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Home / Business News Japan may join TPP free trade talks TOKYO, March 13 (UPI) -- Japan may announce this week its participation in the U.S.-led Trans-Pacific Partnership free trade negotiations, a source told Kyodo News The report Wednesday quoted a government source that Prime Minister Shinzo Abe was expected to make the announcement Friday. The report said Abe would hope to get backing for his decision at a weekend meeting of his Liberal Democratic Party. The Japanese development comes as the 16th round of the TPP talks for the regional economic integration of participating nations continued in Singapore. Participating countries are the United States, Canada, Mexico, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. Those countries' combined gross domestic product exceeds $21 trillion. The Office of the U.S. Trade Representative has said the participation of Canada and Mexico, the two largest trading partners of the United States, adds "significantly to the economic importance of the agreement as well as to establishing TPP as the most promising pathway to promote regional economic integration and to support the creation and retention of U.S. jobs." Kyodo, quoting a source close the negotiations, said some countries at the Singapore meeting expressed concern over Japan's policy of seeking exemptions to tariff eliminations for items such as some farm produce. The report said that those taking part in the Singapore round, however, would likely request Japan to go along with what has been agreed in earlier rounds. TPP calls for elimination of tariffs on all trade items. In Japan, there are concerns the TPP would cause cheaper foreign goods to flood Japan. Abe, described as a conservative keen on strengthening Japan-U.S. relations, returned as prime minister in December after his LDP party won a landslide victory in parliamentary elections. Japan's farming industry has traditionally supported the LDP. China's February exports soared Trade gap rose in January Report: Japan, EU partnership planned Vietnam produce growers seek more exports Topics: Shinzo Abe Latest Headlines

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> Personal Finance » Follow Business On: Tax-Friendly Places for Retirement (By Tim Grajeck For The Washington Post) By Mary Beth Franklin Maybe you're thinking about relocating in retirement, in hopes of enjoying milder weather and lower expenses. Before you make a move, it pays to assess the overall tax burden of your future home. Some states that are tax-friendly could get less chummy as they scramble to find new sources of revenue to plug gaping holes in recession-battered budgets. No matter where you live, the federal taxes will be about the same. But you'd be amazed at how much your state and local tax burden may vary. And if you itemize deductions, how much you pay -- and deduct -- in local property taxes could affect the bottom line of your federal return, too. People planning to retire "often use the presence or absence of a state income tax as a litmus test for a retirement destination," says Tom Wetzel, president of the Retirement Living Information Center. "But higher sales and property taxes can more than offset the lack of a state income tax." Seven states -- Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming -- have no state income tax. Two states -- New Hampshire and Tennessee -- tax only dividend and interest income that exceeds certain limits. But many of the remaining 41 states (and the District of Columbia) that impose an income tax offer generous incentives for retirees. If you qualify, moving to one of these retiree-friendly areas could be cheaper than relocating to a state with no income tax. Plus, in tough economic times, states without a personal income tax have fewer sources of revenue and are more likely to raise property or sales taxes and other fees to shore up their budgets. State tax revenue plunged nearly 12 percent during the first three months of 2009, the sharpest decline on record, reports the Nelson A. Rockefeller Institute of Government. And it may take states years to make up the shortfall. Despite the dismal economy, there is one bright spot for retirees on the move: falling home prices. "We see exceptional opportunities in some sought-after retirement destinations," says Mary Lu Abbott, editor of Where to Retire magazine. If you thought locations such as Naples, Fla., Scottsdale, Ariz., and Hilton Head, S.C., were out of your price range, it could be a good time to take a second look. Property taxes, however, have not been moving down as quickly. For a state-by-state tax guide, including special exemptions for seniors and a rundown on how various types of retirement income are taxed, see our interactive retiree tax map at http://kiplinger.com/links/retireetaxmap. Although most states that impose an income tax exempt at least a portion of pension income from taxation, they often treat public and private pensions differently. For instance, ten states -- Alabama, Hawaii, Illinois, Kansas, Louisiana, Massachusetts, Michigan, Mississippi, New York and Pennsylvania -- exclude all federal, military and in-state government pensions from taxation. But Kansas taxes public pensions from all other states. Pennsylvania and Mississippi, by contrast, exempt all retirement income -- including distributions from IRAs and 401(k) plans. Some states have special breaks based on age or income. Three states are particularly tough on retirees. Not only do they fully tax most pensions and other retirement income, they also have high top tax brackets: California (9.55 percent on income less than $1 million), Rhode Island (9.9 percent) and Vermont (9.5 percent). Connecticut and Nebraska also fully tax retirement income. Social Security Benefits Depending on your income, you may be required to include up to 85 percent of your Social Security benefits in your taxable income when filing your federal return. But in recent years, many states have moved away from taxing Social Security benefits. In addition to the nine states that lack a broad-based individual income tax, 27 states and the District of Columbia do not tax Social Security: Alabama, Arizona, Arkansas, California, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Virginia and Wisconsin. Don't forget to include state and local sales taxes in your personal budget analysis. Some states exempt food and medicine; others tax every dime you spend. Five states -- Alaska, Delaware, Montana, New Hampshire and Oregon -- have no state sales tax. At the other extreme, California's newly increased sales tax of 8.25 percent is the highest in the nation. Five other states -- Indiana, Mississippi, New Jersey, Rhode Island and Tennessee -- each have a state sales tax of 7 percent. In 2008, more than 500 U.S. cities either increased their sales-tax rate or initiated a new sales tax. Property taxes are a major cost factor, particularly for retirees living on fixed incomes. But many local jurisdictions offer property-tax breaks to full-time residents, some based on age alone and others linked to income. Tax rates vary significantly from state to state and among cities in the same state. "America's Best Low-Tax Retirement Towns" is a good starting point if you're trying to determine the financial implications of moving. It rates the total tax burden for more than 200 cities, broken down by different income levels and home values and based on 2006 tax rates. Based on data from a 2007 Census Bureau survey and Tax Foundation calculations, the five states with the lowest median real estate taxes (from lowest to highest) are Louisiana, Alabama, West Virginia, Mississippi and Arkansas. States with the highest median real estate taxes (from highest to lowest) are New Jersey, New Hampshire, Connecticut, New York and Rhode Island.

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Facebook Creates A Challenge For SEC 02.24.2012Business Share this Post According to the Securities and Exchange Commission, it has become increasingly more difficult to regulate and minimize insider trading. A predominant reason for this is social media like Facebook and Twitter. The ease at with insiders can share and disseminate information among groups is astounding. Mary Shapiro, Chairwoman of the Securities and Exchange Commission comments on the added challenges social networking sites bring to regulation: "The incredibly low cost and ease of reaching millions of people through social media creates opportunities for mischief, without question," Because much of what happens on social media sites is protected under privacy policies and guarded by watchdogs like the American Civil Liberties Union, vital information can be hard to come by. Shapiro comments on gathering evidence of insider trading: "Because we are very reliant when we do investigations on documentation, on E-mails, on telephone calls that might be taped by trading desks or by others, to the extent some of this is very ephemeral, it makes it harder to build cases," As we all know, insider trading is illegal for every citizen including lawmakers and government officials, but there is concern from citizens that insider trading is not being regulated properly when it come to the people who are running this country. In other words, the people who make the laws aren't following them. Recently, congress voted to move foreword on a bill to put an end to insider trading by federal employees. Apparently, the bill would further clarify what insider trading is to government employees and also require them to report any trading activity to regulators within 30 days. What I don't understand about the whole scenario is this, why would congress have to clarify what insider trading is to the people who made the laws forbidding it in the first place? More than likely, our elected officials have been using their trusted positions to make a buck, and now the American people are calling them out on it. So typical, our officials get pissed off when we ask them to stop breaking the laws that they themselves helped created. Laena Fallon, spokeswoman for House Majority Leader Eric Cantor elaborates on aspirations for the bill: "Building upon the Senate bill, this common-sense proposal will not only deal with insider trading of stocks, but also prevent all federal officials and employees from using insider information for profit in other areas in a constitutionally sound way," Oklahoma Republican Sen. Tom Coburn was one of the few to disagree with passing a new bill or adding amendments to the existing one, as he explains: "We're playing a game with the American people," "This isn't going to change anything, except for requiring a bunch of paperwork to entrap people." It all sounds like a bunch of nonsense to me, I think we should except the fact that lawmakers are a bunch of Hippocrates who use bureaucracy to mask abuses and perpetuate undeserved wealth. Social media is just a tool that has made it a lot more convenient for them. I don't think they'll be taking real measures to end it any time soon. Tags:Facebook, insider trading, regulators, sec, Securities Exchange Commission Signup for the Newsletter * Your Email Address:

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Please click "Continue" or you will be logged out. Online Banking Features Online Banking Menu Reset Login/Password Order Your Checks HistoryThe American National Bank was organized with Lou Cardin as its Chairman and president in 1917. Chartered as the third bank in Baxter Springs and capitalized for $50,000.00, the company was composed of R.I. Walker, W.T. Apple, L.L. Cardin, Dr. Boswell and others. The Bank purchased property at the corner of Military & River Streets (River is now 12th) and constructed a 50 foot 2 story building.On October 25, 1917 the Baxter Springs News carried a story of the upcoming opening of the bank with the following information "indications are that on November 10th the American National Bank of this city will open its doors for business in its new quarters in one of the best buildings in the city of Baxter Springs." The story continues by describing the building "the first floor of the building consists of the banking room, a store and an office room. The office room will be occupied by the Western Union Telegraph Company." The article concludes with the following "even though the bank is not in a position to sell the second issue of the Liberty Bonds through an advertisement in today's issue of The News, it points out to the people the advantage and patriotism in buying Liberty Bonds."Two years later the bank again made news when a robbery occurred regarding a customer of the bank. The Baxter Daily Citizen reported the events on Saturday October 4, 1919 as follows. "Cashier Traylor, of the Treece State Bank was held up and robbed of $3500.00 two and one-half miles west of Baxter Springs this morning at 9:30. Mr. Traylor, who lives in Baxter Springs and drives to the Treece bank every morning, took his wife and daughter this morning and went by the American National Bank to get some money for the bank at Treece. He was detained at the bank on account of money addressed to the American National Bank being detained in the mail, and as soon as he got his money he left Baxter driving towards Blue Mound. As he was about a mile and half east of Blue Mound a Ford Car passed him, carrying four young men wearing unionalls." The story continues that the three drew their guns, took the money, and left after disabling his car. "He then drove to Baxter Springs as rapidly as he could on the three cylinders that were left working and notified the police." Two Posses left in search of the criminals one headed by City Marshall Henry Horton and one by Constable Gene Turner. The robbers were not caught.Eddie Whitaker was working as a bookkeeper at the American National Bank on September 6, 1933 when three men entered through the front door. One approached teller John Conrad, pointing a gun at him through the service window and announcing a hold up. At the same time two other men went into the back room of the bank, circled in behind the cages, forcing the bank janitor ahead of them. The Janitor, Mr. Goodner, called out to Whitaker and alerted him that a robbery was in progress.Two of the men had a pillow case, which they filled with all the silver and currency that was out of the time safe, nearly $3000. Bank employee, Elsie Bland, had been out to lunch, but upon returning saw what was transpiring through the front door window. Realizing that something was terribly wrong, she ran across the street to Karbe's Store and told Mr. Jobe Stevens that the bank was being robbed. They called the police, only to discover that all local officers were out of town for the day. After the robbery, it was realized that the men were the notorious Wilber Underhill gang, well know for robbing banks in the early thirties. A vigilante group was formed by Baxter Springs citizens, and a search made for the perpetrators. However, the men eluded capture disappearing down Fifth Street. Less than two weeks later, at a hold-up in Galena at the First National Bank, two of the men were apprehended and sentenced to 20 years in Lansing State Penitentiary. Underhill was later killed at Sapulpa, Okla."In 1938, Mr. Cardin President of American National Bank died. Mrs. Jessie Cardin, his widow, became the Chairman of the Board and President.In 1952, the American National Bank and Baxter National Bank merged in the building at 12th and Military. Arthur Hoyt, the President of Baxter National Bank, joined the new bank as its Senior Vice President.In 1946 Walter C. Hartley joined the bank as its President and was elected Chairman of the Board in 1964 upon the death of Mrs. Jessie (Cardin) Hunt.After the death of Walter Hartley in 1972, A.F. Leonhard became President of the bank and W.C. (Dub) Hartley became Chairman of the Board.In 1976, the 2 story brick building first built in 1917 came down "brick by brick" completely removing the structure to replace it with the one-story building on the site today. Art Leonhard oversaw the construction and grand re-opening in 1977 and was President until his death in 1982. Lynn Hartley was then made President of the Bank followed by Ron Wadley. In 1987 Marc Wolin was appointed President. During his tenure, the bank once again expanded by adding the drive in lanes to the South, acquiring the remaining block, and adding the mural on the south facade of the building. In 1999 and 2003 the bank expanded it's Cherokee County services by adding branches in both Columbus, KS and Galena, KS. Currently, Lynn Mitchelson serves as President, Chairman of the Board and CEO. Cassie Mann; Executive Vice President. Jennifer Sparks; Vice President, Cashier. Taylor Hight; Executive Vice President and Chief Operations Officer. Allen Schaper; Executive Vice President, Chief Lender. Jim Gaither; Senior Vice President, Commercial/Agriculture Lending.Since 1917 American Bank has been an important part of the Cherokee County community. With nearly $100 Million in assets and branches in the three largest towns in Cherokee County, American Bank continues to be Customer Oriented and Community Involved.Thank you for visiting our site and we look forward to serving you. Copyright © American Bank. All rights reserved. Member FDIC. Equal Housing Lender

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That venture capital shakeout is still taking way too long Lately, I've heard a lot of VCs bringing up how much of their industry is going out of business. As both a member of the press and an entrepreneur, it's hard for me to feel much pity or see it as some great sign of Darwinian health. Mostly, because I've now been writing about a venture capital shakeout since the year after I arrived in Silicon Valley. This might be the slowest industry reckoning the capitalist world has ever seen. Seriously, Godot got here quicker. It occurs to me that if I'm going to complain about the pivots and acqui-hires and the overall decrease of actual failure in Silicon Valley, I should start with the part of the Valley that funds it all. By my count we are more than a decade now into a "shake-out" in venture capital dating back to the excesses of the dot com crash. Yes, it is more real than theoretical after the last few years. Firms have started to go out of business and the concentration of limited partner money is going to a smaller and smaller set of firms. There was one particular quarter last year when just seven funds raised 80 percent of the venture capital. But that quarter was mostly an anomaly and considering 95 percent of the returns still come from 5 percent of the deals, it seems the VCs are still getting a better deal than their investors. As I've written before, there are precious few firms who can raise as much money as they want. Everyone else is scrapping. But the shocker to me has been how many firms people keep whispering are DOA that somehow find an LP somewhere in the world willing to give them another shot. There are two reasons why. The first is that there is just a ton of institutional wealth that has been created in the world. First, in the US towards the end of the 20th century, and increasingly, in emerging markets. When nearly every institutional fund wants to put a tiny percentage of its wealth in the basket of "alternative assets" like venture capital, that just adds up to more money than the industry can really put to work in good ways -- even at current levels. The second reason is this chart: Cambridge Associates, which tracks venture capital liquidity, released its most recent numbers last week and showed that, yep, results are down of late. But their investors measure them in ten-year increments, because the companies they fund take a while to mature and exit. And it turns out that math is almost always forgiving. For a long time the ten-year index still included the heady times of 1999 and early 2000, so they were artificially bolstered up. Those have only recently fallen out -- about the time the bulk of this actual shakeout really started. But now, Cambridge proclaims that the anemic post-bubble years of 2001 and 2002 are falling off the index as well. That's causing the aggregate long term numbers to rise again. Are they the best venture capital has ever seen? Not at all. But they're better than the market average. And that's the thing. We can all talk about "venture style returns," and most people mean making 10 times your cash. But as long as that's the dreamy upside, and the downside is beating the market, investors still keep putting cash in. Even if -- in practice -- most of those firms aren't beating the market. Many aren't returning capital at all. Everyone is just a hit away from dumb money looking brilliant. In a perfect world, only the firms actually delivering would raise another round. But those good firms are all over-booked. So the rest of the industry's cash goes to the rest or doesn't invest. VCs acutely feel like a shakeout is real and severe. But that's largely because they've been in venture capital too long. It's an insanely forgiving business, even if you're on the losing end. Firms don't just close down the way a company does. Each fund is a ten-year investment cycle that doesn't end until the last deal has gone public, sold or gone under. They can limp along seemingly infinitely. Several VCs I've talked to have pointed out that out of some 700 funds that are technically listed as doing business in the US, only 97 of them have invested at least $1 million for four straight quarters in the room. 700 down to 97 is certainly extreme. But honestly, can you even name 97 venture firms? I write about this stuff for a living and I can maybe name 20 off the top of my head. Remember: This is a home run business and 95 percent of the returns are coming from 5 percent of the deals. Let's be generous and say, at least fifty of those 97 can be putting up what LPs consider venture style numbers. Clearly 600 firms would disagree with me that a venture shakeout hasn't been severe enough. I don't have a lot of pity for them. Anyone going under in this business has been given at least 10 years of second chances while their portfolio companies suffer far harsher economic realities.

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Gilded Age II September 2, 2002 Issue By Alice H. Amsden August 15, 2002 How did it all start? What triggered the 1990s political corruption, its inequality in wealth and its stock market bubble? This is the decade that Kevin Phillips rails against in his historical epic of how the rich get richer and the poor get further in debt. Arguably it all started in Silicon Valley, with a little help from the Department of Defense (which pioneered the epochal breakthroughs–transistor and Internet–that sparked the electronics revolution). Given the government’s basic research, such private companies as Hewlett-Packard, Microsoft, Apple, Intel and Cisco generated creative, profitable products using new technologies. As the intellectual property of these well-managed companies began to rise, their stock prices began to rise, as did those of their suppliers, buyers, competitors, financial consultants, management analysts, lawyers and accountants. Even the stock prices of companies unrelated to high tech began to soar. The frenzy struck executive salaries. Top-notch high-tech managers made a lot of money because their pay was tied to stock options. As their company’s stock price skyrocketed, so did their salaries. Soon other corporate leaders–good, bad and indifferent–tied their own salaries to the price of their company’s stock. The financial markets regarded stock options as a way to make managers more “efficient” using the litmus test of stock-price performance. In practice, some managers cooked the books and inflated stock prices by making risky short-term investments and acquisitions. Long-term investments in new plant, equipment, research and intellectual property, necessary for permanent jobs, became an afterthought. As Phillips shows, the greed of corporate America was such that in the 1960s, the pay of corporate CEOs was “only” about twenty-five times that of hourly production workers. In the 1970s, the ratio was around thirty to one. It rose from ninety-three times in 1988 to 419 times in 1999. Between 1990 and 1998, the wages of ordinary workers barely kept pace with inflation or grew at single-digit rates. Meanwhile, top executives of America’s biggest corporations enjoyed compensation increases of 481 percent! (Appalled by the eye-popping numbers on executive pay, Paul Krugman referred to Wealth and Democracy in one of his columns in the New York Times.) With so much money sloshing around, contributions by business to politicians increased. With more campaign funding, deregulation resumed where Reagan left off, and upper-bracket tax rates mellowed. Phillips shows that the effective federal tax rate (income and FICA, or Social Security and Medicare) for the top 1 percent of families fell from 69 percent in 1970 to about 40 percent in 1993, with plenty of loopholes remaining. Over the same period, the tax rate for the median family increased from 16 percent to 25 percent. Between 1950 and 2000, corporate taxes as a percentage of total tax receipts fell from 27 percent to 10 percent while FICA (mostly paid by the middle class) jumped from 7 percent to 31 percent. Most Popular1Tim Kaine Has a Troubling Record on Labor Issues2The Best Veep Pick for Hillary Clinton Is a Person of Color3If Trump’s Speech Sounded Familiar, That’s Because Nixon Gave It First4The RNC Is a Disaster—So Why Can’t I Sleep at Night?5Donald Trump’s Angry, Dark Speech Caps Off a Disastrous RNC Regulation was critically lax in the accounting industry’s scandals, as we now know. Phillips’s book predates news of this disgrace, but he anticipates most of what happened. Deal by deal, the Big Five all began to relax established auditing norms; otherwise they would have lost big customers to one another. When chairman Arthur Levitt Jr. of the Securities and Exchange Commission proposed to investigate, the Big Five went to Washington. The SEC was called off the job; the Clinton Administration caved in. As for the telecommunications sector, now bleeding billions from overcapacity, its relations with the government were similar to those of the railroads in the robber-baron age. In the late nineteenth century, railroad tycoons were given free access to land worth millions of dollars; in the 1990s, the telecommunications industry was given publicly owned electromagnetic spectrum worth billions of dollars. Phillips shows that, among the top thirty billionaires reported by Forbes for 2001, eight were in high-tech electronics, including software, and eight were in media. So, starting with Silicon Valley, one can tell a story about the 1990s that may be flat-footed but that at least moves from cause to effect in a linear fashion. This, however, is not the story that Kevin Phillips chooses to tell. Or maybe it is, but his writing style is so roving, rambling and roundabout that it is difficult to find a coherent story anywhere, although the parts are sure to be found somewhere, and are often juicy. He aims a shotgun rather than a rifle at the fin de siècle‘s cast of cruddy characters. Phillips doesn’t start in Silicon Valley because, at heart, he is an antitechnologist. For Phillips, technology merely makes mischief. “From early textile machinery to the Internet,” he writes, the early stages of major innovations have generated rising social and economic inequality almost as a matter of course.” (But how about the millions of jobs created in textiles and the Internet at a slightly later stage?) Elsewhere he states: “We can likewise doubt that technology has outweighed representative government, effective markets, and English-speaking freedoms in achieving the economic leadership of Britain and then the United States.” Really? Phillips’s dismissal of technology as a major factor in the economic hegemony of first England and then the United States is strange because he shows contempt for the alternative explanation–an obsessive love of market forces and laissez-faire. Technology is bad in Phillips’s view simply because it breeds speculation. There are no heroes. Ad Policy Notwithstanding Phillips’s chaotic style and his neglect of the real economic forces that govern wealth accumulation and distribution (such as technology), he does a big service for his readers by providing them with bytes of information on wealth inequality and democracy’s warts. Phillips, historically a card-carrying Republican, regards his reformist, liberal politics as nothing strange. It follows in the footsteps of great past Republican reformers like Lincoln and Theodore Roosevelt. Phillips considers Franklin D. Roosevelt one of the team because–his affiliation to the Democratic Party notwithstanding–he was rich but a reformer of radical scope (responding, one might add, not necessarily to his conscience but to social unrest). For most Republicans, Phillips has nothing kind to say. “The Democrats,” he writes, “were the more important incubators of the Internet mania, but the underpinning economic spirit was the market-deifying, tax-cutting, and assets-aggrandizing conservatism given its head in the eighties. This part of the framework was more Republican.” The Republican pedigree lets Phillips get away with murder. He rants and raves in a way that someone on the left would be skewered for. The result, however, is welcome. It is satisfying to read an analysis of the US economy from the standpoint of greed and conservative morality. The history lessons Phillips administers range from Aristotle to the Gilded Age of the 1920s, which he contrasts with Gilded Age II of the 1990s. He examines Holland’s tulip mania and its economic decline as a world power, comparing its fall with that of Britain and possibly the United States. In one table, culled from the Wall Street Journal, he lists the wealthiest people of the past 1,000 years, starting with Al-Mansur (938-1002), the Moorish regent of Cordoba, who got rich through plunder, moving to Kublai Khan, ruler of China (1215-94), who got rich from inheritance and confiscation, and ending with Bill Gates (1955-), the US software executive, who got rich on stock ownership in Microsoft. Other facts and figures are no less interesting, and some of Phillips’s charts are ingenious. To show the “giantizing” of wealth enjoyed by the richest person in the realm, Phillips compares the largest fortune at the time to that of the median family or household. In 1790, the ratio of the richest man’s wealth, Elias Derby, to the median was 4,000 to 1. By 1868, the ratio of Cornelius Vanderbilt’s wealth (in railroads) to the median was 80,000 to 1. For John D. Rockefeller in 1912, the ratio was 1,250,000 to 1 (in 1940, it fell to 850,000 to 1). In 1962, the ratio for Jean Paul Getty was 138,000 to 1. For Sam Walton in 1992, it was 185,000 to 1. For Bill Gates in 1999, it was the blockbuster, 1,416,000 to 1! Presumably, the ratio increased over time as the United States moved from an agrarian economy to one based on modern transportation (railroads), natural resource exploitation (copper, oil) and then manufacturing, where new product innovations could flourish. GET A DIGITAL SUBSCRIPTION FOR JUST $9.50! Subscribe Compared with other wealthy countries, inequality in the United States is extreme. In the 1990s, the income ratio in Japan of the top fifth of households to the bottom fifth was only 4.3 to 1. (A similar ratio exists in Korea and Taiwan, which, like Japan, had a land reform after World War II.) European social democracies tended to have ratios of 6 or 7 to 1 (5.8 in Germany). The US ratio was 11 to 1 or higher, depending on the source. Presumably this reflected the United States’ cowboy capitalism, its rich raw materials, its pioneering technologies and its corporations’ ability to mass-produce for a vast domestic market. Wealth (which Phillips never defines) is essentially the difference between inflows and outflows of income, which is savings in the case of households and profits in the case of firms. Once wealth is attained, its holder has to figure out what to do with it. Thus, the financial services industry usually expands as wealth expands. In the 1990s the finance, insurance and real estate sector (FIRE) overtook manufacturing in US national income, “enabled by a dozen federal rescues and preferences, begun in the eighties and consummated in the nineties.” The thirty richest individuals in 2001 also included eight in finance, investments and real estate–including Warren Buffett, George Soros and Ross Perot. As finance grows, Phillips argues, the likelihood of a technobubble grows exponentially. What does it all mean, the rising inequality and “financialization” of the economy? Business as usual, insofar as Gilded Age II is merely a catch-up with Gilded Age I. Between 1922 and 1997, the share of total wealth of the top 1 percent of households spiked in 1929 at 44.2 percent, tumbled to 33.3 percent in 1933, reached a nadir of 19.9 percent in 1976 (as profits plunged with the energy crisis) and hit 40.1 percent in 1997 (the estimates are from Edward Wolff). As the stock market boomed in 1997-2000, the wealth of the richest rose further, but atomized with the crash of 2000, into the present. Wealth inequality appears to be wired into the American system. Relative increases in the wealth of the rich, moreover, are often compatible with increases in real wages and productivity. The average family’s real income increased 30 percent between 1960 and 1968 as the ranks of millionaires swelled. Then came the era of stagflation. According to the Council of Economic Advisers, average hourly earnings, adjusted for consumer prices, fell by 0.5 percent a year from 1978 to 1995. They then rose at a piddling 2 percent a year from 1995 to 2000, in tandem with rising productivity and the “irrational exuberance” of the stock market. Thus, wealth inequality does not preclude modest increases in income for other social classes. Ad Policy Yet, inequality matters, depending on the use to which wealth is put. And that in turn depends on the economic and social profile of the accumulating classes. Kevin Phillips, however, is not keen on “class analysis.” “‘Class warfare’…is a false description,” he writes, “a perverse conservative borrowing from Karl Marx,” because the United States has had rich reformers and poor Republicans. Still, one doesn’t have to emulate Karl Marx in the Grundrisse to emphasize that the new American class of rich is different from the railroad barons or the oil money of old. For one, it is extremely well educated. Between 1975 and 1998, the mean annual earnings of US workers with less than four years of high school fell steadily. Those of high school graduates stagnated. Those of college graduates rose slightly. Those of people with advanced degrees soared, particularly after 1990, when the demand for economists, lawyers, accountants and MBAs heated up (as noted by Edward Wolff). Investments of the new superrich, therefore, are likely to gravitate toward new technologies in manufacturing and services, and fancy finance. With high educational attainments, the new elite may be expected to command a lot of money and social legitimacy, which the old tycoons never quite managed. A mere college education is no longer a guarantee of upward mobility, as Washington policy-makers still believe. For most ordinary people without a college degree or fancy MBA, the new rich have created a tougher world. Horatio Alger now goes to graduate school. The second defining characteristic of the new rich is their internationalism. They hire, produce and market globally, and have mobilized bipartisan political support for operating overseas. That all started with strong competition from Japan in the 1980s. Technologically behind the United States, Japan had more government interventions to help business grow (as did Korea, Taiwan, China, India, etc.). The United States regarded this as unfair, and shoved a “level playing field” down everyone’s throat–backward and advanced countries have to be equal with open markets, free of government’s foul play. The financial services sector, with large-scale economies, benefited enormously from Washington’s dismantling of developing countries’ barriers to foreign banking and regulations of inflows and outflows of “hot,” destabilizing money. Deregulation was soon followed by the Asian financial crisis of 1997. The Treasury still publishes a book each year documenting on a country-by-country basis the remaining obstacles abroad to American financial institutions. The pharmaceuticals industry benefited from the extension of patent enforcement to developing countries notwithstanding their need for cheap medicines. The software industry pressed for protection of intellectual property. Strangely, Phillips hardly talks about globalization at all. But from stray sentences we can assume he doesn’t like it, especially its effect on domestic jobs. Yet lobbying in Washington for protection of jobs that can be provided more efficiently in lower-wage countries is little different in principle from lobbying for tax breaks and deregulation for the rich. They are both a form of political corruption. Phillips ends his 470-page book with a tepid recommendation, given the preceding fire and brimstone. It is to end the “democratic deficit,” which puts power in the hands of unelected organizations–the judiciary, the Federal Reserve and the WTO. But Washington has a large say in the WTO, controls the World Bank and has a loud voice in the International Monetary Fund. For American business, that deficit is small. Is, therefore, American foreign economic policy likely to give the new class of rich the global stability it desperately requires? No, if Kevin Phillips is right and inequality does matter. Internationally, economic inequality among countries has grown like Topsy. As industrialization spread unevenly, the ratio in per capita income of the richest to the poorest regions of the world rose from about 3 to 1 in 1820, to 5 to 1 in 1870, to 9 to 1 in 1913, to 15 to 1 in 1950. Then, as East Asia grew, the ratio fell in 1972 to 13 to 1, but rose steeply to 19 to 1 in 1998, the age of hardball globalism (data are from Angus Maddison, The World Economy). Global distribution of income and wealth is becoming as important to the American rich as domestic distribution, and both are highly skewed. Phillips doesn’t consider any of this, but that’s fine. He makes a real contribution by showing how American politics works, what really goes on behind the fortunes. Yech! What a scene! Facebook Alice H. Amsden Alice H. Amsden, professor of political economy at MIT, is the author of The Rise of the Rest: Challenges to the West From Late-Industrializing Countries (Oxford). Nearly Half of All Women in Jail Are Disabled By Rebecca Vallas Jul 13, 2016 An Open Letter About Emergency Contraception By Katha Pollitt and Jennifer Baumgardner Aug 28, 2002 Iraq and Poison Gas By Dilip Hiro “AN INDISPENSABLE VOICE IN OUR POLITICAL DIALOGUE.”

