were much higher,” he concluded. “We, like many firms, employ model portfolios, and have target rates of return for each objective. If the long term target return is 6%, and we expect inflation to be 2.5%, then a viable rate of withdrawal might be 3.5%; or if the portfolio has an objective of returning 5%, a comfortable withdrawal rate would be about 2.5%. Anything more won’t keep pace with inflation and maintain the buying power of the investments. Although, we do have clients that are not trying to preserve inflation-adjusted wealth for the next-generation, and don't mind spending down the principal. But, this can be a risky game of cat and mouse while trying to ensure the assets out last the client. “We aggressively stress test the model portfolios in various scenarios, and the withdrawal rate is a constant challenge we deal with, yet we deal with it very successfully.” Charles Bean will be a speaker at this year’s Think Retirement Income Conference in Boston on Oct. 10 and 11. For more information and a list of other speakers, please visit www.thinkretirementincome.com. The Wealth Manager Think Retirement Income 2013 PIMCO Global Multi-Asset Fund Heritage Financial Services

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4 Big Changes to 401(k)s, IRAs in Obama’s 2014 Budget The president’s budget blueprint proposes a number of reforms that would mean big changes in how retirement is financed Set aside for a moment the fight in Washington over raising the debt limit. In his budget blueprint for 2014, President Obama has proposed a number of tax and other reforms that would mean big changes in how retirement is financed. At some point after the debt crisis is resolved, the House and Senate are likely to take up the following proposals, all of which would have lasting effects on anyone saving for retirement. 1. Automatic Enrollment in IRAs The president’s 2014 budget would require employers in business for at least two years that have more than 10 employees to offer an automatic IRA option to employees. Contributions would be made to an IRA on a payroll-deduction basis. If an employer already offers a plan, it wouldn’t have to comply with this regulation, but if its current plan excludes certain segments of its employees from participating in the plan, the employer would have to begin to offer the automatic IRA to those excluded employees, according to an assessment by KPMG. Obama included this provision in the 2014 budget because he wanted to turn the tide on a rising retirement crisis in the United States. According to a Treasury report, the number of U.S. workers participating in an employer-sponsored retirement plan has remained stagnant for decades at no more than about half the total workforce. The administration has seen that automatic enrollment efforts can be very effective in raising the number of people participating in workplace retirement plans and believes that by forcing small companies to offer automatic enrollment in an IRA, the number of people saving for retirement will rise. Under the proposal, employers could help their workers save without having to make contributions to the plan or having to comply with the Employee Retirement Income Security Act. All they would have to do is make their payroll systems available to transmit employee contributions to an employee’s IRA. Employers with fewer than 100 employees that offer an automatic IRA could claim a temporary credit for expenses associated with the arrangement of up to $500 for the first year and $250 for the second year. They also could be entitled to an additional credit of $25 per enrolled employee, up to a maximum of $250 for six years. If employers adopted a new qualified retirement, SEP or SIMPLE plan, they would receive a tax credit for their startup costs that would be doubled from the current maximum of $500 per year for three years to a maximum of $1,000 per year for three years. 2. Elimination of Stretch IRA The Obama budget would eliminate the stretch IRA that allows beneficiaries to stretch the proceeds from an inherited retirement account over their lifetime. Instead, non-spouse beneficiaries of retirement plans and IRAs would have to take full distribution of their inheritance within five years of the account holder’s death. The only exceptions would be disabled or chronically ill individuals, someone who is not more than 10 years younger than the participant, or an IRA owner or a child who has not reached the age of majority. Those individuals would be allowed to take distributions from the deceased person’s retirement plans over the life or life expectancy of the beneficiary beginning in the year following the death of the participant. If the beneficiary was a child at the time of the participant’s death, they would have to take a full distribution within five years of coming of age. If beneficiaries are forced to take distribution of large sums of money early, they will be taxed at a higher rate than they would be if they could leave the funds in the participant’s account and take money out gradually. 