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The Deal: Slim's KPN Bid 'Cause for Concern,' Foundation Says Royal KPN representative concerned about lack of information in $9.5 billion bid from Mexico's América Móvil NEW YORK ( TheStreet) - A foundation tasked with overseeing the well-being of Royal KPN NV said late Tuesday it was worried about the lack of information included in a ¤7.2 billion ($9.5 billion) approach from Mexican phone company América Móvil SAB de CV ( AMX). The foundation stopped short of saying it would try to halt the deal and noted it was "concerned" about the merger offer. It specifically cited the lack of information about América Móvil's feelings about The Hague, Netherlands-based KPN's proposed sale of its German division. Spain's Telefónica SA has agreed to buy KPN's E-Plus unit for ¤6.1 billion in stock and cash. "The Foundation notes that there is considerable uncertainty about América Móvil's intentions ... regarding its position on the further strategic development of KPN, including KPN's intention to sell its German subsidiary E-Plus," it said. The foundation is formally known as Stichting Preferente Aandelen B KPN, or Foundation Preference Shares B KPN, and has the right to force the company to issue it new shares equivalent to KPN's current share capital minus one share. It's tasked with protecting KPN's interests, and a spokesman said it was especially perturbed by the approach because it didn't have the company's blessing. América Móvil, controlled by Mexican billionaire Carlos Slim, has publicly said it will wait for more information from KPN's brass before commenting on the E-Plus sale. But news leaks suggest it may have actually unveiled the KPN offer to either squeeze more money out of Telefónica or halt the approach altogether. However, Telefónica's bid for E-Plus is already perilous. Competition and phone regulators in Germany have pledged to take a hard look at it, as it would remove one of four cellular companies in Europe's biggest economy. América Móvil and Telefónica compete directly in South America. The Madrid-based company has also foiled attempts by Slim and his Mexican provider to buy into Telecom Italia SpA and also tried to prevent it from increasing its KPN stake to 29.8% last year. Telefónica is part of a consortium that owns 22.4% of Italy's incumbent phone company. The renewed resistance comes just days after two ratings agencies said an acquisition of KPN by América Móvil could jeopardize the Mexican phone company's debt ratings. Written by Andrew Bulkeley in New York If you liked this article you might like 3 Stocks Pushing The Technology Sector Lower 5 Foreign Blue Chips That Are Breaking Out This Summer These five big foreign stocks that are telling important technical stories right now. Here's how to trade them. Verizon's Buyout of Telogis Reflects the Wireless Industry's Long Road in Telematics Keeping tabs on trucks is one of the top markets in the burgeoning "Internet of Things." 3 Stocks Dragging In The Telecommunications Industry TheStreet highlights 3 stocks pushing the telecommunications industry lower today.

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Kroger Plans to Buy Harris Teeter KR SVU Trades from $3 With expansion plans in key south-eastern and mid-Atlantic states, one of the largest grocery retailers The Kroger Co. (KR - Analyst Report) has announced its decision to acquire all the shares of regional grocer Harris Teeter Supermarkets Inc. for $2.44 billion in cash. Per the deal, Kroger will pay $49.38 for each Harris Teeter share and will assume the latter’s outstanding debt of about $100 million. The deal has been approved by the boards of both companies. However, Harris Teeter has yet to receive shareholder approval. Kroger will finance the deal with debt, and will therefore allocate some free cash flow to reduce its current debt burden in the subsequent quarters. Kroger expects net accretion to earnings per share in the range of 6 – 9 cents in year-one after the merger. After the completion of the deal, Harris Teeter will become a subsidiary of Kroger. It will retain Harris Teeter’s senior management and its headquarters at Matthews, NC. Kroger will not sell any of the Harris Teeter stores until there is an overlap in any of the Harris Teeter’s markets. Kroger is impressed with Harris Teeter’s strong management team and variety of store formats located in high-growth markets. Harris Teeter operates stores in the Carolinas, Virginia, Maryland, Tennessee, Delaware, Florida, Georgia and the District of Columbia. The bulk of its stores are in North Carolina. Harris Teeter’s fresh and prepared foods section is also expected to allow Kroger to expand its food business. Kroger also expects to benefit from Harris Teeter’s online shopping system. The deal will be a strategic fit for Kroger. It will provide the company with an opportunity to expand its footprint in several attractive and high-growth markets including Delaware, Florida, Maryland and Washington, DC, where Kroger currently does not have a presence. Kroger will also get hold of Harris Teeter’s distribution centers for grocery, frozen and perishable foods in Greensboro and Indian Trail, NC and a dairy facility in High Point, NC. However, it is speculated that Kroger is undervaluing Harris Teeter. Harris Teeter thus have an option to re-consider the deal to provide best value to its shareholders. Kroger's acquisition of Harris Teeter is the second biggest deal in the U.S. grocery industry in 2013 and the second-largest acquisition for Kroger after its purchase of Fred Meyer Inc for $13.89 billion in 1999. Notably, the U.S. grocery industry has been consolidating from quite some time as chains like Harris Teeter have struggled to maintain market share against big retailers, dollar stores as well as drugstores. Retailers like Supervalu Inc (SVU - Analyst Report) and Safeway Inc are also selling off their assets. In June 2013, Safeway agreed to sell its Canadian operations to Sobeys operator Empire Co Ltd while Supervalu struck a $3.3 billion deal to reduce debt by selling five of its chains to an investor group led by Cerberus Capital Management LP in Jan 2013. We believe that the Kroger-Harris Teeter deal will provide excellent value in an increasingly competitive market. The combined business is expected operate 2,631 supermarkets in 34 states and the District of Columbia, with over 368,300 employees. Kroger holds a Zacks Rank #2 (Buy). Get the latest research report on KR - FREEGet the latest research report on SVU - FREE

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Women Ask: Why Have We Been Getting as Little as 4% of VC Money? Written by: Laura Kiesel NEW YORK (MainStreet) -- It seems male investors like to give their money to other men -- even when the product is geared toward female consumers. This became clear last month when entrepreneur and co-founder of popular sports website BleacherReport.com Bryan Goldberg caused an uproar when he announced the launch of a female-focused website, Bustle.com. The uproar was not so much caused by his encroachment on the terrain of women-themed sites, but because he claimed he was carving out new territory -- dismissing a slew of existing websites such as Jezebel, The Hairpin and Bust. Adding to the collective ire was Goldberg's bragging at having been granted $6.5 million to launch Bustle, then offering to pay female staffers $100 a day for up to six posts, which translates to $26,000 a year, assuming the gig is full time. (The ads for these positions have been removed from the Web). More Headlines The Psychology Behind Why We Love Black Friday By comparison, the women's websites already out there -- founded and run mainly by women -- often run on much more modest budgets, having been overlooked by investors despite their popularity. In an open letter to Goldberg, the Bust editors decried that he "was actually able to launch a website, with a spiffy responsive design ... All because some other men gave him $6.5 million." Also see: Student Loan Debt Bad? It's Much Worse for Women>> With $6.5 million, they could spiff up their own website and pay writers better -- much better than Goldberg seems willing to, they wrote. That seems unlikely to happen; the vast majority of all investment money in the United States goes to male-led ventures. Specifically, only about 4% to 9% of venture capital funding goes to women, despite the fact that as of a decade ago, 28% of businesses were owned by women, employing more than 10 million people and generating $1.5 trillion in sales. A report by business analysts the Diana Project, Gatekeepers of Venture Growth: The Role and Participation of Women in the Venture Capital Industry, found that at the turn of the century women represented less than 10% of high-level venture capitalists and had been leaving the industry at twice the rate of men. 12

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Job Worries Linger, But The Economy Is Looking Good By Marilyn Geewax Jul 30, 2014 ShareTwitter Facebook Google+ Email Assembly-line workers at the Chrysler plant in Sterling Heights, Mich. The economy is getting good marks in the latest data, but some worries about the job market continue. Paul Sancya Originally published on July 30, 2014 4:28 pm Five years after the Great Recession ended, where are we with this recovery? On Wednesday, the Commerce Department and the Federal Reserve both answered by saying, in effect: We're in a sweet spot — growing at a decent rate with good reason for optimism. Or as the Fed blandly put it, "economic activity will expand at a moderate pace." President Obama, speaking on the economy in Kansas City, Mo., was more effusive. After a brutal recession, "we have fought back. We have got back off our feet, we have dusted ourselves off," Obama said. "Construction is up. Manufacturing is back. Our energy, our technology, our auto industries — they're all booming." Most economists agree the signposts are pointing up. New numbers provide evidence that "the economy is healthy and will continue to grow at an above-average rate in the second half of this year and into 2015," IHS Global Insight chief U.S. economist Doug Handler said in his written assessment. The upbeat day started with the Commerce Department saying GDP, or gross domestic product, rose at a robust 4 percent pace during April, May and June. Economists were relieved to see the key measure of all goods and services rebound after a dismal winter. Back in January, February and March, when frigid temperatures and unusual snowstorms kept many shoppers at home, the economy shrank by 2.1 percent. But then consumers came out of hibernation. Most economists had predicted a springtime bounce back of 3 percent, and were surprised to see the surge to 4 percent. When the past 12 months are tallied together, growth evens out to about 2.4 percent over the period, a moderate pace. Economists were still chewing over the GDP report when another important announcement came out at 2 p.m. Federal Reserve policymakers ended their regularly scheduled meeting by saying "economic activity rebounded [and] labor market conditions improved, with the unemployment rate declining further." But it wasn't all rosy. The Fed also noted that the job market remains slack. As a result, the central bank will continue to try to make it easier to borrow. The goal is to help businesses expand and hire more. The extra stimulus is still needed because "a range of labor market indicators suggests that there remains significant underutilization of labor resources," the Fed said in its statement. So the central bank will stick with its current program of buying bonds to help spur growth, but will continue to "taper" it down until an end date in October. For now, the Fed will cut its monthly bond purchases by an additional $10 billion, pushing the total down to $25 billion. Back in 2013, the amount was $85 billion a month. Interpretation: The Fed is committed to taking its foot off the economy's gas pedal. But the move will continue to be very gradual, and it has no plans yet to pump the brakes by intentionally raising interest rates. Some economists don't like that supergradual approach. One critic is Charles Plosser, president of the Federal Reserve Bank of Philadelphia. As one of the Fed policymakers, he cast the sole vote in dissent because he disagrees with the Fed's plan to keep short-term interest rates near zero for "a considerable time." The fear is that such low rates might allow the economy to overheat and generate inflation. But Fed Chair Janet Yellen remains more worried about jobs than inflation. Earlier this month, she expressed her concerns about the labor market and said "the recovery is not yet complete." On Friday, everyone will get fresh ammo to continue this debate: At 8:30 a.m., the Labor Department is scheduled to release the July labor report. If the unemployment rate falls significantly from its current 6.1 percent level, it will strengthen the hand of critics who say it's time to push interest rates back up to higher, more normal levels.Copyright 2014 NPR. To see more, visit http://www.npr.org/. View the discussion thread. © 2016 KUVO/KVJZ

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This Just In Sanders warns about ‘chained’ Consumer Price Index By EDWARD DONGACorrespondent WASHINGTON — Sen. Bernard Sanders on Thursday spoke out against a plan aimed at reducing the federal deficit by changing the manner in which Social Security benefits are calculated.Sanders, an independent and founder of the Senate’s Defend Social Security Caucus, was joined at a Capitol Hill news conference by Sens. Sheldon Whitehouse, D-R.I., and Jeff Merkley, D-Ore., as well as AFL-CIO President Richard Trumka and representatives of advocacy groups for senior citizens, women, veterans and those with disabilities..The news conference targeted a proposal to alter how the federal Consumer Price Index is calculated. The CPI is a measurement of the average change in cost of household items, and it is used to help create cost-of-living estimates that govern benefit increases for programs such as Social Security. But Sanders noted that some members of Congress, in an effort to reduce the federal deficit, want to adopt what has become known as a chained CPI. According to published reports, this plan was pushed, but ultimately dropped, by some Republicans during discussions last month on ways to avoid the so-called fiscal cliff.Declared Sanders, “My Republican colleagues in Congress and some Democrats are attempting to use the deficit crisis as an excuse to cut Social Security benefits. That is wrong.” He added: “Deficit reduction is important, but it must be done in a way that is fair. We must not balance the budget on the backs of the elderly, on the backs of veterans.”Rather than simply adjusting the cost of living based on changes in the price of basic goods, as is done currently, a chained CPI would factor in the assumption that, as the price of one good increases, consumers will purchase a similar, less expensive commodity instead.For instance, when the price of apples goes up, the current CPI accounts for the change only in the price of apples; a chained CPI would factor in an assumption that many consumers would buy oranges instead of apples if the former were less expensive.But Sanders warned that if the government begins basing its calculations on a chained CPI, senior citizens would see a significant cut in their Social Security benefits. Veterans with disability benefits would face the same problem, said Sanders, who is chairman of the Senate Veterans Affairs Committee.“The chained CPI for seniors who are 65 today, by the time they are 75 years of age they would lose $650 a year (in benefits),” Sander said, noting that Thursday marked the 73rd anniversary of Ida May Fuller, of Ludlow, receiving the first Social Security check ever issued.Nancy LeaMond, executive vice president of AARP, echoed Sanders’ statement.“It has been put forward as a relatively easy, relatively harmless solution to reduce the deficit,” LeaMond said of the chained CPI proposal. “However, this policy would have very negative effects on millions of seniors, retirees, working families, women, veterans and the seniors.”Sanders said 3.2 million disabled veterans in the United States would also see their benefits affected, contending that veterans who started collecting disability benefits at age 30 would see a $1,400 decrease in those benefits by age 45.“This is unacceptable, and if you support a chained CPI you support breaking your promise that this country made to every single one of those veterans,” declared Tom Tarantino, policy chief for the Iraq and Afghanistan Veterans of America.

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MarketWatch MarketWatch SmartMoney SmartMoney AllThingsDigital AllThingsDigital FINS FINS More WSJ X - Invitation Only WSJ India WSJ China chinese edition WSJ Japan japanese edition WSJ Europe WSJ Deutschland WSJ Americas en Español Also in WSJ.com: Latest Headlines is home to all the latest, up to the minute news headlines from The Wall Street Journal in a streaming continuous headline experience. 314491 0 new posts Risk & Compliance The Morning Risk Report: Small Banks Not Yet Out of the Woods By Ben DiPietro Smaller banks put on a full-court press to get regulators to change some of the capital requirements in the Basel III provisions adopted Tuesday by the Federal Reserve but may yet come under the scrutiny of regulators. Among the concessions won by small banks are being allowed to count certain trust-preferred securities toward capital requirements, being able to opt out of a requirement to count certain types of comprehensive income in capital calculations and getting the Fed to back off a plan to adjust risk weighting for residential mortgages. Now that they have dodged this bullet, smaller banks need to get ready for the next rounds of battle, said Ernie Patrikis, a partner at New York law firm Case & White who previously spent 30 years at the Federal Reserve Bank of New York. ”What’s important is what’s coming down the pike in terms of leverage and enhanced parental supervision with liquidity and concentration,” he said. “This was step one; it’s done.” Mary Mitchell Dunn, senior vice president and deputy general counsel of the Credit Union National Association, said her organization, while not directly affected by Basel III, is concerned that the capital reforms put in place allow for flexibility for credit unions and community banks. “We are hearing from the community banks and others that they don’t think Basel III is doing that for them,” she said. “They’re concerned that money that might go into loans or other activities is going to be in capital.” EXCLUSIVE ON RISK & COMPLIANCE JOURNAL: Proofpoint cou ld gain from NSA news (video). Proofpoint Inc.is turning concerns about U.S. National Security Agency surveillance into a competitive advantage. The California-based and Nasdaq-listed data security company assures non-U.S. business customers they can comply with privacy protection laws in their home territories because Proofpoint will not only store their data outside the U.S. and beyond the reach of U.S. law, but also encrypted in a manner that makes it unreadable even to government authorities without the customer’s cooperation. Q&A: Paul McKeown, Nasdaq OMX. Paul McKeown, vice president of market technology at Nasdaq OMX, talks to Risk & Compliance Journal about cross-border, cross-jurisdictional surveillance, regulating the OTC space and trends in surveillance compliance regulations. Extractive industries ruling upsets trend. A U.S. federal judge on Tuesday threw a wrench into what had been the rapidly expanding reach of disclosure requirements for oil, gas and mining companies. The ruling flies in the face of efforts, led in part by the U.S., to expand the reach of disclosure requirements by companies across the globe operating in oil, gas and mining industries. OFAC sanctions Burmese official. The U.S. Treasury Department said Tuesday that a Burmese military official is still dealing weapons with North Korea despite the country’s efforts to sever the trade. Barrick Gold Q&A. Barrick Gold Corp. operates 27 mines around the world in such diverse locations as Zambia, Peru and Papua New Guinea. In this Q&A we asked Jonathan Drimmer, vice president and assistant general counsel, to explain some of the company’s compliance challenges. SEC lays out plan to fight accounting fraud. The WSJ reports In a push to try to catch corporate fraud earlier, U.S. securities regulators on Tuesday laid out plans to sharpen their focus on catching improper financial reporting and accounting fraud by creating two new task forces and a new analytics center. The Securities and Exchange Commission’s Division of Enforcement is launching a so-called “Financial Reporting and Audit Task Force” to boost the agency’s policing of accounting and disclosure fraud. David Woodcock, director of the Fort Worth, Texas, regional office, will be its chair. Regulator in France raids office of Apple. Authorities searched the French offices of Apple and some affiliated companies as part of an investigation into retailing practices, the NYT reports. The raids took place last week on “some of Apple’s premises in France, as well as those of some of its wholesalers and distributors,” said André Piérard, a spokesman for the regulator, the Competition Authority. Les Échos, a financial newspaper, reported that the investigators were interested in Apple’s relations with its distributors. The article cited the case of eBizcuss, an Apple premium reseller that operated about 15 stores until it collapsed last year. The eBizcuss chief executive, François Prudent, accused Apple of abusing its market dominance and of unfair competition. IRS battles tech companies over tax holiday. The IRS and two tech firms are fighting in court over tax bills from a 2004 corporate tax holiday, with other multinationals watching closely for a result that could come any day, writes Reuters. In separate cases BMC Software and Analog Devices are challenging IRS demands that the companies pay more tax, arguing the agency’s claim breaches the tax holiday law Congress enacted nine years ago. The two cases are believed to be the first U.S. Tax Court tests of the tax holiday. SEC denies ex-Dell CFO’s request to be ‘non-accountant CFO.’ Former Dell CFO James M. Schneider, who was sanctioned by regulators in 2010 for his alleged role in reporting false earnings at the company, was denied a bid to work on audit committees while serving a five-year suspension from accounting, Bloomberg reports. Mr. Schneider, who paid $3 million to resolve the SEC claims, asked the agency to clarify that his penalty wouldn’t preclude him from serving on the audit committee of a registered company or working as a “non-accountant CFO,” the SEC said in an order denying his request. Mr. Schneider’s proposed clarification “would exempt entire job titles from our order, regardless of what tasks or responsibilities those positions entailed,” the SEC said. “Granting such a request would undermine the remedial purpose of our order and the rule on which it is based.” Should your company adopt a forum selection bylaw? A recent Delaware Chancery Court decision upheld validity of forum selection bylaws adopted unilaterally by the board of directors without consent of shareholders. Such bylaws stipulate the forum in which stockholder suits can be brought, e.g. in Delaware or federal courts. Over two hundred U.S. corporations have such bylaws. Their main benefit is to eliminate the risk of litigation in multiple courts. A trend to wider adoption was stalled by the litigation just decided. The Harvard Law School Forum on Corporate Governance and Financial Regulation offers an analysis. Pressure building on Michael Dell over buyout plan. The WSJ reports pressure is building on Michael Dell to contribute more of his own wealth if he wants to ensure that his planned buyout of computer maker Dell Inc. happens. Shareholders are scheduled to vote July 18 on the $24.4 billion offer by Mr. Dell and private-equity firm Silver Lake Partners to take Dell private at $13.65 a share. It is possible the deal will win shareholder approval as is. But people around the deal are discussing options to help make sure it gets across the finish line amid opposition from some vocal big investors including Carl Icahn, the people say. And they don’t expect Menlo-Park, Calif.-based Silver Lake to contribute further. Lack of encryption puts 1.5 million Californians at risk. The WSJ reports that personal information of more than 2.5 million residents of California was put at risk in 2012 due to data breaches. In a report Tuesday, the California Attorney General’s office said that 1.5 million people could have avoided exposure if companies and agencies encrypted their information. In the report, California Attorney General Kamala Harris wrote that the impact of the failure to encrypt data was “particularly striking.” California was the first state in the U.S. to issue a data breach notification law in 2003. Today, 46 states now have similar breach notification laws. The California breach notification law, along with those of 43 other states, contains a clause which says that encrypted data is exempt from notification, even if it is breached. For NSA, hackers are needed, risky. When President Obama called Edward Snowden a “hacker,” he put his finger on a growing fear among intelligence officials: that others in the ranks of young, tech-savvy new recruits could prove as unpredictable as they are indispensable, writes the WSJ. “We have developed this hacker concept, so we want the people that will be the best at breaking into a network,” said Dickie George, who served as the NSA’s technical director of information assurance, responsible for recruiting those who have proven technical skills, before retiring in 2011. The NSA, he said, “will take a chance on somebody who has the skills we need,” even a person without a college degree or government experience. U.K. hit by 70 espionage campaigns a month. The U.K. government is targeted by 70 cyber espionage campaigns a month, according to the director of Government Communications Headquarters, the U.K.’s intelligence agency responsible for signals intelligence. GCHQ director Iain Lobban described business secrets being stolen on an “industrial scale.” Speaking with ComputerWeekly on condition of anonymity, the head of cypher with MI5 added that “there are now three certainties in life – there’s death, there’s taxes and there’s a foreign intelligence service on your system.” It’s Miriam’s internet freedom bill vs anti-cybercrime law. Philstar reports that Phillipines senator Miriam Defensor-Santiago has filed a bill to repeal the Cybercrime Prevention Act, claiming that it restricts the rights of Filipinos in cyberspace. The Supreme Court issued a temporary restraining order in October 2012 stopping the law’s implementation for 120-days. The order was extended indefinitely last February.

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U.S. economic reports hold out hope for hiring gains By CHRISTOPHER S. RUGABER and MARTIN CRUTSINGER AP file photo President Barack Obama and acting Budget Director Jeffrey Zients leave the Rose Garden of the White House in Washington after the president discussed his proposed fiscal 2014 federal budget. Associated Press WASHINGTON, D.C. — Fewer Americans are losing their jobs. Employers are struggling to squeeze more work from their staffs. The U.S. is producing so much oil that imports are plunging, narrowing the trade deficit. A string of data Thursday raised hopes for stronger hiring and U.S. growth in coming months. More jobs would spur spending and help energize the economy, which has yet to regain full health nearly four years after the Great Recession officially ended. And an interest rate cut Thursday by the European Central Bank, if it helps bolster the European economy, could also contribute to U.S. growth. The U.S. economic reports came one day before the government will report how many jobs employers added in April. Economists think the gain will exceed the 88,000 jobs added in March, the fewest in nine months. The government said Thursday that the number of Americans applying for unemployment aid fell last week to a seasonally adjusted 324,000 – the fewest since January 2008. Unemployment applications reflect the pace of layoffs: A steady drop means companies are shedding fewer workers. Eventually, they’ll need to hire to meet customer demand or to replace workers who quit. The four-week average of unemployment applications, which is less volatile than the weekly figure, sank to 342,250. That was near a five-year low. The figures for unemployment applications “point to potential improvement moving into May,” said Ted Wieseman, executive director of Morgan Stanley Research. The government also said Thursday that the productivity of U.S. workers barely grew from January through March after shrinking in the last three months of 2012. Productivity shows how much employees produce per hour of work. When it remains weak, employers can’t keep pulling more output from their staffs. As customer demand strengthens, they’ll need to hire. Productivity grew at a seasonally adjusted annual rate of 0.7 percent in the January-March quarter. And that was after it shrank in the October-December quarter. For all of 2012, productivity rose a scant 0.7 percent, after an even punier 0.6 percent rise in 2011. At the same time, the government said the U.S. trade deficit narrowed in March for a second month. The main reason: The daily flow of imported crude oil reached a 17-year low. The trade gap shows how much the value of imports exceeds the value of exports. A smaller trade gap is good for economic growth because it means America is exporting more while spending less on foreign goods. The gap shrank 11 percent from February to $38.8 billion. Exports fell 0.9 percent, led by fewer shipments of U.S. machinery, autos and farm products. But thanks to reduced U.S. demand for imported oil, imports fell even more – 2.8 percent. Petroleum imports fell 4.4 percent. Crude oil imports averaged 7 million barrels a day, the fewest since March 1996. The United States isn’t using less oil. Rather, surging U.S. production has reduced the need for imported oil. U.S. output averaged 7.2 million barrels a day for the four weeks that ended March 29, the Energy Department says. That’s the most since 1992. U.S. refiners have been taking advantage of low U.S. prices for oil and natural gas to produce fuels at much lower costs than their foreign competitors can. Despite some encouragement from Thursday’s figures, the economy isn’t growing fast enough to reduce high unemployment. The Federal Reserve reiterated Wednesday after a policy meeting that it plans to keep short-term interest rates at record lows at least until unemployment falls to 6.5 percent from its current 7.6 percent. The Fed also said it will continue to buy $85 billion a month in bonds to keep long-term borrowing costs down and encourage borrowing and spending. And it signaled that it’s open to expanding the bond buying if the economy needs it. Since last year, the U.S. recovery has been held back, in part, by weak manufacturing. Earlier this week, for example, an industry trade group said the growth of U.S. factory activity slowed in April to its weakest pace this year. Even so, some manufacturers, particularly auto companies, are strengthening. Last month, U.S. auto sales reached their highest level for any April since 2007. Sales grew 8.5 percent to nearly 1.3 million vehicles. And on Thursday, Ford Motor Co. said it will add 2,000 workers to a Missouri plant that makes the F-150 pickup. The reason: Surging demand for U.S. trucks. Ford’s pickup sales are up 19 percent so far this year. One reason is that home builders and other construction workers have finally been replacing trucks they kept during the recession. And the F-Series is the best-selling vehicle in the United States. The ECB’s move Thursday to cut its key interest rate to a record low 0.50 percent and unveil other measures to spur lending means companies and households in the euro alliance will find it cheaper to borrow. Those lower borrowing costs, in turn, could help the U.S. economy if they allow European consumers and businesses to buy more U.S. exports. Some economists cautioned that the ECB’s actions might not help much because European banks remain reluctant to lend, especially to small companies. On Friday, economists expect the U.S. government to report that employers added more than 100,000 jobs in April but fewer than last year’s pace of nearly 185,000 jobs a month. The unemployment rate is expected to remain unchanged at 7.6 percent. Some economists this week lowered their predictions for job gains after some reports had suggested that slower U.S. growth could hold back hiring. Some are concerned that higher Social Security taxes and deep government spending cuts that took effect this year may have started to hurt the economy. The Fed expressed that concern Wednesday after its policy meeting. “Fiscal policy,” the Fed cautioned, “is restraining economic growth.” AP Energy Writer Jonathan Fahey in New York contributed to this report.

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EU Leaders Agree: Half a Loaf Is Better than None Friday, 11 Mar 2011 | 5:07 PM ETCNBC.com PhotosIndia.com | Getty Images Euro zone leaders have agreed to coordinate their economic policies more closely — more or less. Herman von Rompuy, the president of the European Council, said in a Twitter message that the leaders have reached "agreement in principle on the Pact for the Euro," the Associated Press reported, and the euro rose about 1% on the news. But the agreement is a diluted version of the competitiveness pact proposed earlier by Germany and France, and it's not clear how strictly the pact will be enforced. Also, European leaders have not yet reached an actual agreement to resolve the sovereign debt crisis. Von Rompuy said they are still discussing their response. Leaders were careful to lower expectations going into the meeting, so observers weren't expecting a major breakthrough. So far, they are living up to their promises. CURRENCY FUTURES Tune In: Beginning March 11th, CNBC's "Money in Motion Currency Trading" will air on Fridays at 5:30pm. "Money in Motion Currency Trading" will repeat on Saturdays at 7pm. Kelley HollandSpecial to CNBC

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Don't Get Duped by Investment Fees Donna Fuscaldo When it comes to choosing mutual funds to build your 401(k) or retirement portfolio, there’s more to the decision-making process than the stocks that make up the investment. Funds’ fees can also have a serious impact on your total return. “If you have a 401(k) with 2% fees or higher, over the course of 40 years of your working life you can easily end up with half of your retirement earnings going to fees,” says Bill Harris, founder of online wealth management company Personal Capital. “People think it’s just 2% but to make up what you’re paying in fees means five or more years of additional work.” The type and amount of fees investors pay vary: marketing and distribution fees are used to promote and sell the fund, other fees pay the fund manager if the fund is actively managed and administration fees cover all the expenses related to running a mutual fund. Tisa Silver-Canady, assistant director at the office of Financial Education and Wellness at the University of Maryland, says administrative fees may be justifiable, but argues fees for marketing and distribution don’t benefit the investor. “A fund with high marketing fees is not going to help people already invested in the fund,” she says. “If the company is spending a lot of money to market the fund those high fees can eat away at the return.” Should we Scrap the 401(k) System and Start Over? The fees associated with an actively-managed fund are also questionable, according to mutual fund experts. Investors may not mind paying fees to have a top-notch fund manager pick the stocks that go into the mutual fund if the fund beats the market. But that’s not always the case, making the fees for an actively managed fund a waste of money if it doesn’t outperform. “History shows most active managers don’t beat the market,” says Silver-Canady. “You don’t want to pay someone extra to do something that’s not earning you an extra amount of return over time.” According to Greg Carpenter, chief executive of Employee Fiduciary, retirement investors are better off choosing passive mutual funds like an index fund or an ETF for their portfolio to avoid fees and have a greater portion of their money grow. “You really need to figure out why you’re paying (for an actively-managed fund) because a lot of the time you have a match from your employer. Why do you want to chase an additional return when you get a match,” says Carpenter. Just like the types of fees vary, the percentage you will pay also differs. Often employees of large corporations will pay less in fees than those at small and medium businesses because larger organizations have more power to negotiate. Experts say total fees of 1% or below are considered good, while fees of 2% or more are considered “ugly”. “There is a lot of ugly,” says Harris. In addition to the fees, investors have to be aware of their investment’s share class. Each share class has a different fee associated with it, explains Carpenter. For instance, one share class can charge fees of 67 basis points while another can charge 192 basis points all for the same underlying investments, he says. Even though mutual fund fees are public knowledge, finding out how much you are paying isn’t that easy. According to mutual fund experts, federal legislation has been circulating for years to require funds to disclose fees, but it has only been in 2012 that the Department of Labor issued regulatory advice mandating disclosure of fees to participants. While that helps, deciphering the fees is still tough because they are often disclosed in long legal-like documents, says Harris. Investors have to rely on their employer to explain the fees or check the fund fees online with one of the many mutual fund research websites. “When you get your statement it’s not spelled out for you,” says Silver-Canady. “Don’t be discouraged if the information isn’t right in front of you. It may be hard to find but it’s worth digging for.”

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Entrepreneurs > Investors > Venture Capital & Angel Investors Denver investor Roundtable July 21 Dallas investor Roundtable July 21 Miami Venture and Angel Roundtable July 28 NYC Summer VC and Angel Event Aug 4 Charlotte Venture and Angel Roundtable Aug 18 Food Investing Conference NYC Aug 25 About Us- The FundingPost.com mission is simple: To introduce Entrepreneurs to interested VCs and Angel Investors. For Fourteen Years FundingPost has worked to bring entrepreneurs together with leading investors worldwide. We believe that it is important to reach investors in every medium possible - both online and off line. Through our successful Venture Capital Events in 23 cities, Venture Guide Publications and magazine, and our online Venture Exchange, FundingPost has had the opportunity to work with thousands of Angel and Venture Capital investors representing over $107.69 Billion. We've seen Millions of Dollars raised as a direct result of our Online Exchange, our Magazine, and our National Conferences and Events. We work with more Real Accredited Angel Investors, Family Offices, VC Firms, Corporate Investors and Entrepreneurs than anyone else. We have a dedicated, professional team that works hard to make introductions from Investors to entrepreneurs every single day! Our Team- Joe Rubin Co-Founder & Managing Director Joe Rubin is the Managing Director and Co-Founder of FundingPost.com. FundingPost has been introducing entrepreneurs to investors nationwide for 14 years through its Online Venture Exchange, Dealflow Magazine and organizes Venture Capital and Angel Investor Conferences in 23 cities nationwide. Joe has also invested in dozens of seed deals over the past 12 years as an Angel and Fund manager, including Sticky, Inc. (acquired by Splashtop, Inc.), Senscient, appMobi (acquired by Intel), Giftworks (acquired by Frontstream Payments) & CIMA Systems. Joe was an investor and on the advisory board of Offermobi (acquired by Moko.mobi), Human Demand (acquired by Ignition One) and Gozaik (acquired by Monster) and a current advisor and investor in Augmate. Joe spends most of his time working with investors and helping early-stage entrepreneurs, and speaks at events on topics such as early-stage investing, crowdfunding, and pitching to investors; and has spoken at events such as the NYC Economic Development Corporation's Jumpstart and Fasttrac Programs, Early-Stage-East, FashInvest, The Open Source Fashion Conference and Connecticut's CTech. He is a speaker at and sponsor of the UCLA Private Equity Club and Disruptive Technologists in NYC, and a Mentor to Angel Groups such as 37 Angels, TopStone Angels and Accel Foods. Joe is also a Co-Founder and General Partner of ARC Angel Fund I & II, a seed tech fund based in NYC, which has invested in over 20 companies, including: Upnext (Acquired by Amazon), Medivo, Sidecar, Careerminds, Kanvas, Moviepass, Benestream, Offermobi and Human Demand. He is a prior board member of the Crowdfund Intermediary Regulatory Advocates (CFIRA) and a founder of FP Angels, a national Angel Investor Group. Prior to FundingPost, Joe was instrumental in helping to raise $2.5 Million in angel and venture capital for his dot.com start-up producing a family-friendly network and over 100 flash-based video games which were playable online and sold as a compilation in stores like Comp USA. Joe was also the Webmaster at Knight Securities (NASD: NITE), where he helped to design its online trading platform and website. Prior to working Online, Joe spent 8 years working in television and graphic design for companies such as NBC and MTV, in addition to doing freelance commercial production. Joe began working in television production, graphic design and 3D animation professionally when he was 15, and graduated from Hofstra University with a Bachelor's in Communications. He now lives in Connecticut with his wife and 2 children. Howie Schwartz Howie Schwartz is a serial entrepreneur and an active Angel and Venture investor in early stage technology companies, including founding investor Angel Round Capital (ARC I&II) (UpNext, Sidecar, Medivo), the Scout Ventures I&II (FlowSearch, MobiTeris, Portalarium, Signpost), FF Ventures Silver, Rose, Saphire (Klout, 500px, Gamesalad, Kohort, Indiegogo), Metamorphic Ventures II, Eniac Ventures II & III, Female Founders Fund, CoVentures II & III, 645 Ventures, Future Perfect Ventures. Angel Investments including OfferVault, Sols, Hatch.co, StatSocial, CareCloud, Funding Wonder, Abandon Interactive Entertainment (Freaky Creatures), Blue Pearl Software (exited), AppMobi (acquired), CIMA Systems, GiftWorks (acquired), Senscient, Sticky, Inc. (acquired), ZoomCar, Augmate, The Water Initiative, nToggle, and other early stage companies. * SVP Mobile Ad Tech @ IgnitionOne (through acquisition of Human Demand - Aug 2014) * Howie founded and was the CEO of Human Demand (Mobile DSP / DMP) acquired by IgnitionOne in August 2014. Co-founded FundingPost and Offermobi (acquired by Moko Media), as well as product & marketing training companies with over 120,000 customers worldwide. In the 90's, Howie spent a decade in the video game industry with companies such as Acclaim, ASC Games, and Sega. Howie is on the board of the "Friendship Circle" (Stamford, CT) which helps children with special needs and actively supports "Al's Angels" (CT) which helps children with rare blood diseases and was recognized as "Angel of the Year". Howie lives in CT with his wife and 2 awesome kids. Howie MAKES STUFF and is fascinated by 3D Printing, laser cutters, CNC routers, sensors, and robotics. Howie is addicted to ordering things on Kickstarter and Indiegogo, loves to ski, rock climb and wants to be able to surf... Harris Schwartz Harris Schwartz has been the Chief Financial Officer of FundingPost (Second Venture Corporation) since its inception in 2000. Harris was previously employed by the New York City Finance Department from 1971 to 2002 as a Special Auditor. Additionally, Harris was the CFO of Human Demand, Inc. (www.humandemand.com), since its inception in February 2012 until its acquisition in 2014. Harris is also a limited partner in the ARC Angel Fund I & II (www.arcangelfund.com) in NYC. Harris has been the Principal of HJ Tax Service, LLC, with offices in New York and New Jersey since 1975. He is a Certified Fraud Examiner, Accredited Tax Preparer, Registered Tax Return Preparer with the IRS, a Licensed Insurance Agent in NY, NJ and CT, and has his FINRA Series 6 and 63 Licenses. Harris earned his BS from Long Island University in 1969 and his MBA from Long Island University in 1974. Kenneth Huynh Entrepreneur In Residence Ken specializes in Cloud Computing, Software-as-a-Service, and Enterprise technologies. He spent more than 10 years immersed in market research and execution of emerging technologies including several years at the private technology think tank, The Research Board, the Gartner Research subdivision. Ken has managed and led initiatives across the full-lifecycle of product development, market research, and business development. Currently Ken is the founder and CEO of the Saucey Sauce Company, a Brooklyn based food startup with an ever growing national distribution including retail chains such as Dean & Deluca, Morton Williams, HEB, and Natural Food Markets. Ken is also a Practice Lead for Virtustream, a Cloud Computing specialist to enterprise customers. Ken has invested in a number of startups including the NY Distilling Company, Kopi Trading Company, and servces as a member of the Local Food Lab, a food startup incubator, and Food Angels. Ken is also a founding partner of FP Angels David Drake is a leading equity expert based in New York. He is the founder and chairman of LDJ Capital, a private equity advisory firm, and of The Soho Loft, an event-driven global financial media company. Born in Sweden and fluent in six languages, David is a strong advocate of innovative investing in early-stage equity and the US JOBS Act, for which he lobbied both Congress and the EU Commission. Because of his leading work in this space, he was a US Commerce Department delegate to the EU Commission in Brussels and Rome, and was invited in May 2013 to the White House Champions of Change ceremony in Washington, D.C. His investment, The Soho Loft, produces and sponsors 150+ global events a year. One such was produced in April 2013 for the institutional media leader Thomson Reuters, with speakers from NASDAQ, NYSE, KKR and Carlyle Group. He continues to advance innovative investing through his work as an international speaker and regular writer for major publications like Forbes and Thomson Reuters. He has coauthored the book "Planet Entrepreneur: The World Entrepreneurship Forum's Guide to Business Success Around the World" and is the author of "Crowd Fund Economics." His focus today is to take on board advisory positions at companies, angel networks and venture funds, and to guide them on such topics as international regulations, corporate strategy and fund structures, with emphasis on the growing trend of online investment automation for retail and angel investors. Privately, David has hosted the Harvard Business Club of NY at his home, produced Carnegie Hall concerts and raised funds for the charities, Trail Blazers and Best Buddies Carnegie Hall for many years. Today he is a board director of the UBS Charity of the Year, London-based Archive International, and is co-chair of the Tree Kangaroo Foundation in New York. David has an MBA in Finance and an MA in International Law and Economics from George Washington University, where he was awarded the Wallenberg Scholarship for academic merit. Events Team- Adel Elmankabady, ALC, RECS, CSP, CIIIS, CIPS Regional Manager of Atlanta Adel is Managing Partner & Q. Broker, Vici International Real Estate; Managing Principal, EB-5 Advisory International, LLC; Senior Instructor, American Real Estate University; and International Instructor, Dubai Real Estate Institute. Adel has 20 years of sales, managing, marketing, and real estate teaching in the Atlanta, USA and Middle East Markets. He is also a Real Estate Investment Specialist, Certified Reo Specialist as part of his many qualifications. He began his career in 1975 as Managing Partner of Histco Import/Export Inc. in Portsaid City, Egypt, and was there through 1982. He has also been a Commercial Associate Broker with Realty Executives Greater Atlanta, GA, Vice President/Managing Partner, Realty Executives Commercial, USA, from 2000-2008. He is Managing Partner, Southeastern Homes & Development, Atlanta, GA, from 2007 to the present. Adel's myriad of responsibilities includes overseeing daily activities, creating short- and long-term business plans with the partners, preparing monthly productivity reports, negotiating deals with banks and financial institutions, with many others too numerous to list. Among his many other qualifications, he proudly lists fluency in Arabic and English; a Business Degree from Ain-Shams University, Cairo, Egypt; Advanced Business Degree from Dekalb College, Atlanta, GA. He is an active member of the Atlanta Commercial Board of REALTORS; CBR Education Committee; International Real Estate Federation; and Partner, Lux 1031 Realty Casey Minshew Regional Manager of Texas Casey Minshew is a serial Entrepreneur, but he has deep roots in the Commercial Real Estate Banking & Small Business world. Since 2000 he worked with and helped launched one of top 10 Mortgage Banking organizations in Texas serving over 4000 Loan Officers nationwide. While processing Billions of dollars in loans. In 2009, after the market crash, Casey entered into the technology industry as the COO of a Video Technology company, helping launch better online communications in over 50 countries. This gives Casey a unique perspective from both sides as a person seeking funding and what Venture Capital Firms and Investors are looking for. This makes him the best qualified candidate to assist both parties in achieving their goals.. Today Casey is advising small to medium sized companies in outsourcing their HR to better prepare for challenges Healthcare reform will bring. He is also very proud and honored Host and Manager for the Houston FundingPost Events. Enovia Bedford Regional Manager of Charlotte, NC Thriving in a start up environment, my entrepreneurial approach to business has lead to a successful twelve-year career in creative fields including marketing, accidental sales (I don't try to sell anything, it just happens), brand management, product development, merchandising, trend forecasting, and sourcing. Massive brain storming sessions and the implementation of innovative ideas have left my clients and employers impressed with raving reviews and soaring sales. Clients and Partners include: Walmart, Forever21, Rush Communication, Vitamin Water, Katalyst Live and Melo Tech 7 Partners, among others. Jason M. Cronen Regional Manager of South Carolina I'm a seasoned travel manager, advisor and entrepreneur. My background is in corporate communication, hospitality and transportation management. I primarily work with large sporting events, concerts and resort properties throughout the U.S. As a Partner at COMPASS Transportation, we've grown to become the chauffeured provider of choice to vacation travelers, executives, brides and event planners throughout the Charleston area and in more than 500 cities worldwide. Our group travel, events and concierge services have been featured in The New York Times, Martha Stewart Weddings, People, Charleston Magazine and The Knot. As a marketing professional and business manager, I've jumped in to develop regional and national advertising campaigns, helped connect early stage businesses with capital and partners - and guided my clients in how to connect with new markets to drive sales and excite their customers. It is my pleasure to have worked with a diverse group of companies including YouTube, PGA of America, JetBlue Airways, Pollstar, Diageo, Vail Resorts, Unum Group, Carlson Wagonlit Travel, Rossignol, Ace Hotels and many more. Mary Gotschall Regional Manager of Virginia Mary Gotschall has two decades of experience in marketing communications, public relations, and strategic partnerships. As Founder and President of the Washington, DC-area communications firm called The Athena Group (www.theathenagroup.net), Mary won such top clients as DuPont, Booz Allen Hamilton, Fortune Magazine, Random House, the NASDAQ Stock Market and Merrill Lynch. Mary has a keen interest in entrepreneurial businesses, as well as women's entrepreneurship initiatives, both in the U.S. and globally. She has worked with biotech start-ups at the Johns Hopkins Carey School of Business incubator; published articles about women entrepreneurs in top media outlets; and co-authored a book about doing business in Europe for small American companies, called Bridging the Atlantic, published by the U.S. Chamber of Commerce. In April 2014, she was invited by the State Department's Global Entrepreneurship Program (GEP) to be part of the American delegation that went to Athens, Greece to promote entrepreneurial exchanges between Greek entrepreneurs and their U.S. counterparts. Mary earned a B.A. from Harvard and an M.B.A. from Columbia, and won a Rotary Scholarship to study economics and political science at the Universite Libre de Bruxelles in Belgium. Scott Kelly Regional Manager of Phoenix twitter Scott Kelly is a 20 year veteran in marketing, sales, training and publicity. He has trained over 1,000 sales people, generated hundreds of millions of dollars in sales and has taught marketing at the university level in the United States and Europe. As founder and CEO of Black Dog Promotions, Scott has garnered national media coverage for hundreds regional and national brands and established large fan bases for many in the sports, entertainment and business community. When not making his clients famous, Scott spends his time in countless sporting events with his wife and two boys. He loves a good craft beer and playing with his "Black Dog" Shamus. Spencer Lyon Regional Manager of Miami twitter Spencer Lyon is the type of person to think outside of the parallelogram. Before graduating from Florida International University in Miami with a degree in finance, he had already worked with several different startups. From being the Director of Business Development for a biodegradable plastics company to assisting in the startup of a third party logistics company, he is no stranger to laying the foundation down to creating a business. Spencer has a strong understanding of sales, marketing and how to develop a strong brand. At his latest venture of working with a local business radio station he was responsible for, besides organizing his own program called "South Florida Business Spotlight", assisting individuals and businesses with getting their message out on the radio waves. Focusing on the needs of his clients, Spencer would develop full fledged marketing campaigns that would include interviews on his weekly program, advertisements, promotions and sponsorships. Spencer also organized, what he liked to call, live networking events due to the fact that he would be broadcasting live from these events. With his substantial passion for networking and bring people together, Spencer loves to be able to help others become successful. Stephen Silver Regional Manager of Orange County twitter Stephen is a founding partner at FP Angels, a nationwide virtual angel investment group. He is also the founder of SproutStart.com which specializes in website, software and mobile application development. Stephen is also a partner with MAVN Funding Advisors which specializes in providing a range of funding and business development services for both investors and emerging growth companies. Since 2009 Stephen has connected 14 different ventures with over $15M in venture funding. Stephen currently sits on the board of directors for the Southern California Venture Network (SCVN.org), a professional networking group focused on helping emerging growth companies. After graduating college, Stephen was the Entrepreneur Director for the Southern California Keiretsu Forum, the nation's largest angel investment group. Stephen managed the dealflow for the group's 250 local Angel investors. Stephen attended Babson College, the nation's #1 school for entrepreneurship and graduated with a B.S. in business administration, with concentrations in entrepreneurship and marketing, and was awarded a "30 under 30" in Southern CA in 2011. Tom Sesti Regional Manager of Detroit twitter Tom Sesti is a passionate, experienced leader that works with companies and brands to start-up, re-launch, and/or re-energize, helping them identify and execute strategies to grow their businesses to success. With a knack for problem solving, Tom is known for finding new and creative ways to create markets and opportunities, as well as develop strategies for funding to bring these opportunities to fruition. His list of companies and brands where he has identified and executed plans to enhance business growth include: - The Vendita Company, Inc. - provides small to mid-size business consulting focused on helping companies move from concept through market analysis, developing Go to Market and First Sale strategies. Client industry focus includes consumer products, technology, and software. Also works with clients on business planning, fundraising, and exit strategy consulting. - Brown Sparrow Marketing, LLC - co-founded and launched company to develop, acquire and launch exclusive consumer products brands across multiple verticals in the US, executing brand strategy from market analysis through full distribution. Currently the exclusive distributor of Salcura in the United States www.salcuranaturals.com, www.salcura.co.uk - Bandals International - where he served as President and took this product from concept to a business that generated several million dollars in revenue over 4 years and reached over 150,000 customers during his tenure. - Excelda Manufacturing - Tom successfully restructured the Consumer Products Division, merging several brands and turning the division around to profitability within 12 months. - Additional experience with consumer products companies such as Pell, Manakey, Cadillac Shoe Products, Essential Bodywear, Oppos, Sacs of Life, retail companies such as Just Baked, software companies such as Pixo Group and Onu One, and financial services firm Regal Financial Group all provide Tom with a wealth of experience in identifying and executing plans to grow a business. When he is not working, Tom can be found with his wife, daughter and their multitude of pets. He enjoys travel, camping, cooking, reading, and running. He is a longtime resident of Waterford, MI and some of his professional recognition includes being named a Leader & Innovator by the Great Lakes Innovation and Technology Report, the 2011 WWJ NewsRadio 60 Second Showdown Winner, as well as being featured in the New York Times and Wall Street Journal for his work with previous companies. He is a graduate of the Albion College Professional Management program and holds a Masters Degree from Aquinas College in Management with a concentration in Marketing. Yuriy Porytko Regional Manager of Philadelphia twitter Yuriy is the entrepreneur's resource champion - networking, partnerships, community building, alliances, funding, mentoring, and - especially today - learning to do more with less, maximizing yields from limited resources. Yuriy is a Senior Executive with strategy, business development and Fund Management expertise derived from 20+ years of US and international experience. He is currently a Founding General Partner of SmartInvest Ventures and a Managing General Partner of SmartStart, a transatlantic startup accelerator/incubator. Yuriy Co-Chairs Open Access Philadelphia, a think tank and movement of civic-minded, innovative, entrepreneurial leaders from government, academia and business in Philadelphia, which convenes monthly to share projects and passion. Yuriy continues to hold advisory roles in Philadelphia Start-up Weekend, Leto Investments LLC and LABACA Venture Capital, among others. Yuriy was Founder and COO of Brooks Capital (a $500M Venture Fund) generating multiple high-value portfolio exits in Trade Sales to public and private companies. As a Principal in Sage Technology resources, Yuriy manages deal-flow and due diligence as well as participating as interim-CXO and Board Member in portfolio companies. Yuriy has worked with more than thirty technology startups under many funding structures and successful exits. Other Activities: Yuriy is an active participant and speaker in many Entrepreneurship and Start-up communities including PSL, Philadelphia Startup Leaders, Philadelphia, Baltimore, Delaware and Lehigh Valley Startup Weekends, Code for America Philly Brigade and Philly Health Codefest, among others. He has participated in both Company and Product launches at Suburban Connect, Network Visions, Metromedia International and Motorola Toperator, Solar Communications Camanco, PCRoomlink, BCG portfolio: Medcases, Alliance Consulting, Netcarrier, Eclipse Aviation, Santera Systems, Sage Technology Resources, Airdesk, DreamIt, GCV, Chariot ETE, University City Science Center QED technology transfer incubator programs. He is the Organizer of Code for Philly and Curator of Philadelphia StartupDigest. Yuriy has a Bachelor of Arts Degree in European History, University of Pensylvania, 1991. He is fluent in Ukrainian and proficient in Russian and has travelled extensively in Western Europe, Eastern Europe, Central Asia and the former Soviet Union. Please feel free to contact us at: [email protected] Entrepreneurs can register and apply to have their venture included here. Investors can register to review quality deal flow from experienced management teams. Please note, company listings on this site are suitable only for accredited investors who are familiar with and willing to accept the high risk associated with private investments. Any Investor who intends to utilize this Web site must be an accredited investor. (Please click here for the definition of an accredited investor or go to: www.sec.gov). There has been no investigation as to the accuracy of any information or terms contained herein. There may be errors in the information posted on this site and we strongly suggest that you seek legal counsel prior to commencement of any potential transaction. All materials reviewed on this site are strictly for informational purposed only. FundingPost.com and its affiliated companies are not a registered Securities Broker or Dealer or any other entity regulated under the securities law. FundingPost.com and its affiliated companies do not sell or offer to sell any securities and no information contained on this site is intended to constitute or to be interpreted as any such offer. Any investor requesting to contact a company listed within the site does so at its own risk and is solely responsible for conducting any legal, accounting or due diligence review. "FundingPost allows the venture community to review many interesting deals in a short period of time. The consistent format allows VCs to quickly evaluate companies raising capital based on the criteria that's most important to them." - Deepak Kamra, Canaan Partners "I know that I've invested in at least one deal associated with FundingPost events, and it's a great networking opportunity with the founders and the VCs that are there. I'm looking forward to this one!" - John Filla, Angel Investor, Houston Angel Network "I just invested in a mobile company I met through FundingPost - Thanks!" - Jay Goldberg, Hudson Ventures "Empire Angels has invested in two companies we met through FundingPost. This is a great forum for entrepreneurs to meet investors and we look forward to continued participation!" - Graham Gullans, Empire Angels "FundingPost has provided Investors a great way to read company summaries from across the country, and entrepreneurs the opportunity to get in front of a lot of Venture Funds they wouldn't normally have access to." - Richard Irving, Pond Venture Partners "I see CEO's get their PhDs in best practices for how-to-get-funded techniques. This is accomplished through FundingPost's well orchestrated and accomplished conferences - great for learning from and networking with the money sources." - Jeanne M. Sullivan, StarVest Partners "BP's Castrol innoVentures invested in a company we met through FundingPost - They are a great resource for Investors and entrepreneurs alike!" - Miriam C Eaves, BP's Castrol innoVentures "As a result of the conference we attended in Miami, Caerus made one of its first Investments in a Florida-based company whose CEO we met because of the impressive network FundingPost has constructed. " - Zachary A. Cherry, Caerus Ventures LLC "I am happy to be a member of FundingPost.com. We always find good prospects, and the interface is efficient and easy to use. Thanks for putting this together." - George Petracek, Atrium Capital "The Las Vegas Investor RoundTable of December 2013 was a great event because I got to know many talented entrepreneurs in Las Vegas that I would not have met in person otherwise. After the event, I made an investment of $25,000 in a seed idea that is looking very promising! I am looking forward to future events and future investments in Las Vegas entrepreneurs." - Don Sorensen, Las Vegas Angel Investor © Copyright 2001-2016 Second Venture Corporation. All Rights Reserved. Home | About Us | Contact Us | FAQs | Entrepreneurs | Investors | Success Stories | Blog | Venture Capitalist Profiles | Angel Investor Group Profiles | Venture Glossary | Videos & Books | Terms of Use | Privacy Policy