3. A $3.4 Million Cap The president’s proposed cap on retirement savings has garnered the most attention this year. The cap would raise about $9 billion for the federal government over the next 10 years by prohibiting taxpayers from taking advantage of the pre-tax deferral in their 401(k) or defined contribution pension plans after they cross a $3.4 million threshold. According to the Employee Benefit Research Institute, only a small percentage of IRA and 401(k) investors would be affected by the cap. In 2011, only 0.06 percent of total IRA account holders had $3 million or more in their accounts, and only 0.0041 percent of 401(k) accounts had that much money in them at the end of 2012. The $3.4 million cap would allow an account holder to generate an annuity of $205,000 a year. Small-business owners would be the biggest losers in this proposal, according to Judy Miller, director of retirement policy at the American Society of Pension Professionals & Actuaries. That’s because company-sponsored retirement plans are the only way small-business owners can generate tax-deferred savings. Workers might be hurt, too, even those with nowhere near $3.4 million in their accounts. Brian Graff, executive director and CEO of ASPPA, said he is concerned that “without any incentive to keep the plan, many small-business owners will now either shut down the plan or reduce contributions for workers. This means that small-business employees will now lose out not only on the opportunity to save at work but also on contributions the owner would have made on the employee’s behalf to pass nondiscrimination rules.” 4. Social Security COLA The president also proposed changing the way inflation is measured to shrink cost-of-living adjustments for retirees receiving Social Security benefits. The use of a chained consumer price index for Social Security and other programs, like Supplemental Security Income and veterans pensions, would reduce government deficits by $230 billion over 10 years. A chained CPI is a lower measure of inflation, which would reduce Social Security and other benefits by $130 billion. The AARP Public Policy Institute spoke out about the use of a chained CPI back in 2012, saying the proposed changes would have a detrimental effect on the economic wellbeing of older and disabled Americans and their family members who receive the benefits of Social Security. On the surface, a chained CPI seems like a good idea. It would reduce the annual COLA by small amounts every year. The problem is, it would hit the oldest and most vulnerable beneficiaries the hardest. Those in favor of a chained COLA believe that the inflation measure used for the current COLA overstates inflation because it doesn’t fully account for the way that people substitute different goods and services when prices change. They argue that future COLAs should be based on a more accurate measure of inflation, the chained consumer price index. AARP asserts that these cuts would have a catastrophic impact on older Americans who are the least able to absorb cuts to their benefits because they rely on Social Security for their income and have higher out-of-pocket medical expenses. They also have a higher poverty rate than younger Americans. Originally published on BenefitsPro. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. Please enable JavaScript to view the comments powered by Disqus. By Paula Aven Gladych BenefitsPro.com Employee Benefit Research Institute American Society of Pension Professionals & Actuaries Judy Miller

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Bringing Liquid Alts to the Masses: 361 Capital What is the ‘tip of the pyramid’ and why is it so important to liquid alts’ growth? CEO Tom Florence of 361 Capital. About the only time you’ll see an otherwise laid-back Tom Florence get animated is when you mention fees in the liquid alts space, and the general impression that they’re too high. “Love it, love it; love that question,” says the CEO of Denver-based liquid alternative investment firm 361 Capital, gamely rising to the challenge. “The early entrants into the world of alternative investments were hedge funds into ‘40 Act funds, and they dragged along the performance-based fee structure. So you’d have to pay the manager 150 basis points and then there were all these performance-based fees. It’s evolved to where it’s now really just a management fee, as there is in a traditional mutual fund, without any incentive fees.” For instance, he points to the firm’s managed futures fund, which he says is 180 basis points “all in,” with 150 basis points as a management fee. “They are going to come down,” he says pointedly. “We’re constantly looking at fees in the industry relative to where the assets are going. Now you’re seeing multimanager funds that, rather than hiring hedge fund managers to manage the assets in the traditional sense, they’re able to lure those managers for a flat fee. So they’re becoming much more investor friendly, which is a good thing and what should happen.” The firm, founded in 2001 by president and CIO Brian Cunningham, has a sole focus of taking its “experience and knowledge in the alternative space ‘post-Bernie,’ and all that nastiness with illiquidity, high fees and a lack of transparency, and put these strategies into something usable,” according to Florence. “All lot of these strategies are good strategies and have a place in the portfolio, and why shouldn’t everybody have access to them?” he rhetorically asks. “So we see a '40 Act mutual fund as the perfect vehicle for something like that. Our view is to take the strategies that make the most sense in mutual funds and then put them in mutual funds. Our mission as a firm is to create alternative investment vehicles that have weekly liquidity or better, and then teach our advisors who we work through how to best use them in portfolios.” So is the alternative investment story an easy story to tell at this point? Yes and no, Florence responds. “There was a lot of interest around alternative investments in 2008 and 2009. Since then we’ve had this tremendous bull market, so it’s hard to get excited about