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France's Technicolor Gets New Chairman, Seals Deal to Sell Stake to U.S. Firm Shareholders approved a deal that will see private equity group Vector Capital acquire up to 30 percent of the company's stock. The board of France-based content creation and delivery services firm Technicolor has named Remy Sautter to the role of chairman, succeeding Denis Ranque. The company also said that its shareholder meeting on Wednesday approved a deal that will see U.S. private equity firm Vector Capital take up to a 30 percent stake in the company for up to 191 million euros ($242 million). "The level of participation of existing shareholders…will determine Vector’s final stake in Technicolor," the company said. "Vector will hold between 18 percent and 29.94 percent of Technicolor’s share capital." The deal will give Technicolor a capital injection that the company plans to use on its international expansion and beefing up its product pipeline. "These capital increases will also contribute to stabilizing Technicolor’s shareholder base, which will benefit from Vector’s expertise in technology," the company said. Two Vector representatives will join the Technicolor board. They are Alexander Slusky, founder and managing partner, and partner David Fishman. Paris-headquartered Technicolor offers services for the creation, management and delivery of content, ranging from postproduction to Blu-Ray authoring and digital cinema distribution. The company last fall completed its acquisition of Hollywood-headquartered post house Laser Pacific. http://www.hollywoodreporter.com/news/technicolor-completes-acquisition-laser-pacific-237165

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Asian retailers see Western gold mine Non-food retailers in mature markets have recently pinned their hopes for future growth on three things: factory outlet locations, e-commerce and expansion into emerging markets. The trade press has been fueled for the past couple of years by reports of high-profile retailers expanding abroad. While the common assumption has been that the retailer tide will flow in one direction - from the US and Europe outward - a key trend on the radar is the exact reverse of this. Retailers are going to be heading in the opposite direction and will exert a material influence on fashion and shopping in mature markets.Shanghai Tang was one of the notable early movers but others are looking to get a foothold in the West as well. Examples are China's Li-Ning sports apparel brand, which has just kicked off its US e-commerce site, and India's Malabar Gold & Diamonds that is targeting a major international rollout from its current regional store base of 64 units.This is just the tip of the iceberg. Watch for a steady stream of fashion, health & beauty brands influenced by Eastern philosophies, fabrics and ingredients to come knocking on the door in mature markets over the next few years.Are there positive implications for shopping centers and other retail distribution channels in places like North America and Australia? The answer is a qualified "yes." There will be a pool of new tenants for shopping centers and fresh brands for department stores and other wholesale channels. However, with regard to the benefits to shopping centers, much depends on whether incoming brands take the flagship/e-commerce road or decide to establish full-blown store networks.Either way, after the mess that some Western architects, developers and retailers have made in emerging markets they came to conquer, it's refreshing to see imperialism in the retail industry is now set to work both ways. International shopping center and retail expert. Click here for bioClick here for advisory services

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Business | National / World Business US wants Bank of America to pay $864M over loans 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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Your location: Home > Fast Start Finance At the Conference of the Parties (COP15) held in December 2009 in Copenhagen developed countries pledged to provide new and additional resources, including forestry and investments, approaching USD 30 billion for the period 2010 - 2012 and with balanced allocation between mitigation and adaptation. This collective commitment has come to be known as "Fast-start Finance" (FSF). Following up on this pledge, the COP in Cancun, in December 2010, took note of this collective commitment by developed country Parties and reaffirmed that funding for adaptation will be prioritized for the most vulnerable developing countries, such as the least developed countries, small island developing States and Africa. Further, the COP invited developed country Parties to submit information on the resources provided to achieve this goal, including ways in which developing country Parties access these resources by May 2011, 2012 and 2013. At COP 17 Parties welcomed the fast-start finance provided by developed countries as part of their collective commitment to provide new and additional resources approaching USD 30 billion for the period 2010–2012, and noted the information provided by developed country Parties on the fast-start finance they have provided and urged them to continue to enhance the transparency of their reporting on the fulfillment of their fast-start finance commitments. Fast-start Finance Module This module comprises of information submitted in 2011, 2012, and 2013 by developed country Parties in relation to the implementation of their FSF commitments. The module allows users to search information of contributing countries , as well as on recipient countries. It also allows users to search for information on specific projects and programme, recipient countries/regions activities, and channels of resources whenever they are provided in the FSF submissions. The data presented in this module has been extracted from the FSF submissions and related updates provided by developed country Parties and every effort has been made to ensure accuracy and consistency of the information presented. Users may wish to read the full reports and visit the country websites for more detailed and comprehensive information on the implementation of FSF.

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In Praise of Irrational Exuberance David Champion From the November 2001 Issue 6BUY COPIES Back in November 1999, Professor William Sahlman of Harvard Business School, an expert in new ventures and a mentor to many entrepreneurs, wrote an article for HBR titled “The New Economy Is Stronger Than You Think.” Recently, HBR senior editor David Champion asked Sahlman if his thinking had changed in the wake of the sharp slide in the valuations of Internet companies. You claimed that the new economy’s strength was based on a robust business system. Would you still make that claim? It’s important to separate the value of the businesses created by the new economy from their stock prices. Amazon, for example, opens up a whole bunch of purchasing possibilities for consumers. I can shop at midnight. I can quickly find the books I want and be directed toward related books. It’s also a compelling business model. I pay up front, but they don’t pay their suppliers for 60 days. They don’t need much capital, and they don’t need expensive locations. Having said that, was Amazon worth $40 billion? No, it wasn’t. But that doesn’t change the fact that Amazon still represents $4 billion or $5 billion worth of value that was created by a real transformation. Yes, a lot of money was wasted. But at the end of the day, I can still shop at Amazon. What’s more, every other competitor in the book business is now much more efficient and effective because of Amazon. I can completely separate how I feel about Amazon as a company and Amazon as a stock. Most of the money in the capital markets is managed by professionals. Why were these sophisticated people so willing to go along with the feeding frenzy? Financial theory tells us that you can’t time the markets and that each price accurately reflects possible cash flows. But anyone who believes that there aren’t periods of egregious misvaluation isn’t living in the real world. Typically, the periods start like this: You see someone else winning big, and you say to yourself, “I can do just as well.” Then, when you find that every bet you place pays off, it seems to make plenty of sense to place more bets. Of course you know that the valuations don’t make sense, but the cost of sitting out is very high. A $50,000 investment in Juniper Networks in the first private financing round was probably worth over $300 million at the peak. What’s more, financial professionals rarely foot the bill when the party stops. It’s the individual investors who pay, because they are the last ones in and typically don’t sell after prices fall as they are always hoping that the market will resume its upward march. Indeed, studies by my colleague Peter Tufano and coauthor Erik Sirri show that the public is much faster at putting money into hot new venture funds than at taking it out of cold ones. Now that’s wonderful news for the people creating and managing venture funds. Even if the fund does miserably, you’ll be picking up a fee. And when one bubble bursts, there’s always another. So the Internet has dried up, then try genomics or energy. It doesn’t matter what the hot fund is—it only matters that it is hot. Isn’t that wasteful? Absolutely. But no other system can galvanize our most creative people as effectively. And attempts to control the system always backfire. Back in the early 1990s, the Clinton administration accused the pharmaceutical companies of abusing their monopoly rights on patented drugs. This declaration of war knocked down the stock values of all the companies involved in drug development—not only pharmaceuticals but also biotech companies. Now, think about this for a moment. A biotechnology company is an attempt to reengineer and attack a pharmaceutical company, so biotech could undermine the monopoly position of pharmaceutical companies far more effectively than any proposed regulations could. But if you reduce the values of those targets, you only discourage that behavior. The markets are far more effective at promoting change and innovation than any law or government because any profitable niche offers a tempting target for entrepreneurs to attack. And when I look at the enormous potential for new technologies like biotech to improve our lives, I want the overinvestment. Suppose I’m Jeff Bezos. Would I get money for Amazon today? Money is there. Last year, $100 billion came into the venture capital industry. But it’s extremely hard to get because a lot of that money will go toward existing ventures that can’t rely on the public markets any more. What’s more, entrepreneurs won’t get VC money under the same terms they did 18 months ago, when there was more money than there were good ideas. Back then it was like trying to recruit for the army in war-time—people lowered the enlistment age just to fill the positions. Today, VC investors are much less prepared to fund growth on the promise of profits, and entrepreneurs have to rely much more on their cash flow even though that means accepting a lower growth rate. Investors are also looking more closely at managerial qualifications. Entrepreneurs need to get experienced managers to buy into their ideas before going after the money. Finally, entrepreneurs have to give up much more control than Jeff Bezos did. But although they’ll have a smaller piece of the pie, at least there’ll be a pie to have a piece of. A version of this article appeared in the November 2001 issue of Harvard Business Review. David Champion is a senior editor at HBR. Based in France, he is also a member of the Academic Committee of the European Center for Executive Development (CEDEP) in Fontainebleau. This article is about ECONOMICS

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Capital One Home > About Capital One > Corporate Information > History Our History Print Contact Us Skip Secondary Navigation About Capital One Corporate Information Who We Are History Awards Leadership Corporate Sponsorship Corporate Citizenship Economic Development Supporting Families Financial Education Partnerships Programs Environmental Sustainability Community Involvement Doing Business with Capital One Third Party Code of Conduct Purchase Orders and Invoicing Supplier Registration Supplier Diversity Investor Relations End of Secondary Navigation History We have a history of innovation—from our early days as a small bank division to our current status as a world-class Fortune 500 company. Richard D. Fairbank is founder, Chairman and Chief Executive Officer of Capital One® Financial Corporation. Capital One, headquartered in McLean, Virginia, offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients. Mr. Fairbank founded Capital One in 1988 based on his belief that the power of information, technology, testing and great people could be combined to bring highly customized financial products directly to consumers. Since then, Capital One has emerged as one of the America's largest consumer franchises with one of the nation's most recognized brands. As one of the nation’s top 10 largest banks based on deposits, Capital One, N.A. has branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia, and the District of Columbia.

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Richard Sennett Named Division of Investment Management Chief Accountant Washington, D.C., April 3, 2007 - The Securities and Exchange Commission today announced the appointment of Richard F. Sennett as Chief Accountant of the Division of Investment Management. As Chief Accountant, Mr. Sennett will be primarily responsible for oversight of the financial reporting and accounting practices of registered investment companies. Since 2002 Mr. Sennett has been an Assistant Chief Accountant in the Division of Investment Management where he has worked on a variety of accounting issues related to investment companies, and was instrumental in the development and implementation of the Division's Sarbanes-Oxley annual report review process. Prior to coming to the Commission, he was Vice President and Senior Manager for Fund Accounting at Deutsche Bank Global Fund Services. Andrew J. Donohue, Director of the Division of Investment Management, said, "Rick brings a vast amount of investment company accounting knowledge and experience to the position of Chief Accountant. He has helped us work through many challenging and complex matters, and I am glad to have him head up our accounting program." Mr. Sennett, 36, graduated with a Bachelor of Business Administration degree in accounting from Loyola College in Maryland in 1992 and is a Certified Public Accountant. He succeeds Brian Bullard who left the Commission in December 2006. http://www.sec.gov/news/press/2007/2007-61.htm

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News Release 03-030 CARPENTER DESIGNATED DIRECTOR OF ITC'S OFFICE OF INVESTIGATIONS Deanna Tanner Okun, Chairman of the United States International Trade Commission, announced today that Robert G. Carpenter has been designated Director of the agency's Office of Investigations. Carpenter will direct the planning and conduct of the ITC's import injury investigations under the antidumping and countervailing duty provisions of the Tariff Act of 1930, the global and China safeguard provisions of the Trade Act of 1974, and other import injury statutes. Carpenter served as a supervisory investigator in the Commission's Office of Investigations since 1984. In that role, he guided investigative teams building the factual records in import injury investigations, ensuring that investigations were conducted in accordance with Commission rules, policies, and timetables and that adequate official records were established. He served as a staff investigator in the ITC's Office of Investigations from 1983 to 1984. From 1977 to 1983, he was a supervisory economist in the Office of Trade Adjustment Assistance at the U.S. Department of Labor, and he was an economist in that office from 1972 to 1977. Carpenter holds a master's degree in economics from George Mason University and a bachelor's degree in economics from Geneva College. He resides in Springfield, Virginia, with his wife and has two grown daughters. The U.S. International Trade Commission (ITC) is an independent, bipartisan, factfinding federal agency that makes determinations concerning the impact of imports and their potential injury on domestic companies. The ITC staff includes experts who analyze virtually every commodity imported into the United States. The ITC provides data on international trade to the President, Congress, other federal agencies, and the public.

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The Future of Trade Policy and the Global Economic Crisis CCGA/file In the first of a three-part public program series on the global economy, leading globalization and trade expert Jagdish Bhagwati discusses the global economic crisis and its implications for international trade. Bhagwati reflects on the crucial relationship between trade policy and the global economy, and offers suggestions on how the new U.S. administration can best manage the deepening crisis. Jagdish Bhagwati is university professor of economics and law at Columbia University and senior fellow in international economics at the Council on Foreign Relations. The author of the widely acclaimed book In Defense of Globalization, he has served as economic policy adviser to the director general of the General Agreement on Tariffs and Trade, special globalization adviser to the United Nations, external adviser to the World Trade Organization, a director of the National Bureau of Economic Research, and advisor to India's finance minister, among other positions. He has received the Freedom Prize (Switzerland), the Bernhard Harms Prize (Germany), and the Thomas Schelling Award from the Kennedy School of Government at Harvard University. His latest book is Termites in the Trading System.This program is cosponsored by the Council on Foreign Relations. Recorded Tuesday, February 03, 2009 at InterContinental Hotel.