anything other than the S&P 500. However, what is starting to draw people to it is the question of what will happen with fixed income and rising interest rates.” That concern, coupled with more education among advisors on the topic of alternatives, are driving interest beyond the “tip of the pyramid,” a theme the firm is currently discussing. “The tip is the people that really get it, they’ve been using [alternative investments] in the asset allocation of their portfolios and they’ve been subbing out the illiquid stuff for the liquid stuff. They’ve been the ones that have been really driving assets in the space over the last three years. And when you read about the asset growth, which has been pretty tremendous, it’s some of the more astute advisors that haven’t been using alternative assets that are now beginning to use them. And that will continue down through the rest of the pyramid, and it represents tremendous opportunity.” The impression among many advisors is that in 2008, too many of the supposedly noncorrelated assets sure were correlated, and about the only asset class that performed to expectations during that time was managed futures. The story since then with managed futures hasn’t been pretty, so how does the firm tell the alternative investment story if there isn’t the track record to back it up? Florence doesn’t hesitate. “One of the things that make us so effective is that we have counter-trend strategies, which is different than the trend followers,” he says. “Managed futures have predominantly been a trend following strategy,” Cunningham adds. “That has suffered over the last few years because, ex. the equity markets which have been choppy at times, there really hasn’t been a clear trend, say, with commodities and things of that nature. So we’re in a 26-month or 27-month drawdown on the managed futures industry as a whole. I think that I’d rather have a strategy that’s consistent over time, rather than one that gives me a 30% return in 2008 and then nothing for the next four or five years.” This is one reason 361 Capital (“a degree beyond” is its tagline, in case you were wondering) “latched on” to the whole idea of short-term countertrend strategies; because they tend to be more consistent and tend to trade less often. “I think one of the things that’s been a major driver of our growth and something we emphasize here is simplicity and transparency in the strategy,” Cunningham continues. “It’s one thing to have underlying transparency to the position, but show me the typical hedge fund with the thousands of positions and I couldn't really tell you what the strategy is. If you keep it simple as to why the strategy works and when it will do well and when will it struggle, that’s what has been resonating with advisors.” The result is that the firm has been able to get positive returns in a bad market environment for managed futures, something few others were able to do. Cunningham says the managed futures fund is up 9.43% over the last 12 months, while the average fund in the industry was down 6%. “If I can earn 9.43% every year, hey, I’ll take it,” he says, before conceding the S&P 500 was up 19% over the past 18 months, “but those are really outlier years. We’ve focused on this niche specifically for that consistency, and that’s really what’s resonated with advisors. Simple process, simple story. It’s not a black box; around here we call it a transparent box.” Also in Alternative Investments Why a Falling Dollar Doesn't Always Mean Big Gains for Commodities Goldman Sachs Profit Jumps 74% on Bond Trading: Q2 Earnings Oil Producers Prepare for Second-Half Slump as Rally Sputters REITs Booming in Billboards, Casinos, Prisons and More More Alternative Investments Tom Florence

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Whats News Business Finance Europe Business & Finance *** At least four Wall Street firms have launched or plan to roll out electronic bond-trading networks to woo institutional clients looking for better bond trades. Japanese auto makers said prospects in China were finally improving, having unveiled measures to win back market share that fell amid tensions between Beijing and Tokyo. The EU's competition authority conditionally approved the merger between Glencore GLNCY and Xstrata as the world's biggest mining deal neared completion. Apple was ordered by a U.S. judge to disclose to Samsung details of its patent settlement with smartphone maker HTC, a move that could help the Korean company build its case to fight a potential sales ban in the U.S. Fitch downgraded the credit ratings of Sony SNE and Panasonic PCRFY to junk status, another blow for the unprofitable Japanese electronics companies. The initial public offering of People's Insurance Co. of China Ltd., one of the biggest in the world this year, is attracting a number of large buyers. SABMiller reported a sharp drop in Australian demand, barely a year after its acquisition of Foster's, and warned of slowing growth in other markets. The BBC appointed the head of the Royal Opera House, Tony Hall, as its new director general, calling him an "outsider" who can cast a fresh eye on the broadcaster and help it recover from a scandal. Barclays downgraded its membership on the London Metal Exchange, exiting Europe's last open-outcry trading floor and limiting the bank to phone and electronic trading. World-Wide *** Business activity in Germany and the broader euro zone continued to shrink in November, indicating the region's economic downturn is steepening. Former French President Sarkozy was being questioned by investigating magistrates as