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Economy bleak for many black Americans The Washington Post Published: Saturday, February 2, 2013, 12:01 a.m. advertisement | your ad here WASHINGTON -- Scholars gathered for the African American Economic Summit at Howard University on Friday sketched an alarming picture of the financial ills afflicting the black community even as the nation recovers from the recession.The white-black wealth disparity is more than 20 to 1. Black homeownership has declined. Black joblessness is up. Black income is down.As the conferees gathered, the government released new figures showing the black unemployment rate at 13.8 percent, nearly double the 7.0 percent for whites. The overall jobless rate is 7.9 percent.As bleak as the economic picture is for black Americans, the immediate prospects for improving it are worse, many participants said. They agreed that chances are remote for the kind of aggressive, targeted action needed to combat those problems and close the economic disparities that have long separated blacks and whites."We are basically talking about an economic system that is shot through with discrimination," said Bernard a former assistant secretary of labor.Despite that, Anderson and others said, President Obama seems reluctant to attack economic disparities between blacks and whites head-on.Anderson said that Obama's second inaugural address was notable for lifting up gay rights, sounding the call for immigration reform and signaling his determination for women to receive equal pay in the workplace. "But there was not a single, blessed word on race," he said.Anderson said that he has met with Obama's economic advisers in years past but did not get the sense that they were interested in any racially targeted economic remedies. "He does not want to be labeled a president who is consumed by racial inequality in this country," Anderson said.Others at the conference said that Obama took office during the worst downturn since the Great Depression and had his hands full forging policies to keep the economy from a full meltdown.Meanwhile, administration officials have pointed out that the president's policies have led to 35 consecutive months of private-sector job growth and more than 6 million new jobs. They also note that the president's work to expand Pell Grants and extend the earned-income and child tax credits have helped millions of African Americans.Nonetheless, conferees said that more needs to be done to close the racial disparities that have long been a feature of the nation's economic life.During the depths of the crisis, Obama often said he wanted to build a better, more durable economy in the recovery. Conference participants said they are challenging him to live up to his word."We would all like to see him pursue that course," said RalphEverette, president and chief executive of the Joint Center for Political and Economic Studies, which co-sponsored the event.Several scholars offered far-reaching, if politically unlikely, policy prescriptions.Duke University professor William Darity said policymakers should pursue a large-scale public jobs program to dramatically lower unemployment. Darrick Hamilton, an economist at the New School, said the government should divert some of the money used to fund the income-tax deduction for mortgage interest to fund "baby bonds" that would provide $15,000 for disadvantaged newborns of any race to invest later in higher education, a business or a home.The remedies need to be bold because "racial disparities are persistent and they are ubiquitous," said Enrique Lopezlira, a lecturer at Howard. "It is hard to explain in a context that does not include some sort of institutional racism going on." Story tags » • Jobs • Unemployment • Racism

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Geithner mulls whether to push extension of first-time home buyer credit Treasury Secretary Timothy Geithner said today he hasn’t "made a judgment yet" on whether to recommend extending the tax credit for first-time home buyers. "Obviously that's something that I'm going to take a careful look at," he told reporters in Washington. The heat is on to keep the credit (worth up to $8,000) alive, as the Associated Press reports: There have been more than a dozen bills introduced in Congress to prolong the life of the tax credit past the Nov. 30 deadline. The credit is helping stabilize the housing market, but there are conflicting views about the practicality and cost of an extension. The National Assn. of Realtors and the National Assn. of Home Builders have launched marketing campaigns touting the credit and have pushed Congress to keep it going. But some lawmakers are balking at the cost, which may hit an estimated $15 billion -- more than double the amount projected in February's economic stimulus bill. As long as the Treasury is having no trouble selling debt (and it isn’t having any trouble at all), Congress and the administration may figure the incremental cost of the tax credit is no big deal. When you’re already running an annual deficit of $1.6 trillion, what’s another $15 billion? But gems like this from the AP story may give some in Congress pause: Critics . . . see the credit as a subsidy for people who don't need one. Charles Curtis and his wife weren't even aware of the tax credit until they put a $895,000 all-cash offer in July on a two-bedroom apartment in New York City. "It was a wow moment," said Curtis, 27, a freelance writer and researcher. Not surprisingly, builders see extension of the credit as critical. The National Assn. of Home Builders, lamenting the 3% drop reported today in single-family housing starts in August, put out a release pleading for action on the credit. "With the $8,000 first-time home buyer tax credit set to expire at the end of November, the window is now basically closed for being able to start a new home that can be completed in time for purchasers to take advantage of that," said Joe Robson, the group’s chairman. "Builders are therefore pulling back on new construction at this time. Clearly Congress must act now to extend the tax credit if we are to keep the market moving toward a recovery." -- Tom Petruno

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Personalized Rewards, Maximum Return Your customers come in different shapes and sizes--shouldn't your reward offerings too? By Janet Kraus Click here for full-size image When you look at your customer base, you're sure to find an increasingly diverse mix of age, ethnic, racial, or social groups--each with its own preferences, values, and interests. If the offerings in your rewards program do not reflect this diversity, it's time to roll up your sleeves and get busy. Think about it: A recent study by the Administration on Aging reports the number of Americans aged 65 and older is expected to increase 17 percent from 1995 to 2010, and 75 percent by 2030, to over 69 million people. In fact, the fastest growing segment of the population is those age 85 and over. According to the 2000 U.S. Census, the combined buying power of ethnic consumers in the U.S. tops $1 trillion. By 2030, one third of the U.S. population will be Hispanic (19 percent), African-American (13 percent), or Asian American/Indian (7 percent); and by 2050, minorities will represent close to half of our population, up from 29 percent in 2000. The average age of a millionaire is 44; in 2000, more than 200,000 women in the U.S. had a net worth exceeding $1 million. A one-size-fits-all approach to customer loyalty cannot be effective. Loyalty programs and their growing set of award offerings have been around for years. While at one point gift certificates, airline tickets, and electronic gadgets had been shown to have broad appeal, customers have grown bored with the sameness of loyalty programs. What ignites their emotions (and loyalty) are awards that appeal to their dreams and desires--personalized experiences that relate to their age, lifestyle, and culture and provide them with lasting memories. Customers choose the rewards that are most meaningful to them, thereby promoting redemption and strengthening the bond between your customers and your company. Concierge brings personalization Concierge providers allow leading brands to offer their customers an amazingly broad array of experiences. Because of the very personal nature of these interactions (e.g., planning the perfect spa vacation, making arrangements for a night on the town) virtually every one of them is an opportunity for that company to deliver a brand-enhancing experience. For example, because there's nothing more important to a Hispanic grandmother than her family, she can use her accrued points to purchase personalized jewelry featuring children's names or birthstones, or sketches made from family photographs and beautifully framed. Seniors who are traveling the globe during their retirement years, but who are unable or unwilling to carry 50-plus pounds of baggage, have been know to call upon their rewards program's concierge to make arrangements to have their luggage delivered to their destinations. And, one credit card company recently announced a new reward program that is targeted specifically to adventure-seeking NASCAR fans in which points can be redeemed for once-in-a-lifetime NASCAR experiences. But do these services truly create business value? The answer is a resounding yes! Some companies have seen over 30 percent increases in customer spend levels and up to 50 percent reduction in attrition levels for concierge users. In fact, in controlled tests some companies have even found that simply offering concierge services as part of the loyalty package drove increased spend levels of 10 to 20 percent, even for those customers who never took advantage of the service. Concierge services also offer another very powerful benefit--incredibly powerful insight and information that can be used to drive a company's one-to-one marketing efforts. Many concierge interactions are so personal that they offer a great opportunity to capture customer information that can't be captured in any other way. Individual life stage information, hobbies and personal passions, important dates and personal influences, and business needs are all revealed during these interactions. By offering customers the ability to choose their own rewards--to create experiences that embrace their age, culture and lifestyle--you are giving them the opportunity to create personal and lasting memories. Each time the customer looks back on the experience, he will relive the emotion of the award and appreciate the company that gave it to him, strengthening his bond with the company. About the Author Janet Kraus is CEO and cofounder, in 1997, of Circles, and drives the company's vision and strategy. Her strong understanding of the value of loyalty and relationship marketing has made Circles a leading provider of concierge and personal assistance services, and has guided Circles through a 100 percent increase in revenue over the past two years. Circles received the Greater Boston Chamber of Commerce Small Business of the Year award for 2003. While receiving an MBA at Stanford's Graduate School of Business, Janet spearheaded the financing and building of the first multimedia center with access to the Internet. Janet received her BA from Yale University. She can be reached at www.circles.com

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Encyclopedia > Social Sciences and the Law > Economics, Business, and Labor > Money, Banking, and Investment devaluation devaluation, decreasing the value of one nation's currency relative to gold or the currencies of other nations. It is usually undertaken as a means of correcting a deficit in the balance of payments. Although devaluation occurs in terms of all other currencies, it is best illustrated in the case of only one other currency. For example, if the United States is losing money in its trade with Japan, a decision may be made to devalue the U.S. dollar by 10%. Whereas previously one dollar may have been worth about 100 yen, a 10% devaluation causes it to be worth only about 90 yen. Such a move causes Japanese products to become more expensive for Americans and U.S. products to become cheaper for the Japanese. The net result of such a devaluation is that U.S. exports tend to increase and imports tend to decrease, thus helping to reverse the balance of payments deficit. The Columbia Electronic Encyclopedia, 6th ed. Copyright © 2012, Columbia University Press. All rights reserved.See more Encyclopedia articles on: Money, Banking, and Investment

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Resource Center Current & Past Issues eNewsletters 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 top of any article. Partnering with the Business Michelle Scheer of Thomson Reuters talks about the lessons of project management. By Dave Lindorff December 11, 2012 • Reprints Michelle Scheer, vice president for finance at Thomson Reuters, is at home in the matrix. “Thomson Reuters has a matrix style of management,” she explains. “Instead of being organized into divisions, all with their own finance departments, we have five different product lines and five heads of those product lines, but we also have functional leaders, like myself, who manage things across all the product lines.” This style of organization can make things challenging, Scheer says, but she calls that a good thing, because it means she and other functional leaders are always trying to manage all the product lines and “looking to see where the growth areas are.” “That’s part of my role, coming up with those priorities, and putting funding in place to drive those priorities,” she says. Scheer, 38, joined Thomson Reuters in 2009 after working in the treasurer’s office at General Motors, where her positions included director of business development and director of worldwide pension funding and analysis. As assistant treasurer at Thomson Reuters, she led a project designed to model the company’s foreign exchange risk and devise a forex hedging program, a project that won an Alexander Hamilton Gold Award in financial risk management in 2010. While the project itself has “little application” to her current job, Scheer says the process of building and heading the team for that project gave her experience and skills that do carry over. How has it helped?That treasury project was a comprehensive forex strategy, which we needed because Thomson had just bought Reuters. So we were suddenly a global company and needed to develop a hedge program to deal with forex risk. Doing that meant trying to manage a project that involved a lot of teamwork across the company. And it turns out that managing in a matrix is a lot like managing a project. Everyone has their own goals, and yet you need to win their cooperation. What is the biggest challenge in your finance position?Trying to make everyone understand the goals of what we’re trying to accomplish so everything gets done. All the product line heads have their goals, and we functional leaders have our goals. I have to get buy-in from the product line heads. Global growth is what we’re focusing on now, so we need to make sure we provide product development and product management with the resources they need. In the current economic environment, it’s more important than ever to have a strong finance operation, to focus on key growth areas and on efficiency, and to really support a lean business. Corporate finance is more important now than ever. What do you like best about this job?I really love being closely involved in the business operation side. I love being part of such a talented and motivated business team. It’s exciting! Is there a downside?Yes. Implementing expense controls. I don’t enjoy telling people they can’t spend money on an initiative that on its own might make sense. This company has grown through acquisitions, and people come up with good ideas all the time. Part of my role is to have the company focus on things that make the most sense, and sometimes I just have to say no. What helped you get your career on the fast track?It really hasn’t been any one thing. I have always tried to do my best in every role I’ve had. Over time, that gets noticed. I have also definitely benefitted from having sponsors who have given me stretch opportunities. My current position is an example of that. Before this, I’ve been in corporate-level positions, and I’ve been interested in moving into a more operational role in the company. I was made aware of this position, and had a sponsor who encouraged me to take it on. Are you referring to mentors?Yes, kind of. In this case it was David Shaw, senior vice president for finance at Thomson Reuters. I had first worked with him when I was an analyst. That was even before business school, when I was with General Motors. He got me interested in Thomson Reuters, and I came and worked for him here. He was treasurer at the time. That was a built-in support, and you need that kind of a safety net when you move to a new company. Having someone like that who can provide advice and career support is important. You get that kind of a relationship by doing a good job and getting noticed. He also was instrumental in getting me to move into my current position. Do you do mentoring yourself?Yes, but more informally. We also recently started a more formal mentoring program here in finance, and I’m involved with that. What advice do you have for young people interested in corporate finance?Try and find a way to partner with the company. Sometimes it’s easy to think of corporate finance as something separate from the business activity of a company, but it’s really possible to see it as closer to or even part of operations. Are there any areas of finance that offer more opportunity?There is no ideal path. Each company has its own growth areas. One that does come to mind is financial planning and analysis. Taking a role there, especially early in your career, can help you hone your technical skills and at the same time gives you a lot of knowledge about the business operations side. Are there skills that you are still trying to improve?Oh yes. I have very strong technical and analytical skills, but over time you transition from being a doer to being a leader. So being able to motivate employees and to develop a great team is important. That’s leadership skills, particularly around the idea of motivating people. For the complete 2012 30 Under 40 list, see Ascending the Corporate Ladder. For last year’s list, see Ready to Take Charge. Calling All Innovators! 6 Tips for Safer Business Travel Why Corporate America's Borrowing Costs Keep Falling IRS Corporate-Debt Rules Exceed Authority, Tax Lawyers Say Learn from Brexit Previous Regulator Faults Work of Audit Firms (Reuters) Apple Not Seen Paying Special Dividend Reuters 99 General Motors 59 finance departments 29 product management 22 financial risk management 20 David Shaw 13 finance operation 9 Thomson Reuters 6 finance position 4 business development 2 fx hedging 2

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#23F: Mass Demonstrations Against Financial Coup In Spain By Jérôme Roos February 25, 2013 [ A+ ] / [ A- ] Email this page Posted in: Europe, Spain | No comments Europe’s 2013 protest season finally kicked off this week. On Saturday, three days after the umpteenth general strike paralyzed Greece, a “citizens’ wave” of indignation washed over Spain with hundreds of thousands of protesters swarming onto the streets of Madrid and over 80 cities in yet another major popular outcry against the ongoing financial coup d’étât. In Madrid, clashes broke out and at least 40 were arrested after police sought to disperse protesters who had once more encircled Parliament. Saturday’s demonstration in Spain was deliberately timed to coincide with the 32nd anniversary of El Tejerazo, an attempted coup d’étât by Lieutenant Colonel Antonio Tejero, who in 1981 led a military contingent of 200 armed officers as they stormed into Congress while it was in the process of electing a new Prime Minister. Although King Juan Carlos publicly condemned the coup, Der Spiegel last year revealed secret documents showing that the King privately sympathized with the coup. For millions of Spaniards, the embarrassing issue of the country’s anachronistic aristocracy is enough of a headache already. As Spain’s crisis burst out into the open, King Juan Carlos infamously went elephant-hunting in Botswana, amply displaying the insensitivity and aloofness of the head of state (who also serves as honorary president of the country’s WWF branch). Meanwhile, the King’s daughter and son-in-law are facing major corruption charges for multi-million euro fraud and money-laundering. Still, past military coups and absurd royal scandals are some of Spain’s least concerns at the moment. As the economy plunges ever deeper into the abyss, spectacularly missing EU-imposed debt goals by posting a dramatic 10.2 percent budget deficit last year, millions are now at risk of poverty. According to Oxfam, some 18 million Spaniards (almost 40 percent of the population) could face life of destitution by 2022. Decades of development risk coming undone. In the EU, only Bulgaria and Romania have a higher percentage of their population living in such dire circumstances. With unemployment hitting a shocking 26 percent, with over 400.000 families evicted from their homes since the start of the crisis (amounting to a mind-numbing 500 families per day), and with another 53,272 families projected to lose their homes this year alone, an acute humanitarian crisis is presenting itself. Meanwhile, with the excuse of “balancing the budget”, salaries are being slashed, employees laid off, hospitals privatized, pensions cut, tuition fees hiked, taxes raised, and social spending decimated. Last year, a quarter of the government budget went to servicing the public debt, while 100 billion euros were wasted to bail out Bankia, itself a conglomerate of bankrupt savings houses. Despite the lavish provision of public funds and the extravagant bonuses of Bankia’s executives (one of whom was given 6.2 million euros to go into “early retirement”), the bank will next week reveal total losses amounting to more than 19 billion euros, constituting the largest corporate losses in Spanish history. All the while, the elephant in the room is a sickening corruption scandal that continues to plague Rajoy’s conservative government. Last month, Spain’s biggest newspaper El País published secret documents revealing years of endemic corruption at the highest levels of the governing party. Luis Barcenas, the treasurer of the Partido Popular, kept a double account from which secret contributions by Spanish businessmen were redistributed to leading party members. Among the benefactors of the scandal are former Bankia executive and IMF official Rodrigo Rato, as well as Prime Minister Rajoy, who for 10 years netted over 250.000 euros in illegal side-payments. To make matters worse, much of this money appears to have originated from the construction sector, which experienced a huge boom during the build-up of the Spanish real estate bubble, suggesting that leading politicians greedily took bribes to allow private investors to bypass construction regulations and build on protected lands. In the process, thousands of building projects scarred the Spanish landscape, leaving behind hundreds of uninhabited ghost towns and destroying much of the country’s once pristine beach lines. When the bubble finally burst, millions of workers in the construction sector lost their jobs and hundreds of thousands lost their homes — while politicians, bankers and businessmen made windfall profits. The PP corruption scandal confirmed a long-held suspicion among the Spanish population that democratically-elected representatives were largely complicit in causing (and profiting from) the country’s severe financial crisis. Already back in 2011, millions of indignados took to the streets to denounce the country’s representative institutions as a sham of democracy, counter-posing the corporate and corrupt practices of their politicians with a genuine form of grassroots democracy practiced through popular assemblies and solidarity networks. This Saturday, the Marea Ciudadana — a loose and decentralized coalition of over 200 action groups and movement associations, and itself a product of nearly two years of popular resistance — brought hundreds of thousands of people back to the streets to send yet another message to the government: enough with austerity and debt repayment; enough with political and economic corruption, with banker impunity, royal dishonesty and police brutality; enough with the rule of financial markets and EU/IMF-imposed reforms; enough with this inhumane neoliberal solution to the crisis of capital. As the PP corruption scandal sent Rajoy reeling and clinging on to power, the government’s last remaining fragments of legitimacy are rapidly evaporating. Polls show that 96 percent of Spaniards believe their politicians are thoroughly corrupt, and the persistent mobilization of hundreds of thousands of outraged citizens shows that millions are acutely aware that there is a direct line connecting these corrupt politicians to national businessmen, European institutions, and international finance capital. And so, exactly 32 years since the Tejerazo, the people of Spain are making it known that they will not abide by yet another attempted coup d’étât. The elephant in the room has been exposed and the emperor is revealed to stand without clothes. The 2013 hunting season has begun. This time around, the hunter will be hunted and the King will be prey — along with the entire blue-blooded financial aristocracy: from Rato to Rajoy and from Bankia to the Troika. ¡Que se vayan todos! It’s time for them to go. Leave a comment Cancel replyYou must be logged in to post a comment. Roos's: ZNet ArticlesBrexit Confirms: The Center Cannot HoldGreece’s Refugee Ring-Fence Will Be Europe’s NooseIs China’s Stock Market Turmoil a Sign of What’s to Come?The Year the ‘European Dream’ Finally Caved InIs the Era of Cheap Credit at an End?Read more...Z CommentaryGreece’s referendum: one no, many yeses!Greek referendum: euro crisis explodes into dramatic climaxThe Greek Endgame: Time to Choose Between Default and DefeatDismantle Europe’s Racist and Murderous Migration RegimeIn Amsterdam, Rebellion Against the Neoliberal UniversityRead more...Video‘Utopia on the Horizon’#12M — The Sun Rises Once MoreOne World, One RevolutionRead more...

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Joint Release Board of Governors of the Federal Reserve System For Immediate Release FDIC-PR-78-2003 August 12, 2003 Agencies Jointly Issue Request for Comment on Interagency Guidance on Response Programs to Protect Against Identity Theft The Federal bank and thrift regulatory agencies today requested public comment on proposed guidance that would require financial institutions to develop programs to respond to incidents of unauthorized access to customer information, including procedures for notifying customers under certain circumstances. The proposed guidance interprets the interagency customer information security guidelines, issued in February 2001, that require financial institutions to implement information security programs designed to protect their customers' information. The proposed interpretation describes the components of a response program and sets a standard for providing notice to customers affected by unauthorized access to or use of customer information that could result in substantial harm or inconvenience to those customers, thereby reducing the risk of losses due to fraud or identity theft. The proposed guidance states that "an institution should notify affected customers when it becomes aware of unauthorized access to sensitive customer information unless the institution, after an appropriate investigation, reasonably concludes that misuse is unlikely to occur and takes appropriate steps to safeguard the interests of affected customers, including monitoring affected customers' accounts for unusual or suspicious activity." The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision are requesting public comment on all aspects of this proposal, including whether the agencies have identified the appropriate standard for financial institutions to provide notice to their customers. Comment on the proposed guidance is requested by October 14, 2003. Specific information on how to file a comment is contained in the Federal Register notice. Attachment: August 12, 2003, Federal Register, pages 47954-47960 PDF (64.7 KB File - PDF Help or Hard Copy) Federal Reserve Andrew Williams (202) 452-2955 FDIC Phil Battey (202) 898-6993 OCC Bob Garsson (202) 874-5770 OTS Chris Smith (202) 906-6677 Last Updated 08/12/2003

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ft.com > comment > blogs > FTdotcomment Staging the crisis by Kiran Stacey 0 At the height of the crisis, in November 2008, the Queen asked a room of academics at the London School of Economics what could be the key question of the last few years: “Why did nobody see this coming?” It is a question seized on by David Hare in his new play, The Power of Yes, but which is arguably better answered by Lucy Prebble (a Londoner in her 20s) in her play Enron, which debuted in London’s West End last night, and which ostensibly has nothing to do with the credit crisis and its aftermath. Enron‘s West End debut, especially for those who, like me, were seeing the play for the first time, was a triumph. The acting was compelling and believable, especially from Sam West, who as Jeff Skilling managed to make a seamless transition from maths nerd to master of the universe. This was coupled with the kind of spectacular pyrotechnics that audiences expect from a Rupert Goold production, including a stunning representation of 9/11 (an event not exactly easy to re-create within the confines of a West End stage). Nor were the special effects out of place: Prebble explained recently in the FT that part of the point of the elaborate staging was to capture something of the out-of-control nature of Enron itself. But the real star was the writing. Some of it seemed too prescient to have been written before the current crisis, and Prebble says in the FT piece that she re-wrote parts for the West End. But in one scene, which must have been there from the play’s inception, she captures perfectly how Enron got into the position it did and why no one saw it coming, and it is a scene that translates perfectly for the current crisis. In that scene, Jeff Skilling and his CFO, Andy Fastow, present Fastow’s plans to create off-balance sheet vehicles in which to hide debts, to the three parties who might stop them: the accountants, the lawyers and the board. After each group has tried to pass the buck to another, there is an awkward moment at which someone asks “Okay?” Another barks the question back: “Okay?” And another “Okay?” And slowly, but surely, the questions sound less and less interrogative until everyone in the room is shouting “Okay!” The idea behind the scene is that when people don’t understand what’s going on, they will rely on those they imagine are the smartest guys in the room without asking too many other questions. This is as true for the off-balance sheet vehicles that helped bring down Lehman Brothers (which is represented by bumbling conjoined twins in Prebble’s play: surely one of the parts written in later) as those that brought down Enron. It is also the idea behind the title and much of the action in Hare’s play. Given that the theme is universal enough for it to be as true at the beginning of last decade as at the end, it is reasonable to assume it will always be thus. This is why strict regulation is the only way to ensure such a crisis doesn’t happen again. In a world where very few understand the complexity of the financial instruments being created, we must be able to rely on those who put themselves up as specialist watchdogs to make sure they are not going to bring down the system as a whole. The scene also shows just how few people took the decisions that resulted in so many losing their life savings, and how small and personal many of the dramas were that led up to the world’s biggest corporate scandal. This is why Prebble’s drama gets at the truth so much better than Hare’s more clunking staged-documentary format. And why, eventually, someone will have to write the definitive stage version of this crisis as told through the story of Lehman. If no one else is forthcoming, I know of a 20-something London-based playwright who would do a stunning job. Tags: David Hare, Enron, Lehman Brothers, Lucy Prebble, The Power of Yes Posted in Banking, Comment, Financial Crisis, Regulation | Permalink Share Share this on Twitter Facebook Google+ LinkedIn StumbleUpon Reddit Clip thisPrintEmail Share Share this on Twitter Facebook Google+ LinkedIn StumbleUpon Reddit Clip thisPrintEmail FT dot commentFT dot comment is no longer updated but it remains open as an archive. Politics, economics, high finance and morality – this blog addresses the issues being considered by the FT’s comment team, and their thoughts. FT dot comment: a guideChristopher Cook is an FT editorial writer. Before joining the FT in 2008 as a Peter Martin Fellow, he worked for three years for the Conservative party. Lorien Kite is deputy comment editor, a post he took up in 2009 after four years as a commissioning editor on the analysis page. He joined the FT in 2000. Ian Holdsworth became assistant features editor in 2009 and was previously chief production journalist for the features pages. Categories Bank of England What we’re reading Bagehot's notebook Charlemagne's notebook

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Why Berlin Says U.S. 'Bad Bank' Plan Is Bad William Boston / Berlin Monday, Mar. 30, 2009 Steffi Loos / AFP / Getty ImagesGerman Chancellor Angela Merkel delivers a speech in Berlin in front of the Federal Association of German Banks on March 23, 2009 Germany's Auto-Woes Fix: Scrap That Clunker!The Dangers of Printing Money25 People to Blame for the Financial Crisis German Chancellor Angela Merkel and her Finance Minister, Peer Steinbrück, have spent months saying they will never let irresponsible German banks off the hook by taking their toxic assets and putting them into some sort of government-backed bad bank. But that was before U.S. Treasury Secretary Timothy Geithner unveiled his plan to do just that with the toxic debts of U.S. banks. The move has won plaudits on Wall Street and even a knowing nod from Main Street U.S.A., which understands that the plan is a necessary evil. In Germany, it has also fueled a fierce debate about whether Merkel is wrong and how Berlin might get toxic assets off German banks' books without making taxpayers foot the bill. (See 25 people to blame for the financial crisis.) With an election just six months away, Merkel simply doesn't have the political capital with voters enjoyed by the newly elected Obama Administration. She already faces rising criticism and demonstrations against her policies to bail out the banks, such as the government stakes in Commerzbank and struggling mortgage bank Hypo Real Estate. Critics say during years of belt-tightening to cut public debt the government had no money for social programs, but now it is spending billions to bail out irresponsible banks. In a speech to German bankers last week Merkel said her opposition to a bad bank was based on a need for fairness in resolving the crisis. "Politically we have to be careful that in the spirit of justice we don't reach a point where the taxpayer bears the bad risks and the privately functioning banks in the end have all the good opportunities," Merkel said. The Chancellor remains skeptical of the American initiative. But in her speech to Germany's banking élite, Merkel also acknowledged that Europeans were under pressure to deal with the issue of toxic debt. "I am dying to see how the American model will work and whether private-sector incentives can actually sell the more difficult assets," she said skeptically. "But we can't dodge the issue because otherwise it will take far too long before the banks can return to their full strength." But many Merkel critics say Germany needs to act now. Merkel's wait-and-see policy just isn't working, they argue. Economists now predict that Germany's export-dependent economy will contract by a record 7% this year. And the latest data from the European Central Bank show that despite the stimulus packages and bailouts across Europe, the region's banks still are not lending money. The volume of lending to the private sector in the eurozone, the 16 countries that use the common European currency, dropped 0.1% in February from the month before and lending to businesses also slipped 0.1%, the ECB reported. German banks have an estimated $265 billion to $400 billion in bad debt on their books. Put another way: that's as much as 12% of German GDP. The U.S. bad-bank plans calls for purchasing up to $1 trillion in toxic debt, equivalent to 6.8% of U.S. GDP. German banks have about $550 billion in cash reserves. So, it's not hard to figure out what would happen to the real economy if the banks are left on their own to work through loan failure of this magnitude. "Germany has not succeeded yet in getting control of the financial crisis," says Klaus Zimmermann, president of the Berlin-based DIW economic research institute. "We must quickly extract the toxic assets from the system so that the banks can finally reassume their service role for the real economy." There is a chance that Merkel will unveil something at the G-20 meeting to show that Europe's biggest economy is dealing with the issue. Axel Weber, president of the Deutsche Bundesbank, said talks between the banks, the finance ministry and SoFFin, the federal bank-stabilization fund, could produce a viable concept for a bad bank before the G-20 meeting. According to Weber, Germany would not create a central bad bank and it would not buy the toxic assets from the banks. Instead, German banks could split each bank into a good bank and a bad bank, allowing the banks to move the bad debt into their bad bank and in return receive fresh capital from the government for their good bank. The government remains skeptical of the plan but still has put no alternative suggestion on the table. The government wants to ensure that a bank's shareholders and not the taxpayer bear the brunt of any losses. "The previous shareholders will primarily have to share the losses and bear the risks," he told the Saarbrücker Zeitung newspaper. The Federation of German Banks, which represents the main private-sector banks, has proposed something along these lines already. Rather than calling it a bad bank the banks call it a "mobilization fund." Each bank would park its toxic assets in an account with the government. This way the assets would be off the banks' books but each security would still be associated with its original owner rather than pooled together. "The mobilization fund is not about burdening the taxpayer with all the risks," Klaus-Peter Müller, head of the banking federation, told reporters. DIW, the economic-research institute, suggests that the banks sell the toxic assets to the federal government at no charge. In exchange, the government would then provide the banks with equity by taking stakes in banks that participate. The toxic assets would be placed in a state-owned bad bank and sold back to the banks at a later date when a market for such assets reemerges. "This ensures that the shareholders and not the taxpayers have to bear the initial costs of the failure," says Dorothea Schäfer, DIW head of research. Back at the finance ministry, no one seems happy with any of the suggestions currently on the table. "We are continuing to look for a solution that doesn't place the burden on taxpayers," a ministry spokesman says. See pictures of Germany's efforts to recover from a financial crisis in the 1920s. See TIME's Pictures of the Week.