part of a campaign-financing investigation involving the heiress to the L'Oréal LRLCY cosmetics empire. Sanitation workers in the Spanish city of Jerez de la Frontera ratified an agreement to end a 21-day strike that has left tons of garbage on the streets. Bahrain has been slow to implement changes following last year's protests and has failed to bring to justice those guilty of abuses, the head of an official investigation into the unrest said. Egypt's president issued decrees exempting his decisions from judicial review and barring the courts from dissolving a constitutional drafting committee. Sunday's elections in Catalonia could put the wealthy region on a path toward independence, possibly triggering a constitutional crisis in austerity-weary Spain. Syrian rebels seized a military base with artillery stockpiles in the country's east, activists said, and Syrian warplanes hit a building next to a hospital in Aleppo, killing at least 15 people. A coalition of entrepreneurs and investors is intensifying efforts for a special visa that would allow foreigners who launch companies to stay in the U.S. The Indian Parliament's winter session got off to a chaotic start, with opposition lawmakers shouting against the government's recent decision to ease foreign-investment rules in retail. The front-runner to become Japan's prime minister said he would consider loosening fiscal-discipline policies, in defiance of warnings to curb borrowing by the world's most indebted government, in order to boost growth. Argentina moved closer to approving a capital-markets reform bill that aims to channel more private savings to fund businesses and infrastructure projects. A preliminary gauge of China's manufacturing activity showed the first expansion in 13 months, reinforcing evidence of a turnaround for the economy. The Thai government invoked special security laws to help police control thousands of protesters expected to pour onto Bangkok's streets this weekend. Save Article

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http://www.wsj.com/articles/SB120519561189425805 Will Fed Try Something New to Aid Markets? David Wessel With worsening strains in credit markets threatening to deepen and prolong an incipient recession, analysts are speculating that the Federal Reserve may be forced to consider more innovative responses -- perhaps buying mortgage-backed securities directly. "As credit stresses intensify, the possibility of unconventional policy options by the Fed has gained considerable interest, said Michael Feroli of J.P. Morgan Chase. He said two options are garnering particular attention on Wall Street: direct Fed lending to financial institutions other than banks and direct Fed purchases of debt of Fannie Mae and Freddie Mac or mortgage-backed securities guaranteed by the two shareholder-owned, government-sponsored mortgage companies. Fed officials have said that, at times like these, the prudent course is to evaluate all sorts of ideas, many of which may be rejected. Since 1932, the Fed has had the authority to lend, against collateral, to individuals, partnerships or corporations other than banks in "unusual and exigent circumstances," subject to the vote of five members of the Board of Governors. (The board has seven seats, but two are currently vacant.) This power has never been used. Mr. Feroli noted that Congress in 1966 gave the Fed temporary authority, made permanent in 1979, to purchase obligations of government-sponsored enterprises, such as Fannie Mae and Freddie Mac. So far, the Fed hasn't purchased GSE obligations except in its short-term repurchase operations. When the federal budget was in surplus, the Fed considered outright purchases of GSE obligations, but judged against such a move as it would reinforce the perception of an implicit government guarantee. Last week, the Fed said it would lend banks $100 billion starting this week in 28-day loans through its new Term Auction Facility, at which banks can post a wide variety of collateral, including mortgages, corporate loans and other items that have become harder to sell in the open market. And it said it would make money-market loans of as much as $100 billion to its network of 20 bond dealers for 28 days, double the usual maximum term, and structure them to encourage dealers to submit mortgage-backed securities guaranteed by Fannie and Freddie Mac. Sen. Christopher Dodd (D., Conn.), chairman of the Senate Banking Committee, has suggested creating a new government corporation that could buy mortgage-backed securities. But direct Fed purchases may be more practical and address current problems "head on and immediately," David Ader, U.S. government bond strategist at RBS Greenwich Capital, said in a note to clients. "Plans like Dodd's or ideas like an explicit guaranty for the agencies are far more political and will take a while to work out." "If there is a message in the madness, it's this: The market is looking elsewhere for a 'solution' to the broad mess that started in housing and will presumably end with housing albeit with some big victims along the way," Mr. Ader said. "Meaning someone or something will have to buy mortgage-backed securities as a starter, to restore liquidity and confidence," he said. "We emphasize that this is what the market is saying, not that it will happen or won't." The Fed's target for the federal funds rate is already down to 3% despite rising inflation. The yield on two-year Treasury notes is a low 1.4%. And the yield on five-year notes, Treasury's inflation-protected securities, is negative, which means that investors accept a return