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Buffett insuring $1B bracket challenge Published On: Jan 21 2014 08:05:27 AM PST Updated On: Jan 21 2014 12:41:52 PM PST iStock / 33ft Turns out, there is a price for perfection.Mortgage lender Quicken Loans is teaming up with Warren Buffett and Berkshire Hathaway to offer a chance at a $1 billion prize for completing a perfect NCAA Tournament bracket.Any registered entrant in the "Billion Dollar Bracket Challenge" will share the total $1 billion prize paid in 40 annual installments of $25 million, Quicken Loans said Tuesday.Winners could instead choose an immediate $500 million lump sum payment or share in that lump sum payment if there is more than one perfect bracket submitted."We've seen a lot of contests offering a million dollars for putting together a good bracket, which got us thinking: 'What is the perfect bracket worth?' We decided a billion dollars seems right for such an impressive feat," said Jay Farner, president and chief marketing officer of Quicken Loans. "It is our mission to create amazing experiences for our clients. This contest, with the possibility of creating a billionaire, definitely fits that bill."Beyond the grand prize, Quicken Loans is offering $100,000 to the contest's 20 most accurate -- if not perfect -- to use toward buying, refinancing or remodeling a home.In conjunction with the "Billion Dollar Bracket Challenge," Quicken Loans will also be directly donating $1 million to inner-city Detroit and Cleveland nonprofit organizations that are dedicated to improving the education of young Detroit and Cleveland residents."Millions of people play brackets every March, so why not take a shot at becoming $1 billion richer for doing so," said Buffett, chief executive officer of Berkshire Hathaway, who is insuring the contest's grand prize. "While there is no simple path to success, it sure doesn't get much easier than filling out a bracket online. To quote a commercial from one of my companies, I'd dare say it's so easy to enter that even a caveman can do it."Registration is free and begins March 3, running through March 19. Registration is required and entrants will receive their brackets on Selection Sunday.

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Charting Our Way to Solvency WASHINGTON -- In 2013, when President Mitch Daniels, former Indiana governor, is counting his blessings, at the top of his list will be the name of his vice president: Paul Ryan. The former congressman from Wisconsin will have come to office with ideas for steering the federal government to solvency. Not that Daniels has ever been bereft of ideas. Under him, Indiana property taxes have been cut 30 percent and for the first time, Standard & Poor's has raised the state's credit rating to AAA. But in January 2010, Ryan released an updated version of his "Roadmap for America's Future," a cure for the most completely predictable major problem that has ever afflicted America. Some calamities -- the 1929 stock market crash, Pearl Harbor, 9/11 -- have come like summer lightning, as bolts from the blue. The looming crisis of America's Ponzi entitlement structure is different. Driven by the demographics of an aging population, its causes, timing and scope are known. Funding entitlements -- especially medical care and pensions for the elderly -- requires reinvigorating the economy. Ryan's map connects three destinations -- economic vitality, diminished public debt, and health and retirement security. To make the economy -- on which all else hinges -- hum, Ryan proposes tax reform. Masochists would be permitted to continue paying income taxes under the current system. Others could use a radically simplified code, filing a form that fits on a postcard. It would have just two rates: 10 percent on incomes up to $100,000 for joint filers and $50,000 for single filers; 25 percent on higher incomes. There would be no deductions, credits or exclusions, other than the health care tax credit (see below). CARTOONS | Ken Catalino View Cartoon Today's tax system was shaped by sadists who were trying to be nice: Every wrinkle in the code was put there to benefit this or that interest. Since the 1986 tax simplification, the code has been recomplicated more than 14,000 times -- more than once a day. At the 2004 Republican convention, thunderous applause greeted George W. Bush's statement that the code is "a complicated mess" and a "drag on our economy" and his promise to "reform and simplify" it. But his next paragraphs proposed more complications to incentivize this and that behavior for the greater good. Ryan would eliminate taxes on interest, capital gains, dividends and death. The corporate income tax, the world's second highest, would be replaced by an 8.5 percent business consumption tax. Because this would be about half the average tax burden that other nations place on corporations, U.S. companies would instantly become more competitive -- and more able and eager to hire. Medicare and Social Security would be preserved for those currently receiving benefits, or becoming eligible in the next 10 years (those 55 and older today). Both programs would be made permanently solvent. Universal access to affordable health care would be guaranteed by refundable tax credits ($2,300 for individuals, $5,700 for families) for purchasing portable coverage in any state. As persons under 55 became Medicare eligible, they would receive payments averaging $11,000 a year, indexed to inflation and pegged to income, with low-income people receiving more support. Ryan's plan would fund medical savings accounts from which low-income people would pay minor out-of-pocket medical expenses. All Americans, regardless of income, would be allowed to establish MSAs -- tax-preferred accounts for paying such expenses. Ryan's plan would allow workers under 55 the choice of investing more than one-third of their current Social Security taxes in personal retirement accounts similar to the Thrift Savings Plan long available to, and immensely popular with, federal employees. This investment would be inheritable property, guaranteeing that individuals will never lose the ability to dispose every dollar they put into these accounts. Ryan would raise the retirement age. If, when Congress created Social Security in 1935, it had indexed the retirement age (then 65) to life expectancy, today the age would be in the mid-70s. The system was never intended to do what it is doing -- subsidizing retirements that extend from one-third to one-half of retirees' adult lives. Compare Ryan's lucid map to the Democrats' impenetrable labyrinth of health care legislation. Republicans are frequently criticized as "the party of no." But because most new ideas are injurious, rejection is an important function in politics. It is, however, insufficient. Fortunately, Ryan, assisted by Republican representatives Devin Nunes of California and Jeb Hensarling of Texas, has become a think tank, refuting the idea that Republicans lack ideas. Share this on Facebook Tweet Tags: Jobs

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Law and Enforcement Alabama Pension Fund Nets $111M From WorldCom Settlement Finance Oct 5th 2004 0 As the Alabama state pension fund waits to see what will happen with U.S. Airway's bankruptcy filing, the fund received a $111 million settlement from three companies over claims in the WorldCom collapse, the Associated Press reported. The Retirement Systems of Alabama achieved majority shareholder status in U.S. Airways when it bought into the company in December 2002 while the airline was previously in bankruptcy. The airline once again filed for bankruptcy protection Sept. 12. "Would I do it again? Absolutely," said Alabama pension system chief David Bronner. "It had $7.5 billion in revenues and we got controlling interest for $240 million." While Bronner has said that while a bankruptcy filing by U.S. Airways would cost the pension system up to $240 million, the fund is diversified enough to withstand the loss. US Airways announced plans last Tuesday to cut $45 million a year in pay and benefits to roughly 3,700 management employees, a move the airline hopes will convince its union employees to collectively accept $950 million in annual cost cuts, the Associated Press reported. An airline source who briefed reporters Monday on condition of anonymity said the planned cuts will include hundreds of layoffs and shed at least $45 million off the $201 million collective payroll for its management workers, the AP reported.Trending The influx of cash from this week's settlement will no doubt be welcome to the Alabama pension fund. The settlement resolves the Retirement Systems of Alabama's claims against J-P Morgan Securities, Citigroup Global Markets, Banc of America Securities, and Arthur Andersen, the AP reported. Bronner called the settlement a huge win for public pension funds and for investors as a whole, the AP reported.

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Nine keeps its sights on selling select websites by Neil Shoebridge Nine Entertainment Co and Microsoft’s negotiations with three private equity firms over the sale of their 33 per cent stake in online comparison business iSelect are continuing, despite the fact that the holding is not formally on the market.The iSelect shareholding is owned by the Nine-Microsoft internet joint venture ninemsn, which bought it in 2006 for about $20 million. Nine and Microsoft were understood to value the stake now at between $120 million and $150 million.Nine chief executive David Gyngell said there had been “good interest" in ninemsn’s stake in iSelect, but a sale was not a fait accompli.“It depends on what is best for the company and what works best for us and the other shareholders," he said. Other shareholders include iSelect founder and chief executive Damien Waller and the United States private equity firm Spectrum Equity Investors, which bought 10.2 per cent in March for $US30.2 million. The iSelect group bulked up this year with the $33.5 million takeover of listed financial comparison website Infochoice.The takeover, which was announced in May and completed earlier this month, added financial websites such as Once Life and BidMyLoan to iSelect and was part of Mr Waller’s strategy to position ­iSelect as the leading provider of online consumer comparison services in Australia.Ninemsn chief executive Mark Britt declined to discuss the talks with private equity firms about the iSelect holding, but said he “wouldn’t necessarily agree that it’s for sale". “iSelect is a very strong and very impressive business," he said. “It’s an important part of our investment portfolio, along with Cudo and RateCity."Mr Britt, who took the top job at ninemsn on September 1, said the company was “always looking to add and review its investments".Earlier this year Nine and Microsoft hired Macquarie Group to look for a potential buyer for Cudo, the group buying website they launched in August 2010, and to examine acquiring other sites.Macquarie distributed an information memorandum to several parties, including Yahoo!7 (which is half-owned by Seven West Media ) and the United States-based online group buying companies Groupon and Living Social. No bids were made for Cudo, which had a price tag of about $60 million. Nine and ninemsn executives said the business would now be retained.Mr Britt said ninemsn was looking at several potential investments.“Ninemsn has always been a great business for helping new companies get to scale," he said.“Our next investment phase will focus on companies that help deepen our understanding of consumers. That’s a pretty broad remit, but that’s the focus." The proceeds from the sale of ninemsn’s stake in iSelect would not be used to reduce the Nine group’s $3.66 billion debt, as the investment was not taken into account when Nine’s loan documents were drawn up with its banks.Late last week Nine and its owner, private equity firm CVC Asia Pacific, asked their banks to extend the deadline for refinancing the former’s $2.69 billion of senior debt from February 2013 to August 2015, and the deadline for its $975 million mezzanine debt refinancing from April 2014 to October 2014.

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China ‘faces credit crisis’ by Ambrose Evans-Pritchard Monetary tightening in China threatens to pop the $US1.7 trillion credit bubble in local government finance and expose the country’s simmering sub-prime crisis, according to the Communist Party’s economic guru.Cheng Siwei, head of Beijing’s International Finance Forum and a former deputy speaker of the People’s Congress, said interest rate rises and credit curbs to cool overheating were inflicting real pain on thousands of companies used by local party bosses to fund the construction boom.“The tightening policy is creating a lot of difficulties for local governments trying to repay debt and is causing defaults," he told a meeting at the World Economic Forum in Dalian, north-east China.“Our version of sub-prime is lending to local authorities and the government is taking this very seriously. “Everybody assumes they will be bailed out by the central government if they default, but I disagree with this. It means that the people will ultimately pay the bill for it all, at a cost to the broader welfare. “Those who are not highly indebted are forced to help those who are," he said, echoing the debate over moral hazard that has split opinion in the West since the banking rescues.China’s local governments have formed more than 6000 arm’s-length companies to avoid curbs on bond issuance, creating a huge patronage machine for party bosses that has largely escaped central control.The audit office said the loans had reached $US1.7 trillion. While some of the money had financed much-needed investments in water systems and roads, a large part had fuelled unbridled construction with a dubious rate of return. The local governments depended on land sales for 40 per cent of their revenue so the process had become incestuous and self-feeding, such as greatly aggravated the post-bubble crisis in Ireland. Mr Cheng said China was entering a “very tough period" as growth ran into the inflation buffers.He said it threatened the sort of incipient stagflation seen in the West in the 1970s and left the central bank with an unpleasant choice. “The inflation rate and the growth rate are conflicting with each other: it is very troubling," he said, describing what is known to economists as the Phillips Curve dilemma. Motorists ‘singing in their cars’: PM ‘Nothing the Prime Minister can do’: Frydenberg Data-retention law to cost $400m: Abbott Most direct action bids ‘too expensive’: RepuTex PM rings in changes but more needed Contains:

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Behind the Scenes: How Obama Picks His Economic Advisors Morgan Housel, The Motley Fool Jan 30th 2013 2:37PM In October 2008, the CEOs of the nation's 13 largest banks, including Bank of America , Citigroup , JPMorgan Chase , and Wells Fargo , which collectively controlled (and still control) more than one-third of the country's deposits, lined up for a meeting at the Treasury department where they were told, in effect, how to manage their companies through the financial crisis. Whether they wanted it or not (some didn't), the banks were given billions of dollars in taxpayer money and pushed into restrictions on how they could pay dividends and repurchase stock. It wasn't nationalization, but it was close. One month later, Barack Obama was elected president. He would bring in a new set of economic advisors and a new cabinet to manage the banking sector. Many thought he would install a staff bent on tough love -- even dismantlement -- of the banking sector. But that wasn't the case. Instead, the president surrounded himself with a team of Wall Street-friendly advisors, some of whom were seen as responsible for creating the mess banks were in. Larry Summers, Obama's new economic advisor, was a former Treasury Secretary involved with derivatives deregulation in the 1990s. Tim Geithner, then the new Treasury Secretary, was the former head of the Federal Reserve Bank of New York, tasked with overseeing Wall Street during the bubble. Many didn't get it. Why would Obama surround himself with a group of advisors seen as culpable for a mess he was trying to clean up? Last week, I asked that question to Ron Suskind, a Pulitzer Prize-winning author of the book Confidence Men, which describes the president's first two years in office. Here's what Suskind had to say (transcript follows): Morgan Housel: Your book Confidence Men talks a lot about Obama's economic advisors and how, when he was running for office prior to 2008, he had this A Team of advisors that were good fresh-faced people that had good reputations with the public -- or no reputations, which was the good part -- and then when he was elected, he pushed them to the side and brought in a group of people who were in many ways, in the public's eye, responsible for the crisis; Larry Summers, Tim Geithner. What was the reason for bringing those people in that the public looked down upon? Ron Suskind: I don't think we have a very succinct answer. We may have to wait for Obama's memoirs for that. But I have a pretty good sense of what went on. I think when you get to be my age, some of these things become a bit impersonal. Power will exercise its prerogatives if it has the chance. It's not the issue of party, it's not the issue of some concept or ethical compass. If they can do it they will. There's a lot at stake here whether it's big profits for a company, or the presidency of the United States. And I think part of the key to the American model are the self-correcting features. That's the key to what makes this all work, both in the markets and in the public place. Obama, essentially, in the spring of 2008 when he really took off after winning Iowa at the end of the year and now by the spring when he's giving that speech at Cooper Union in New York, I mean, it's like, 'touch the hem of my garment.' It's just crazy. He was like a messiah. And around him he's got [former Fed chairman Paul] Volcker, the old warhorse who was really a champion of tough love. He chokes off interest rates, money supply, in 1979-1980, forces a recession to kill off the demon of inflation, and he's got no great love for Wall Street. You know, he said, 'The only great financial innovation I've seen in the last 20 years is the ATM.' I mean, the guy's great. And Obama and Volcker, they cottoned each other. Volcker's like 'I like this guy.' It just was key for Obama. He had credibility with Volcker. And who else does he got? He's got Bill Donaldson the SEC chief under Bush who's feeling very confessional at this moment. He's got Laura Tyson who's a nice, honest broker. He's got Robert Wolf, the UBS chief, who was a Wall Street titan. He's got [Joseph] Stiglitz and Rice on the left; it's an ecumenical team of the type you'd want. Folks who are saying, 'I know we don't usually hang out with these guys or this women or this crowd, but we're nervous. The ship is going for a waterfall here. We're here to help.' Well, Wall Street takes one look at this scene, of Obama and this team, and they say, 'If he gets to be president with that team around him, we on Wall Street are toast! It's going to be Roosevelt in 1933. They'll create a model, a restructuring, that will last another 50 years of diminished profits; often unreasonable and ill-gotten profits, but profits nonetheless. Do something!' So [Wall Street's] idea was simply, 'get our team in close.' And there was actual discussion about this. 'Just get Larry Summers to the table.' Because Larry is a genius at managing these conference tables. He is a genius at it. And I think his particular skill is not so much in clarity of ideas like a Danny Kahneman as he's a rhetorical master. He's brilliant at framing arguments. And when Summers is in, you can see that everyone starts to follow. Obama had a cold-sweat moment, there's no doubt about it. And he gets to October of 2008 and he's like, 'Oh my god. I think I'm going to win this thing. I'm going to have to tame New York, own Washington, keep us from a recession,' and I think he just took the advice of going with the pros from Dover rather than a much more robust team. And he went with Team B and not Team A. And that made an enormous difference, because he was fighting against them all the way through the first term. To learn more about the most-talked-about bank out there, check out our in-depth company report on Bank of America. Just click here to get access. The article Behind the Scenes: How Obama Picks His Economic Advisors originally appeared on Fool.com. Morgan Housel has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo. 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.

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selected Politics Business selected Your Money UK economy is turning corner, George Osborne says http://www.bbc.co.uk/news/business-24011795?postId=117306173 Media captionGeorge Osborne: "There are still those calling for the government to abandon its economic plan... but to do so would be disastrous" The UK economy is "turning a corner", Chancellor George Osborne has said in a speech in London.Mr Osborne cited "tentative signs of a balanced, broad based and sustainable recovery", but stressed it was still the "early stages" and "plenty of risks" remained.Mr Osborne said that recent months - which have seen more upbeat reports on the economy - had "decisively ended" questions about his economic policy.Labour has dismissed the comments. The speech comes ahead of the Conservative Party conference later this month, and after a number of forecasts and surveys pointed to an acceleration in the UK's economic recovery. Revised gross domestic product figures showed the UK economy grew by 0.7% in the second quarter of the year, with predictions it could reach 1% for the third quarter.And last week the OECD economic agency sharply increased its growth forecast for the UK economy this year to 1.5% from an earlier estimate of 0.8%. By Nick RobinsonPolitical editor The Conservatives' fear is that in future voters may not accept that current policies need to be maintained Economic arguments have just begun Mr Osborne said: "The economic collapse was even worse than we thought. Repairing it will take even longer than we hoped."But we held our nerve when many told us to abandon our plan. And as a result, thanks to the efforts and sacrifices of the British people, Britain is turning a corner."Of course, many risks remain. These are still the early stages of recovery. But we mustn't go back to square one. We mustn't lose what the British people have achieved."This is a hard, difficult road we have been following. But it is the only way to deliver a sustained, lasting improvement in the living standards of the British people."The government's "economic plan is the right response to Britain's macroeconomic imbalances and the evidence shows that it is working", he said, in his address to an audience of academics, think tanks and businesses. Those in favour of a Plan B have lost the argumentGeorge Osborne Mr Osborne said that those who advocated an alternative economic path could not explain recent improvements in the economic data. And "the last few months have decisively ended" the idea that the scale and pace of his measures were to blame for much slower than projected growth over recent years, he added."Those in favour of a Plan B have lost the argument," he said.Heeding calls to abandon the government's economic plan in order to spend and borrow more would have undermined the recovery and "would be disastrous" now, Mr Osborne said.He pledged to remain "vigilant" to threats from abroad - including growing instability in the Middle East pushing up the oil price and a fresh eurozone crisis - as well as at home. John Cridland, director-general of business lobby group CBI, said the economy was gathering some momentum, business confidence was rising and he expected growth to continue into next year."We have always said that deficit reduction should be at the top of the government's 'to-do list', but it must be coupled with an unrelenting focus on growth-boosting measures like infrastructure projects," he said.'Rewrite history' The chancellor isn't declaring victory on the recovery just yet - he's too careful for that. But he is declaring victory over Ed Balls By Stephanie FlandersEconomics editor And he dismissed claims he was encouraging "the wrong sort of growth" - led by debt-fuelled consumer spending - insisting the evidence suggested "tentative signs of a balanced, broad based and sustainable recovery". He said there were many tough decisions still to be taken and that "the only sustainable path to prosperity is to reject the old quick fixes and stick to the course we have set". Labour accused Mr Osborne of "extraordinary complacency".Opposition leader Ed Miliband told the BBC that the chancellor was "saying to people that he has saved the British economy at a time when, for ordinary families, life is getting worse". "If ever you wanted proof that the government is out of touch with most people, that it is on the side of the few, George Osborne has provided it today," he added.

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Gallery: A collector’s treasure trove of campaign memorabilia More than 8,000 households with no power in West Seneca Long lines at Peace, Niagara bridges getting longer because of lack of staff This Week in Pictures: July 16-22 Buffalo in the 1890s: Poles, Italians clash on riverfront View more » Outdoors Calendar (July 24): Events in the great outdoors Alex Ramirez was Herd’s best in title season Mike Harrington’s MLB Power Rankings for July 24 Roster turnover has Bills special teams rebuilding and aiming to bounce back Gwinnett’s ninth inning is decisive View more » M&T Bank subsidiary in Delaware notified of federal probe By Matt Glynn | News Business Reporter on November 12, 2013 - 11:37 AM , updated November 12, 2013 at 6:37 PM Tweet The Securities and Exchange Commission has notified Wilmington Trust, an M&T Bank Corp. subsidiary, of possible enforcement action. The investigation centers on financial reporting and securities filings by the Delaware-based firm before M&T bought it in 2011.Buffalo-based M&T said the SEC on Aug. 5 sent Wilmington Trust a “Wells notice,” which provides notification of potential enforcement action and is named for a former SEC committee chairman. Recipients are given a chance to explain why the action should not be brought; Wilmington Trust sent its response Sept. 20.“Counsel for Wilmington Trust has met with the SEC to discuss the investigation and its possible resolution,” M&T said in a regulatory filing Tuesday. The SEC declined to comment on the investigation.“The issues in question relate exclusively to Wilmington Trust Corp. and occurred prior to the merger with M&T Bank Corp.,” Chet Bridger, an M&T spokesman, said in a follow-up statement about the regulatory filing. “We do not currently believe that any liability arising from these matters would have a material impact upon the company’s consolidated financial position.”The Department of Justice is also investigating Wilmington Trust for actions that occurred prior to the M&T deal, the Buffalo-based bank said. M&T said both probes began before the Wilmington Trust acquisition.M&T said the U.S. Justice Department is investigating Wilmington Trust’s financial reporting and securities filings, as well as “certain commercial real estate lending relationships” involving its subsidiary bank, Wilmington Trust Co. Attorneys for Wilmington Trust have met with the Justice Department to discuss the investigation, which continues, M&T said. A Justice Department spokeswoman declined to comment.M&T said the investigations “could lead to administrative or legal proceedings resulting in potential civil and/or criminal remedies, or settlements, including, among other things, enforcement actions, fines, penalties, restitution or additional costs and expenses.”In December 2011, the News Journal newspaper in Wilmington, Del., citing unidentified sources, reported that Wilmington Trust was the subject of an FBI criminal probe and that a federal grand jury was impaneled to hear evidence. The report also said the SEC was conducting its own investigation.M&T’s $351 million stock purchase of Wilmington Trust, completed in May 2011, was the second-biggest acquisition in M&T’s history. Wilmington Trust was a Delaware institution. It was the state’s No. 1 bank, with a history stretching back more than a century to its founding by the president of DuPont Co.At the time the deal was announced in the fall of 2010, Wilmington Trust was in disarray. Its stock had lost three-quarters of its value in the previous three years, and it had reported losses for six straight quarters, due in part to bad commercial real estate loans.M&T officials said then that they had assessed the loan problems and risks, factoring those into the acquisition’s price. “We’ve done a fairly extensive review and we felt very comfortable,” M&T Chief Financial Officer Rene F. Jones said in a November 2010 interview.Meanwhile, M&T, under an agreement with the Federal Reserve Bank of New York, is working to strengthen its anti-money laundering practices, a process that has delayed its planned acquisition of New Jersey-based Hudson City Bancorp. Some observers have speculated that M&T was subjected to tougher scrutiny because of M&T’s connection to Wilmington Trust, which has some overseas operations. But whether that factor contributed to the Federal Reserve’s scrutiny has not been disclosed.email: [email protected] This week Sahlen’s going to more markets and selling footlong dogs Low-cost carriers add flights to Fort Lauderdale and Orlando from Niagara Falls airport Eden horse farm headed to auction Feds put closed Buffalo post office up for sale CTG replaces Bleustein as CEO after 16 months with long-time executive Crumlish Sahlen’s going to more markets and selling footlong dogs Independent Health says it is dropping CCS Oncology from its network Low-cost carriers add flights to Fort Lauderdale and Orlando from Niagara Falls airport Hot dog! Sahlen’s to sell footlongs in grocery stores for first time Eden horse farm headed to auction Connect with us

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JP Morgan's Tom Lee: This Is Why I'm Not Worried About The 'Fiscal Cliff' Sam Ro JP Morgan's Tom Tom Lee, J.P. Morgan's top U.S. equity strategist was on Bloomberg's In The Loop with Betty Liu this morning. Lee, who is widely recognized as one of the more bullish strategists on the street, isn't letting the upcoming so-called "fiscal cliff" to change his bullish view. While it is a considerable risk, Lee argued that the downside to fiscal cliff related issues are much less significant and less complicated than the debt downgrade the U.S. economy faced last And things ultimately turned out okay for stocks last year. The fiscal cliff is the worry that expiring tax cuts and stimulus programs could shave around 3 percent to 5 percent from GDP next Lee further argued that politicians on both sides of the aisle fully appreciate the risks of the fiscal cliff. And he's confident that a resolution will come. However, he warns it may come at the last minute. Just think about last year.

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From the December 21, 2011 issue of Credit Union Times Magazine • Subscribe! House, Senate Banking Panels Took Divergent Paths By Claude R Marx December 18, 2011 • Reprints The House Banking Committee focused on oversight and trying to undo or modify some of President Obama’s initiatives while the Senate Banking Committee focused on less sweeping efforts in 2011. Both panels paid some attention to credit union issues, though neither held an oversight hearing on the NCUA. Legislation that would raise the cap on member business loans–from 12.25% of assets to as much as 27.5% of assets–was the subject of hearings by both panels. NCUA Chairman Debbie Matz testified in favor of the measures, arguing that it would fill a demand among small business and would help credit unions by diversifying their portfolios. Both sessions featured lively discussions with pointed questions by opponents of raising the cap and strong testimony by witnesses representing the banking industry. Neither panel has voted on the bill. However, it is possible that the member business lending bill will be combined with a measure that would provide regulatory relief to banks and credit unions. When the House panel considered the bank bill, the CEOs of CUNA and NAFCU testified on it, the first time in recent years that credit unions were invited to weigh in on a bank measure. The House Financial Services Committee, as befits a Republican-controlled panel at a time of a Democratic presidency, focused a great deal of attention on what the panel sees as the negative effect of the Obama administration’s policies. Even before the Consumer Financial Protection Bureau began its operations in July, the panel and its subcommittees–and the House Oversight Committee–held hearings questioning the need for the agency. Several lawmakers also expressed concern that the agency would unnecessarily limit consumer choice. The House Financial Services Committee, and subsequently the full House, passed a bill that would restructure the bureau to have it run by a five-member board rather than a director; allow the bureau’s decisions to be overturned by a majority vote of the Financial Stability Oversight Council rather than two-thirds currently required; and delay some of the CFPB’s operations until it has a confirmed director in place. The Senate Banking Committee hasn’t taken up the measure and the unwillingness of Senate Democrats to consider it as a reason why Republicans in that chamber are blocking the confirmation of a permanent director of the CFPB. The House panel has also held a series of hearings on how legislation and regulations supported by the Obama administration have stifled the growth of companies and financial institutions. Central City CU President/CEO Patricia Wessenberg told the panel’s subcommittee on Financial Institutions and Consumer Credit in October that the “barrage of regulations creates an unnecessary burden without any measure of the effectiveness of these changes. They are costly, both in time and personnel to implement, and they are confusing to our membership.” Wessenberg, a CUNA Board member whose Marshfield, Wis.-based credit union has $179 million in assets, added that the CFPB will issue rules that will cost credit unions more money. The Senate Banking Committee, as befits a panel controlled by Democrats, has focused less on regulatory burden and more on how to use government to relieve some of the financial burdens facing the middle class. Wright-Patt CU President/CEO Doug Fecher told the panel’s subcommittee on Financial Institutions and Consumer Protection that he hopes the CFPB issues regulations that “empower consumers without adding to our regulatory costs.” He said that his $2.1 billion Fairborn, Ohio-based credit union helps its members by disclosing the cost of loans and other products up front. But he noted that while his credit union will change some terms of mortgages, he opposes reducing the principal because the costs will just be shifted to another part of the economy and that will be a net negative. Both the House and Senate panels held hearings on revamping the way the housing finance system operates. The House committee focused on more comprehensive overhaul plans. By contrast, the Senate panel held a series of informational sessions at which it explored different aspects of the problem and possible solutions. In October, Affinity FCU President/CEO John Fenton urged members of the Senate committee to ensure that any changes in the housing finance system don’t jeopardize the existence of the 30-year mortgage. “It’s consumer friendly, straightforward and easy to understand. It’s necessary for the health of the housing market that it remain a viable product,” said Fenton, whose Basking Ridge, N.J., credit union has assets of $2 billion. The Senate Banking Committee declined to hold a hearing on one subject of great interest to credit unions. Though the panel never formally announced a hearing, several sources indicated that it planned to hold one in late November on the nomination of Carla Decker to succeed NCUA Board Member Gigi Hyland. However, when the hearing’s witness list was announced, Decker’s name wasn’t on it. Decker, the president/CEO of the District of Columbia Government Employees FCU, was nominated by President Obama in October. The momentum of her nomination slowed following a Credit Union Times report about a 2010 NCUA examination of Decker’s credit union that rated it a CAMEL 3 and concluded that it was a “high strategic risk.” « Previous

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The Big Categories of Investment in Emerging Markets Efforts to Fight Corruption in Emerging Markets Comparing U.S. GAAP and IFRS Accounting Systems The Emerging Market in India By Ann C. Logue from Emerging Markets For Dummies India is a diverse country that’s always been open to the rest of the world, and its emerging marketplace shows the power of a diverse, open economy. Although only 60 percent of the people are literate, most who have an education understand English — it’s one of two official languages of the government — making India the largest English-speaking nation in the world after the United States. A program of economic liberalization started in 1991 led to rapid growth. India’s large population and low starting point mean that it can sustain much faster average long-term growth than most other countries on earth. India has its own numbering system that uses a number that’s between a thousand and a million: the lakh, which is equal to one hundred thousand. If a company reports earnings of 20 lakhs rupees, that means it earned 2 million of them. Another number, the crore, is equal to 10 million. A company with assets of 100 crores rupees has 1 billion rupees in assets. What you should know about India: Type of government: Federal republic Major industries: Armaments, caustic soda, cement and other construction materials, ferrous and nonferrous metal fabrication, fertilizers, food processing (particularly sugar refining and vegetable oil production), petrochemicals, petroleum, textiles Currency: Indian rupee English-language newspaper: The Times of India The pros of doing business in India India has huge scale growing off of a small economic base. Even small improvements in income, when multiplied across more than a billion people, add up to big money. That opportunity is huge, but it’s not the only one: Saving big to encourage enterprise: Indians are big savers, so Indians who want to start businesses have access to local capital — from family members or local banks. The country’s culture encourages enterprise. Improving infrastructure: India has long been hampered by poor infrastructure, ranging from dirt roads (if roads exist at all) to electrical systems with frequent blackouts. The infrastructure is improving, though, slowly but surely. Serving the bottom of the economic pyramid: Much of India’s population is poor, but Indian companies have been developing products, services, and packaging to appeal to people who have little cash and small savings but who want to lead a better life. Risks of doing business in India Although India’s growth and prospects have all the excitement of a big Bollywood movie, the country has some real challenges that could derail its progress: Ethnic tensions: The diversity that is one of India’s strengths is also one of its weaknesses. Myriad religious and ethnic groups mostly get along, but not always, and the tensions can get ugly. These tensions have spilled into three wars with Pakistan, and several assassinations and bombings. Ethnic tensions are constant and not easy to resolve. Petty corruption: India is notorious for its petty corruption, inefficient operations, and incompetent bureaucracy. On top of governmental snags, almost any commercial activity involves a chain of inefficiencies. The hassles are frustrating to Indians and to overseas business people. Unless these issues are addressed, India’s growth rate will be held back. Extreme poverty: India’s population skews young, poor, male, and poorly educated. The shortage of skilled workers is driving up wages for Indians who do have an education and leaving everyone else behind. The frustration of these energetic, young people without jobs or direction may well drag the country down. Timeline: The Evolution of Islamic Finance 26 Countries Considered to Be Frontier Markets Frontier Markets — A Subset of Emerging Markets Key Sharia Principles and Prohibitions in Islamic Finance Organizations that Influence Emerging Markets Emerging Markets For Dummies

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Fulton Financial: A Complete Review Before Earnings Here's a deep dive into Fulton Financial's soundness, profitability, and growth to prepare for the company's second-quarter earnings results this week. Jay Jenkins (TMFJayHJenkins) Over the next month, banks will be releasing results for the second quarter. In advance of these releases, let's take a moment to review the state of some of these banks as of the end of Q1. Today we'll look at Fulton Financial Corporation (NASDAQ:FULT), a $16.9 billion bank holding company headquartered in Lancaster, Pennsylvania, which reports earnings this Tuesday, July 21. You can find information on other banks at my Motley Fool article feed, available here. All data in this analysis was sourced from the FDIC's Quarterly Banking Profile and S&P Capital IQ. When I evaluate banks, I follow a model made famous by former Wachovia CEO John Medlin: soundness, profitability, and growth. As investors, we then look at valuation and the potential for investment after gaining a better understanding for each bank. SoundnessSoundness refers to the bank's asset quality. Generally speaking, this means loans. If a bank makes loans that are never repaid, that bank will fail, and fail quickly. The best banks put risk management first, ensuring that shareholder capital is protected if a portfolio of loans turns sour. To measure this, we'll look at both non-performing assets and Fulton Financial Corp.'s provision for loan and lease losses. A simplified definition of non-performing assets is loans or other assets that have fallen seriously delinquent or are in foreclosure. The provision for loan and lease losses is a reserve of money that the bank pulls out of its income each quarter to guard against future losses in the loan portfolio. Banks are required by regulation to maintain certain levels of reserves, but within that, management has plenty of wiggle room to over- or under-reserve. Over-reserving increases protection but hurts net income; under-reserving increases risk but keeps net income high. Fulton Financial's NPA trend. Source: BankRegData.com. For the quarter ending on March 31, Fulton Financial Corp. had 1% non-performing assets as a percentage of total assets. The FDIC reports that banks with total assets greater than $10 billion on average had 1.5% non-performing assets as a percentage of total assets. Fulton reserved $2.5 million for the first quarter, which represented 1.5% of operating revenue. That compares with 5% for the $10 billion-plus peer group, according to the FDIC. Since the second quarter of 2011, Fulton and its subsidiaries have literally halved the total level of non-performing loans. This trend continued in the first quarter of this year, and I expect it to continue in Q2's numbers. Another facet of soundness is compliance with all legal and regulatory requirements. Last week, regulators issued enforcement orders against three of Fulton's subsidiary banks. These subsidiaries failed to fully comply with Bank Secrecy Act and Anti-Money Laundering requirements. I don't see too much risk to shareholders based on the consent order released last week. However, it is worth noting as an indication of management's focus (or perhaps, lack thereof) on these business-critical compliance issues. ProfitabilityAfter establishing an understanding of a bank's risk culture and soundness, next we can focus on profitability. Any investment in a business is an investment in that company's future earnings, so profitability is a particularly important consideration for any bank investor. The first question, perhaps most obviously, is if the bank actually generates a profit at all. According to data from the FDIC, 7.3% of U.S. banks failed to generate a profit at all in the first quarter. That's one in every 14 banks! For Fulton Financial, the first calendar quarter of 2014 fortunately wasn't that bad. The company generated total net revenues of $168.1 million for the quarter -- that's total interest income plus non-interest income minus interest expense. FULT Return on Equity (TTM) data by YCharts Over the past 12 months, Fulton has generated $678 million in total net revenue. Of that revenue, 77% was attributable to net interest income, the difference between interest earned on loans and paid out to depositors. The remaining 23% was through fees, trading, or other non-interest revenue sources. The bank was able to turn a profit margin of 24% on that revenue. For the first quarter, the company reported return on equity of 8.1%. Of the banks covered in this series of articles, the average return on equity was 8.9%. The FDIC reports that the average ROE for U.S. banks with total assets greater than $10 billion was 9.1%. In the bank's letter to shareholders reporting the first quarter's results, Philip Wenger, the company's chairman and CEO, cited the harsh weather this past January and February as being particularly challenging in Fulton's footprint in the Northeastern United States. The company deferred two major marketing campaigns until March in an effort to produce better results on those campaigns. Fulton's subsidiaries and footprint. Source: Company website. The company also completed a major cost-cutting initiative in the first quarter -- consolidating 14 branches, adjusting some employee benefits, and thinning out middle management. These changes are expected to save $7 million through the rest of 2014. The company's profitability was more or less on level with the average of the bank's peer set, and with the extra marketing push as the weather thawed, coupled with the more efficient branch and management structure, I expect the company's profitability to improve in the second quarter. LeverageLeverage is a double-edged sword for banks and could easily fit into either the soundness or profitability categories. We'll call it a subset of both and discuss it here. Leverage is just part of the game with banks, so if you're a conservative investor who really focuses on conservative capital structures, the banking industry may not be the best place for your money. Adding leverage is an easy way to juice return on equity, which is, generally speaking, a good thing. The bank increases assets and thus earnings, while maintaining a lower capital level. The result is a higher numerator, a constant denominator, and a larger return-on-equity number. The math does the heavy lifting for you. On the flip side, too much leverage can put the bank on thin ice if the loan portfolio takes a turn for the worse. A stronger equity base protects the bank from bankruptcy and bailouts, two outcomes that are both politically charged and downright terrible for shareholders. Banks use all kinds of esoteric and overly complex accounting methods to determine leverage. We'll keep it simple here with an old-fashioned assets-to-equity ratio. The lower the number, the less levered (and more conservative) the bank. FULT Assets To Shareholder Equity (Quarterly) data by YCharts Fulton's assets to equity ratio comes in at 8.2. The average of the 62 banks analyzed in this series of articles was 9.1. The company's below-average return on equity is largely correlated to this conservative leverage position. Growth and valuationFulton Financial Corp. saw its revenues change by 2.4% over the past 12 months. That compares with the 5.74% average of the 62 banks analyzed. This change in revenue corresponded with a 2.4% change in net income over the same period. The peer set averaged 14.1%. Fifty-four precent of all U.S. banks saw year-over-year earnings growth in the first quarter. In the case of Fulton Financial and its subsidiaries, the cold winter really hindered Q1 growth. That said, with the marketing push mentioned previously, it stands to reason that the company will report a much stronger second quarter. Moving now to valuation, Fulton Financial Corp. traded at a forward price-to-earnings ratio of 14.0, according to data form S&P Capital IQ. That compares with the peer set average of 16.7 times. Fulton Financial Corp.'s market cap is, at the time of this writing, 1.5 times its tangible book value. The peer set average was 1.9. FULT Price to Tangible Book Value data by YCharts Many investors use a general rule of thumb of buying a bank stock when the price-to-tangible book value is less than 0.5 and selling when it rises above 2. For me, that method is just way too oversimplified. It sometimes makes sense to pay a premium for a bank stock that places a high value on credit culture and asset quality. These banks will survive and prosper while others fall by the wayside. That security can be worth a premium. Likewise, a bank that relies heavily on leverage to achieve above-average return on equity may not be worth the price, even if price-to-tangible book value is low. That risk may not justify even a healthy discount in price. Based on the factors we've discussed here -- soundness, profitability, and growth -- Fulton Financial Corp. appears undervalued. The bank's soundness is acceptable, and profitability is strong and improving. The company has conservative leverage and trades at a healthy discount to peer average tangible book value. Fulton Financial seems to be on the rise. I expect Q2 earnings to continue the trend. Jay Jenkins and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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. Anticipating opportunity, filtering out the noise, and figuring out what it all has to do with the price of rice in China. Like me on Facebook here! Fulton Financial Corp. NASDAQ:FULT 3 Reasons To Buy Fulton Financial Corporation

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Infighting at the Fed? ADVERTISEMENT Infighting at the Fed? By Bankrate.com When people think of "the Fed," they might picture a monolithic building in Washington, D.C., or the serenely smiling, bearded face of its chairman, Ben Bernanke. But the reality is, the group making decisions about raising or cutting rates or pumping money into the economy through so-called quantitative easing is made up of several highly educated, opinionated individuals with sometimes-conflicting ideologies, personalities and policy specialties. Meet the Federal Open Market Committee. The FOMC uses a variety of tools, including the adjustment of the key federal funds rate, to serve a dual mandate set forth in federal law to control inflation and maximize employment. While as chairman, Bernanke certainly takes the lead on deciding how to achieve those goals. But it's not a foregone conclusion that he'll get his way at every meeting. Before he can implement his plans, he has to get them approved by a majority of the FOMC at one of its regularly scheduled meetings. In recent years, the Fed has used some unusual methods to nudge the economy forward in recent years. Those include massive purchases of government securities under the large-scale asset purchase plan dubbed quantitative easing, as well as a second round of buying called "QE2." On these measures, FOMC members don't always agree, and some FOMC members have stated publicly they won't support Bernanke's easy-money policies indefinitely. Fed's Bullard: May Need to Trim QE2: Report To get an idea of where individual FOMC members stand on monetary policy and "QE2," here's a sampling of statements they've made in recent weeks. Chairman, Federal Reserve Board of Governors "My colleagues and I have said that we will review the asset purchase program regularly in light of incoming information and will adjust it as needed to promote maximum employment and stable prices. In particular, it bears emphasizing that we have the necessary tools to smoothly and effectively exit from the asset purchase program at the appropriate time." -- From prepared remarks on Feb. 3 at the National Press Club, Washington, D.C. "The economy, though it does look to be growing more quickly, is still in a deep hole, (and) is still very far from where we'd like to be, and we need to manage policy -- both monetary policy and fiscal policy -- to try to put people back to work in a way that is consistent with stability, and in particular with continuing low inflation." -- From Q&A on Feb. 3 at the National Press Club, Washington, D.C. William Dudley Vice chairman, FOMC, and president of the Federal Reserve Bank of New York "It is important to emphasize that we at the Federal Reserve have been expecting the economy to strengthen. We provided additional monetary policy stimulus via the asset purchase program to help ensure that the recovery regained momentum. "A stronger recovery with more rapid progress toward our dual mandate objectives (of controlled inflation and full employment) is what we have been seeking. This is welcome and not a reason to reverse course." -- From prepared remarks on April 1 at E-3 Summit of the Americas, San Juan, Puerto Rico. Elizabeth A. Duke Member, Federal Reserve Board of Governors "It would not be helpful if monetary policy reacted to every move in a volatile price." "The rate of inflation over the medium term is a key and important number for us to pay attention to. But when you look at things like gasoline prices, (they) are very volatile." -- Q&A on April 14 at the International Factoring Association Conference in Washington, D.C. (Reuters). Charles Evans President of the Federal Reserve Bank of Chicago "With regard to policy today, slow progress in closing resource gaps and underlying inflation trends that are too low lead me to conclude that substantial policy accommodation continues to be appropriate. This accommodative policy will foster a return of economic conditions consistent with our dual mandate. "We are providing this accommodation in two ways. The first is our commitment to keep short-term nominal policy rates low for an extended period. The FOMC's policy statements have been very clear on this and have included this characterization for the federal funds rate since March 2009. "The second is our large-scale asset purchase program (LSAP) through which by June, we most likely will have purchased all told $2.35 trillion of long-term Treasury and GSE (government-sponsored enterprises) issues. These purchases are aimed at directly influencing longer-maturity interest rates. They also play an important and useful communications role; they signal our commitment to keep short-term rates low for an extended period of time." -- Speech on March 28 at the BB&T Speaker Series on Capitalism, Darla Moore School of Business, University of South Carolina, in Columbia, S.C. President of the Federal Reserve Bank of Dallas "In my view, no amount of further accommodation by the Fed would be wise -- either by prolonging or tapering off the volume of purchases of Treasuries past June, or adding another tranche of large-scale asset purchases. Indeed, it may well be that we should consider curtailing what remains of 'QE2.' "Now, we at the Fed are nearing a tipping point. Just as we pressed on in doing our duty through extraordinary, exigent measures, we must now discipline ourselves to just as persistently normalize our operations in a timely way." -- Prepared remarks on April 8 before the Society of American Business Editors and Writers 2011 Annual Conference, Dallas. Narayana Kocherlakota President of the Federal Reserve Bank of Minneapolis "I'll be watching core inflation pretty closely. Based on my forecast for core inflation, right now I think I could see it ticking upwards over the course of 2011. I wouldn't foresee an extension of the LSAP (large-scale asset purchase program). Barring other eventualities, I wouldn't see an extension of the LSAP being necessary in June." "We have a highly accommodative policy in place to deal with a large amount of slack but also to deal with where inflation was at the end of last year. If that inflationary factor changes, you have to change policy in response." -- Excerpts from an interview in The Wall Street Journal on March 31. Charles Plosser President of the Federal Reserve Bank of Philadelphia "As to when to begin exiting from accommodative policy, I will continue to look at the data on output and employment growth, and on inflation and inflation expectations. Signs that inflation expectations are beginning to rise or that growth rates are accelerating significantly would suggest that it is time to begin taking our foot off the accelerator and start heading for the exit ramp. "I would add that we should not be too sanguine in believing that such a time is a long way off or that the process will only be gradual. A stronger rebound in the economy or inflation than some now expect could require policy actions to be taken sooner and more aggressively than many observers seem to be anticipating. "Allowing monetary policy to fall behind the curve can only result in greater inflation and more economic instability in the future." -- Speech on April 1 at the Harrisburg Regional Chamber & Capital Regional Economic Development Corp., Harrisburg, Pa. Sarah Bloom Raskin Member of the Federal Reserve Board of Governors "Although decisive action by policymakers has been successful in containing the crisis, we should not presume that the experience of the crisis is over. To be sure, the frantic days of rushed mergers of major financial institutions, emergency applications of nonbanks to become bank holding companies, and large-scale, targeted Federal Reserve programs to stabilize markets and restore the flow of credit are behind us. "If we were doctors, we'd say that we had successfully treated the worst symptoms of the illness. But as we've learned from the other crises that are buffeting our world today, both natural and man-made, rescue and containment are only the first steps. Now we must address the aftershocks of the subprime mortgage meltdown -- dislocation, joblessness and loss of confidence." -- Speech on April 7 at the Federal Reserve Bank of New York Community Bankers Conference, New York City. Daniel Tarullo "We've had a lot of accommodation over the last couple of years. We've had two large-scale asset purchase programs and a zero interest-rate environment. So I don't think there's any question we've done a lot, and I think the record is quite clear that what we've done had an important effect on the U.S. along the way on several counts. "Having said that, I try to and will continue today to make it a policy of not prejudging what my view of a particular monetary policy action would be at any given moment. I think one does have to approach each FOMC meeting as one in which one looks at the data and tries to make an evaluation of what's going to be happening in the medium term, so I'm not going to address that question. "All I have said before, which I'll repeat now, is that with respect to the $600 billion large-scale, asset policy program put in place in November, I don't see any need to either terminate it prematurely or to increase it during its pendency -- both of which have been articulated as options in our statements along the way. I don't see a need at this juncture to do either one of those." -- Excerpt from a panel discussion on April 14 at a C-Span forum at the Newseum in Washington, D.C. Vice chairman, Federal Reserve Board of Governors "The Committee initiated a second round of Treasury purchases last November and has indicated that it intends to complete those purchases by the end of June. My reading of the evidence is that these securities purchases have proven effective in easing financial conditions, thereby promoting a stronger pace of economic recovery and checking undesirable, disinflationary pressures. "I believe this accommodative policy stance is still appropriate because unemployment remains elevated, longer-run inflation expectations remain well-anchored, and measures of underlying inflation are somewhat low relative to the rate of 2 percent or a bit less that committee participants judged to be consistent over the longer term with our statutory mandate. "However, there can be no question that sometime down the road, as the recovery gathers steam, it will become necessary for the FOMC to withdraw the monetary policy accommodation we have put in place. That process will involve both raising the target federal funds rate over time and gradually normalizing the size and composition of our security holdings. "Importantly, we are confident that we have the tools in place to withdraw monetary stimulus, and we are prepared to use those tools when the right time comes." -- Speech on April 11 at the Economic Club of New York City.