lower than the eventual rate of inflation. All this suggests the Fed already has its foot heavily on the monetary gas pedal. "The Fed has few traditional tools to use and, in the case of an interim ease or 75 basis point [three-quarter percentage point] cut later this month, it had better use them sparingly," Mr. Ader said. Still, Wall Street Fed watchers increasingly anticipate that the Fed will cut its target for the federal funds rate -- at which banks lending directly to each other -- to 2.25% from 3% at its March 18 meeting. Fed officials haven't been convinced that steep a cut is wise. "The speed and agility with which public policy makers and private financial institutions respond...will determine how quickly and how smoothly market conditions return to normal," Timothy Geithner, president of the Federal Reserve Bank of New York, the epicenter of the current crisis, said last week. Write to David Wessel at [email protected]

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2016-30/1376/en_head.json.gz/18784

Home > News & Events > Press Releases FDIC Creates a Deposit Insurance National Bank to Facilitate the Resolution of Community Bank of Nevada, Las Vegas, Nevada Nevada State Bank to Provide Temporary Operational Management David Barr (202) 898-6992 Email: [email protected] Community Bank of Nevada, Las Vegas, Nevada, was closed today by the State Commissioner, by Order of the Nevada Financial Institutions Division, which then appointed Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC created the Deposit Insurance National Bank of Las Vegas (DINB), which will remain open for approximately 30 days to allow depositors access to their insured deposits and time to open accounts at other insured institutions. At the time of closing, the receiver immediately transferred to the DINB all insured deposits of Community Bank of Nevada, except for brokered deposits, certificates of deposit (CDs) and individual retirement accounts (IRAs). The receiver also transferred to the DINB all secured public unit deposits. Nevada State Bank will provide operational management of the DINB under a contract with the FDIC. The main office and all branches of Community Bank of Nevada will open on Monday. Banking activities, such as direct deposit and writing checks, ATM and debit cards, can continue normally for former customers of Community Bank of Nevada during the 30-day transition period. It is also important to note that Community Bank of Nevada official checks will continue to clear and will be issued to customers closing accounts. All insured depositors of Community Bank of Nevada are encouraged to transfer their insured funds to other banks. They may do so by asking their new bank to electronically transfer their deposits from the DINB or by writing checks for the amount in their accounts. The FDIC will mail checks at the end of the transition period to the address of record for depositors who have not closed or transferred their accounts during the transition period. Brokered deposits, CDs and IRAs were not transferred to the DINB. The FDIC will mail checks directly to deposit customers with CDs and IRAs. The FDIC will pay the brokered deposits directly to the brokers for the amount of their insured funds. Customers with brokered deposits should contact their brokers directly for information concerning their money. Under the FDI Act, the FDIC may create a deposit insurance national bank to ensure that depositors have continued access to their insured funds where no other bank has agreed to assume the insured deposits. The DINB allows for uninterrupted direct deposits and automated payments from customers' accounts for customers with checking and NOW accounts and allows them time to find another institution with which to do business. As of June 30, 2009, Community Bank of Nevada had total assets of $1.52 billion and total deposits of about $1.38 billion. At the time of closing, there were approximately $4.2 million in deposits that potentially exceeded the insurance limits. Uninsured deposits were not transferred to the DINB. This amount is an estimate that is likely to change once the FDIC obtains additional information from these customers. Customers with accounts in excess of $250,000 should contact the FDIC toll-free at 1-800-331-6306 to set up an appointment to discuss their deposits. This phone number will be operational this evening until 9 p.m., Pacific Daylight Time (PDT); on Saturday from 9 a.m. to 6 p.m., PDT; on Sunday from noon to 6 p.m., PDT; and thereafter from 8 a.m. to 8 p.m., PDT. Customers who would like more information on today's transaction should visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/community-nv.html. Beginning Monday, August 17, 2009, depositors of Community Bank of Nevada with more than $250,000 at the bank may visit the FDIC's Web page "Is My Account Fully Insured?" at http://www2.fdic.gov/dip/Index.asp to determine their insurance coverage. The FDIC as receiver will retain all the assets from Community Bank of Nevada for later disposition. Loan customers should continue to make their payments as usual. The cost to the FDIC's Deposit Insurance Fund is estimated to be $781.5 million. Community Bank of Nevada is the 77th bank to fail this year and the third in Nevada. The last bank to be closed in the state was Great Basin Bank, Elko, on April 17, 2009. Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,246 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations. FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-146-2009

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