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Housing Finance Boss Blocked Principal Reductions, Hid Data Showing They Work, Dems Allege [UPDATE] Senior Congressional Reporter, The Huffington Post Ben Hallman Senior Editor for Projects & Investigations, The Huffington Post WASHINGTON -- Democrats on the House Oversight Committee on Tuesday accused the head of the Federal Housing Finance Agency -- who has refused to follow President Barack Obama's recommendation to help underwater homeowners reduce their loan debt -- of withholding from Congress evidence that principal reduction works. In a letter to FHFA acting director Edward DeMarco, Reps. Elijah Cummings (D-Md.) and John Tierney (D-Mass.) argued that they had obtained documents from the agency -- that DeMarco had never provided to them -- that show housing officials were well on their way to a plan to help struggling homeowners reduce the principals of their Fannie Mae and Freddie Mac loans. The FHFA oversees the mortgage lending giants. DeMarco had testified that steps such as principal reduction would end up hurting taxpayers, and pose a "moral hazard" whereby homeowners might intentionally stop making mortgage payments in order to benefit from such a program. But the new documents reveal another story, and suggest DeMarco's intransigence may be more of an ideological stand that has cost billions, the Democrats said. "We have now obtained a wide range of internal documents demonstrating that Fannie Mae officials conducted detailed, substantive analyses and concluded years ago that principal reduction programs have enormous potential to save U.S. taxpayers significant amounts of money by reducing overall losses from foreclosures following default," they wrote. The Obama administration has advocated such reductions of principal, but DeMarco has remained steadfast against them, calling write-downs the "least effective tool in the toolbox." Just last week his agency indefinitely delayed a decision on write-downs. But according to the Democrats, Fannie Mae data crunchers seem to have thought differently from DeMarco, who took over after President George W. Bush's appointee left the position. He has led the FHFA since, and remains there because the Senate has blocked President Obama's nominee for the job, Joseph Smith. "These documents reveal how Fannie Mae officials worked with Citibank beginning in 2009 to develop a 'shared equity' principal reduction pilot program that ultimately was terminated for unspecified reasons," the lawmakers wrote. "The documents show that Fannie Mae officials strongly supported the concept of principal reduction and fully evaluated its risks and benefits as they obtained the necessary internal approvals to finalize the program." According to the documents that Tierney and Cummings cite, the Citibank program would have cost less than $1.7 million to implement but could have saved Fannie $410 million. Yet the program was canceled at the "11th hour" for no clear reason. "Despite the clear conclusion reached by Fannie Mae officials that principal reduction would reduce losses to the taxpayer, this pilot program was prevented from ever getting off the ground," the lawmakers wrote. "It remains unclear why you failed to mention this in your testimony and why you failed to disclose this principal reduction program to the Committee." "This was not merely a missed opportunity, but a conscious choice that appears to have been based on ideology rather than Fannie Mae's own data and analyses," they argued. "The documents make clear that Fannie Mae officials concluded as far back as 2009 that principal reduction programs had enormous potential to save the U.S. taxpayers significant sums of money, even when compared to other types of modifications, such as forbearance." The documents, which haven't yet been made public, are certain to increase pressure on DeMarco to permit loan value write-downs on mortgages controlled by Fannie Mae and Freddie Mac, which include about half of all home loans in the United States. DeMarco, as head of the FHFA, has had effective control over the mortgage giants since they were bailed out by taxpayers in 2008. The Obama administration, many state attorneys general and housing groups have all called on DeMarco to permit principal reductions. They argue that allowing deeply underwater borrowers to write off some portion of their debt is the best way to keep many of these people in their homes. Past studies, including one by the Treasury Department, have found that principal reduction can also save money for investors, such as Fannie and Freddie, who benefit financially when borrowers stay in their homes. "There is an overwhelming drumbeat that this is the way to go," Tierney told The Huffington Post on Tuesday. "There is a substantial benefit to people who are underwater, to the financial community, to taxpayers, to everyone." The new documents appear to show that federal housing officials agreed, and indeed, the banking industry agrees. In February, five of the biggest banks -- including Citibank -- agreed to offer as much as $10 billion in principal reduction to troubled homeowners as part of the national mortgage settlement. But homeowners with Fannie Mae or Freddie Mac loans don't qualify because DeMarco's office opposes such a step. Last month, DeMarco said a new analysis by his agency found that writing down some underwater mortgages could save Fannie Mae and Freddie Mac $1.7 billion, based on an offer by the Treasury Department to triple incentives for investors like the mortgage giants to offer principal reductions. But he said the analysis did not incorporate other potential costs, including the risk that otherwise current homeowners might "strategically default" just so they could take advantage of the savings. In the letter to DeMarco, Cummings and Tierney wonder why DeMarco has not concluded -- as Fannie Mae, the banks, the Treasury Department and Congressional Democrats all have -- that principal reduction is a vital step. The internal Fannie Mae documents show that company officials tested out the Citibank loan forgiveness in 2009 and determined that new default rates on loans that received the benefit "are far below rates on other modification portfolios," according to the nine-page letter. The program was shut down in July 2010, and three days later, a Fannie Mae official explained in an internal email that Citibank was surprised. Even before they agreed to forgive $10 billion in debt as part of the mortgage settlement, the largest banks were already permitting principal reduction as an option for borrowers who were struggling with their mortgages. Tierney, in an interview, declined to reveal the source for the internal documents, and said it is still "unclear" why the pilot program was shelved. "It seems as though someone with an ideological bent just killed it," he said. In the letter to DeMarco, Tierney and Cummings said the new information calls into question DeMarco's previous statements about the cost to taxpayers of principal reduction. "[W]e have very serious concerns about your public statements, your previous responses to us, and your failure to provide Congress with complete and accurate information about these important matters," Cummings and Tierney said. They called on DeMarco to release before May 11 a wealth of other documents relating to internal deliberations about whether to allow mortgage loan write downs. "My patience has grown thin," Tierney said. Although housing advocates have called for DeMarco to be fired, the Obama administration has not taken steps to do so. Doing so could leave the administration open to charges of interfering with a nonpartisan position for political reasons. This post has been updated to include remarks from Tierney and further background about principal reductions. UPDATE: 4:00 p.m. -- On Tuesday afternoon, DeMarco wrote back to the lawmakers. "I strongly disagree with any characterization of FHFA's work or motives as anything but in keeping with the professionalism expected of this agency," he said. DeMarco said that he turned over the documents requested by Cummings and Tierney nearly a month ago. As proof, he made public a letter dated April 12 to the lawmakers that included a summary of the Citibank pilot program. The summary does not mention that Fannie Mae had determined that principal reduction would save taxpayer money, nor does it say who ultimately killed the program, stating only that "At the corporate level, taking into account staff perspectives and experience, the pilots were not pursued or were terminated." It is unclear whether any additional information about the pilot was included in that letter. DeMarco's letter continues: The fact that FHFA continues to consider principal forgiveness alternatives, including recent HAMP program changes initiated by the Treasury Department, belies any ideological tilt on our part, but rather a strict analytical-based approach to gathering and evaluating data to determine what options best fit within the legal constraints that fall upon this agency as conservator for the Enterprises [Fannie Mae and Freddie Mac]. FHFA continues its analysis and continues its discussions with the Treasury Department. FHFA has a duty to ensure the Enterprises provide assistance to troubled homeowners and FHFA has a duty to conserve the assets and property of the Enterprises so as to protect taxpayers. How best to accomplish these separate goals, especially in light of the uncertainties associated with initiating a principal forgiveness program, is a challenging policy question. Such a policy question, especially as it has to do with public funds being taken from one group of citizens to provide a benefit to another group of citizens, should be determined by Congress. Housing Crisis Elijah Cummings Federal Housing Finance Agency Edward Demarco John Tierney

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3/22/201312:58 PMJ. Nicholas HooverNewsConnect Directly1 CommentComment NowLogin50%50% Federal Reserve To Hire Chief Data OfficerAppointment would make the Fed another in a growing number of governments and government agencies with chief data officers.In what appears to be the start of a trend, the Board of Governors of the Federal Reserve System is calling on the Federal Reserve System to hire a chief data officer to usher the organization through the big data era. In a new strategic plan, the Federal Reserve board makes "redesign[ing] data governance and management processes to enhance the board's data environment" one of its six strategic deliverables through 2015. As part of that effort, the board urges that the Federal Reserve System create an Office of the Chief Data Officer. By creating such an organization and position, the Federal Reserve System would join a short but growing list of federal agencies that have placed a high priority on structured management of agency data. [ Out with the old, in with the new -- government IT needs to think more like a startup. Read We Must Run Government IT Like A Startup. ] Among those agencies, the National Institutes of Health is the next newest addition to the list. The NIH announced in January that it planned to hire a new associate director for data science. The Federal Communications Commission has an agency-wide chief data officer as well as chief data officers for each FCC bureau. Other federal agencies that have chief data officers include the Army and the Consumer Financial Protection Bureau, and the Commodity Futures Trading Corporation. The Securities and Exchange Commission has also called for the creation of such an office. Earlier this year, the SEC named its first associate director of the agency's Office of Analytics and Research. Numerous state and local governments have been adding chief data officers as well. Colorado, both New York State and New York City, San Francisco, Philadelphia, Chicago and Los Angeles County, Calif., all have chief data officers to oversee their governments' data efforts. Chief data officers have been a regular staple in some parts of the private sector, such as the financial industry, for years, but have lately become particularly salient with the rise of big data. This is true in government as well as in the private sector. In October, industry trade lobby TechAmerica called on the federal government to "name a single official both across government and within each agency to bring cohesive focus and discipline to leveraging the government's data assets." As for the Federal Reserve, the board says that the new chief data officer position should have "clear roles and responsibilities" and should address everything from managing the massive quantity of data that the Fed is collecting and analyzing to sharing that data, making Fed employees more aware of what data is available, setting policies for data security and controls, and ensuring better data quality. A well-defended perimeter is only half the battle in securing the government's IT environments. Agencies must also protect their most valuable data. Also in the new, all-digital Secure The Data Center issue of InformationWeek Government: The White House's gun control efforts are at risk of failure because the Bureau of Alcohol, Tobacco, Firearms and Explosives' outdated Firearms Tracing System is in need of an upgrade. (Free registration required.) re: Federal Reserve To Hire Chief Data Officer Just a quick FYI...The Federal Reserve Bank of New York had a CDO until December 2011. John Bottega was the NY Fed's CDO for a few years. He is now CDO at Bank of America. Before joining the Fed, he was CDO at Citi. I'm not sure if the NY Fed has hired a new CDO.Bottega spend a lot of time working to implement data standards at the Fed to help monitor the financial health of some of the largest financial institutions (risk management). This was, and still is, a big focus for the Fed and regulators.

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Apple at $577: a good buy or a good bye? Search Macworld Apple at $577: a good buy or a good bye? So what has caused Apple's shares to dive to a three-month low and should Apple's 27,696 investors be worried? Has Apple's winning streak come to an end? Karen Haslam After surpassing $700 in late September, Apple's stock has been on the decline for the past few days, closing at $576.80 on Friday, down $19.74 from Thursday's $596.54. Last week was the first time Apple's stock had closed below the $600 mark since July. The stock has shed a tenth of its value in one month, the biggest monthly loss since 2008. In addition, the decline has seen the Apple stock lose over $100B in market cap, although with a market capitalization of $541.74 billion, Apple is still the most valuable company in the world (in second place, Exxon Mobile is currently $416.68B). So what has caused Apple's shares to dive to a three-month low and should Apple's 27,696 investors (according to their recently filed Form 10-K) be worried? Has Apple's winning streak come to an end? Or does Apple's stock, currently at $576 represent a great buying opportunity for potential investors? One analyst report published this weekend suggests that Apple is a good buy: Apple shares will be worth more than $1,000 in three years, according to analysts at Valuentum. According to the Valuentum article, published on Seeking Alpha, Apple could be worth $1,062 within three years. This figure is based on the "existing fair value per share of $818 increased at an annual rate of the firm's cost of equity less its dividend yield," explains the report. The report notes a number of factors for the positive outlook. It suggests that Macs continue to gain market share, particularly with younger consumers. It also notes, Apple has an "excellent combination of strong free cash flow generation and low financial leverage". However, given the volatile nature of Apple's stock right now, we examine the reasons for the decline and offer information that may help you decide whether it is a good buy. 1) iPad mini disappointment or sales driver? Earlier in the year rumours about the iPad mini helped Apple's stock reach new highs. So why has Apple's stock been declining since the new product was announced? Following the announcement of the product analysts reacted negatively to what was considered the high price of the iPad mini. Apple's share price fell following the company's special event on 23 October, and reports suggested that this could be down to the iPad mini's £269 price tag. Compared to some of the competition Apple's smaller tablet has a high price, although Apple's not the only one receiving criticism for the high price of its tablet: Microsoft's 10.6in Surface RT tablet has a starting price of £399. Regardless of the price, the iPad mini is predicted to be "the competition's worst nightmare." Sterne Agee analyst Shaw Wu said: "We continue to believe that the iPad mini is the competition's worst nightmare and will likely slow down the adoption of competitor tablets." As yet it is unlikely that the device has given the competition cause for concern, however. Piper Jaffray analyst Gene Munster had predicted that Apple will sell 1.5 million iPad minis this weekend - that's half the number of iPad 3 units that were sold within the same space of time following its launch. Apple has now announced the sales of the iPad mini in the first weekend. Today Apple claims it sold a total of three million iPad mini and iPad 4 combined. The analyst reaction is here: Analysts and investors react positively to iPad mini sales. However, the launch of the iPad mini on Friday failed to prop up the stock thanks to reports of smaller queues than those seen for previous product launches. However, it should be noted that Apple is to launch a cellular version of the iPad mini towards the end of the month, a fact that could have caused many consumers to hold back from purchasing the device. Another reason for the low turn out for the iPad mini may have been the weather. Camping out for a new product is certainly a less attractive idea in November, compared to the iPad 3 launch in March, or the Summer launch of the iPhone 5. Presumably, queuing outside a store is even less attractive in New York following Hurricane Sandy. However, reports suggest that big queues formed for the iPad mini in New York, so it would appear that Apple cannot blame the weather for a poor turn out there. As for whether Apple can blame the decline in the value of its shares on the hurricane; according to reports, most US stocks actually rose after the market was reopened. Assessment: Too early to tell 2) Weaker-than-expected earnings Apple sold 27 million iPhones and 14 million iPads in the last quarter of 2012, swelling its revenue by 27 percent, but its profits fell short of what analysts had been expecting. Does this explain why investors have been selling their shares? Apple's net profit for the quarter that ended on 29 September was $8.2 billion, or $8.67 per share. That was below the analyst forecast of $8.75 per share, according to a poll by Thomson Reuters. However, revenue was $35.97 billion, up from $28.27 billion and slightly ahead of expectations. Experts suggest that what concerned investors was Apple's low expectations for the first quarter of fiscal 2013. Apple announced that it expects revenue of about $52 billion and earnings per share of $11.75. Those numbers are below the current analyst forecast, which calls for $54.98 billion in revenue and profit of $15.41 per share. Also concerning investors, is Apple CEO Tim Cook's announcement that Gross Margin (a measure of how efficiently a company turns sales into profits) for the December quarter would be lower than it has been. Apple revisits this in its Form-10K, noting that it "expects to experience decreases in its gross margin percentage in future periods, as compared to levels achieved during 2012". Apple anticipates a gross margin of about 36% during the first quarter of 2013, this compares to a gross margin percentage in 2012 of 43.9%, and to 40.5% in 2011. Assessment: Not as bad as it looks 3) The Forstall fall out Apple's stock fell below $600 in the first days trading following the Apple executive re-shuffle (with two Apple executives, Scott Forstall and John Browett, leaving the company). That day Apple finished at $595.32, down $8.68, having fallen as low as $587.70 during the day's trading. However, prior to the market opening (the NASDAC had been closed for two days due to Hurricane Sandy), analysts had mostly reacted positively, so why was the investor reaction so negative? Uncertainty about the management's ability to run the company seems to be key. Sterne Agee analyst Shaw Wu expressed some concerns, saying: "The sudden departure of Scott Forstall doesn't help. Now there's some uncertainty in the management," according to a Reuters report. "There appears to be some infighting, post-Steve Jobs," he added. Global Equities Research analyst Trip Chowdhry wrote that Forstall's departure was "a major blow to Apple," notes The Wall St. Cheat Sheet. Another snippet: Earlier this year Scott Forstall sold significant quantities of Apple Stock. "Maybe the stock sales did signal Forstall was really upset with how things were going under Tim Cook's leadership in the post-Jobs era," notes The Street. Should investors take note at what might be Forstall's vote of no confidence in Cooks' ability to run the company? Investors may be concerned that Cook is not up to the job of managing his team of ambitions executives. The late Steve Jobs is thought to have kept such in-fighting in check. In addition, while the blame for the Apple Maps fiasco has been placed at the feet of Forstall, some reports note that it is ultimately the fault of Cook. Was Cook asleep at the wheel, asks one report? Cook is also being criticized for his hiring, and subsequent firing of John Browett. However, even under Browett, retail store numbers, per-store revenue, and workforce numbers have increased, according to Apple's 10-K form. Apple opened 33 new stores in 2012, 28 outside of the US. There are now 390 stores. According to the 10-K form, Apple plans to open 30-35 new retail stores in FY 2013, with 75% of those outside the US. Assessment: Better out than in 4) Declining market share Returning to Maps briefly, it should be noted that Apple's Maps software was met with widespread frustration and ridicule. As JPMorgan analyst Mark Moskowitz wrote: "The buggy and poor-performing Maps app, which displaced Google Maps as part of the iOS 6 launch, has been a black eye for Apple." Apple certainly shot itself in the foot when it ditched Google Maps in favour of its own poor offering. Apple gave customers who might have purchased an iPhone 5 a reason to look to the competition for their next smartphone. There are concerns that Apple has slipped from its position of leading smartphone maker. According to ABI Research, Samsung shipped more than double the number of smartphones shipped by Apple in the third quarter of 2012. According to the research, Samsung sold 55.5 million units between July to September, while Apple sold 26.9 million. Apple admits that the competition is hotting up in its 10K report. Apple said it is confronted by "aggressive competition" and expects it to "intensify significantly" as rivals "imitate some of the features of the company's products and applications within their own products or, alternatively, collaborate with each other to offer solutions that are more competitive than those they currently offer." Apple also noted that its competition have "aggressively cut prices" and lowered product margins with a view to increasing market share. "The company's financial condition and operating results can be adversely affected by these and other industry-wide downward pressures on gross margins." In addition, the competition "have substantial resources and may be able to provide such products and services at little or no profit or even at a loss to compete with the company's offerings," wrote Apple in the Form 10-K. Assessment: It's not being number one that matters, it's the money Apple makes 5) Patent disputes The Samsung story goes far deeper than market competition. The two have been in and out of court over the last year and while Apple won the case in the US this summer, this weekend the company had to post a statement regarding Samsung on Apple's UK website in which it repeated the finding of the UK court that " to comply with a court ruling on Thursday". In Apple's Form 10-K it noted concerns that could arise from the patent battles, should things not go in in its favour. Apple wrote: "No single patent or copyright is solely responsible for protecting the Company’s products. Many of the Company’s products are designed to include intellectual property obtained from third parties." However, it added: "Although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s consolidated financial statements for that reporting period could be materially adversely affected." Apple's senior vice president of legal, Bruce Sewell, has just sold half of his Apple stock. Patently Apple is suggesting that there may be a connection with the news that he had sold some stock and the news that Apple had been ordered by a UK court to change the wording of the statement about Samsung that they had been told to put on their UK website. Assessment: Perhaps Apple shouldn't have made such a big fuss, it may come to regret it 6) Supply and demand Another fall out from the patent dispute, Apple has done its utmost to remove Samsung from its supply chain. Unfortunately one knock-on effect of this appears to be that Apple has been unable to meet demand for the iPhone 5 due to a shortage of parts that its new suppliers cannot build quickly enough. In addition, some reports claim that Apple's suppliers are unhappy with the company's unrealistic demands, noting strikes at the Foxconn factory. “Everyone knows that Apple mistreats its suppliers and keeps trying to push the prices down. It also wants all of its suppliers to comply exactly the way it thinks the manufacturing process should be. Maybe Apple won’t get its way anymore,” said a source quoted in a Korea Herald report. “When we sign a contract with (Apple), it’s not for the money but for the fame,” said another source. The Korea Herald suggests that if Apple slips from its lofty position suppliers may be less wiling to work with it. However, in Apple's favour, much of its money is spent on costs associated with these suppliers, a fact that may keep the relationships sweet. According to Apple analysts, the company is fronting the costs for their supplier’s factories and other manufacturing equipment, suggests Forbes. Could Apple be too reliant on these Asian suppliers? In its Form-10K Apple wrote: "Substantially all of the Company’s hardware products are manufactured by outsourcing partners that are located primarily in Asia. A significant concentration of this manufacturing is currently performed by a small number of outsourcing partners, often in single locations. Certain of these outsourcing partners are the sole-sourced suppliers of components and manufacturers for many of the Company’s products. Although the Company works closely with its outsourcing partners on manufacturing schedules, the Company’s operating results could be adversely affected if its outsourcing partners were unable to meet their production commitments." Apple adds that it "Remains subject to significant risks of supply shortages and price increases." Assessment: Apple CEO Tim Cook is supposed to be a numbers guy and yet Apple is missing the numbers, that doesn't look good 7) Not enough iPhone 5 Following on from these supply issues, the scarcity of the iPhone 5 is said to be the main reason Apple's shares have tumbled. It is thought that the holdup is the result of a shortage of the new displays that Apple is using in the iPhone 5. Today Apple's online store shows a shipping delay of three to four weeks for the new iPhone. Piper Jaffray analyst Gene Munster and his colleagues have been investigating availability of the iPhone 5 using Apple's online reservation system for next-day pickup. Stocks are so low that they have only on a few occasions been able to order a phone, and then only if they logged on promptly at 10pm. It is noted in a New York Times report that it is better for Apple that it appears to be suffering problems of supply rather than demand. Assessment: While it's better that supply can't meet demand, perhaps Apple should have been more conservative about releasing the iPhone in so many different markets around the world, was Cook getting carried away with the numbers? A positive outlook Among these concerns there are still some analysts with a positive outlook for Apple. 1) Expect a blow-out quarter The next quarter looks like it will be a good one, notes one report suggesting that Apple left a "major clue that it’s expecting a blowout quarter for the holidays" in it's financial report. "We already know that Apple’s characteristic lowball guidance calls for $52 billion in revenue in the current quarter, which would top last December’s $46.3 billion and set a new all-time record for the iPhone maker…" writes The Motley Fool, adding: "Apple’s manufacturing and component purchase commitments have just skyrocketed sequentially to $21.1 billion. That’s an increase of $7.5 billion compared to the last quarter and is Apple’s highest by far." "That means that Apple is gearing up to meet massive demand for the arsenal of products that it’s unveiled over the past two months, which it expects to drive 80% of revenue this quarter," concludes that report. Assessment: Apple will sell a lot, if Apple can make enough products. Is it time to start getting excited about the Apple Television again? 2) Extra R&D investment In it's Form 10-K, Apple revealed that it is expanding its research and development (R&D) costs. Apple increased spending on research an development by almost $1 billion in 2012, representing a nearly 40 percent increase from one year ago. The total research and development expense was $3.4 billion in 2012, $2.4 billion in 2011 and $1.8 billion in 2010. However, as a percentage of sales this is actually declining: R&D spend was 6 percent in 2012, 7 percent in 2011, and 8 percent in 2010, notes Forbes. In comparison, rivals like Google and Microsoft spend around 15 percent of revenues, and Samsung spends around 6 percent, notes The Verge. Assessment: It's good news that Apple's upping investment in research and development. We expect that it's busily patenting everything it invents too. Follow Karen Haslam on Twitter / Follow MacworldUK on Twitter Related: Apple sells 3 million of its new iPad models within first weekend Apple in-fighting: Mansfield agreed to two more years at Apple after Forstall fired Analysts praise Apple's exec overhaul, see hints of future sea changes Cook receives praise for Apple's 'cabinet reshuffle', will the markets react positively? Tim Cook says Apple has 'learned not to worry' about the iPad mini's 'cannibalisation factor' We round up analyst reaction to the iPhone 5 as Apple's share price hits a record high Apple price declines on news of 5 million iPhone 5 sales, supply can't meet demand, say analysts Apple hits $700 a share on iPhone 5 pre-order news Apple stock price hits record high as investors await iPhone 5, iPad Mini Tags: Apple Share this article The 136 best iPad & iPhone games New fifth-gen Apple TV 2016 release date & features rumours How to fix an iPhone that keeps asking for your iCloud login and password

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Tags: US | Default | Economy | Fears US Avoids Default but Fails to Dispel Economic Fears Wednesday, 03 Aug 2011 07:36 AM The United States stepped back from the brink of default on Tuesday but congressional approval of a last-ditch deficit-cutting plan failed to dispel fears of a credit downgrade and future tax and spending feuds. President Barack Obama and lawmakers from across the political divide expressed relief over the hard-won compromise to raise the country's borrowing authority after weeks of rancorous partisan battles. Nevertheless, U.S. stocks tumbled, turning negative for the year, as investors shifted their attention to the increasingly grim state of the U.S. economy and the potential for a downgrade of America's gold-plated debt rating. That risk grew when one of the three major ratings agencies said it was affirming the U.S. government's AAA-rated sovereign debt but slapping it with a negative outlook. The announcement by Moody's Investors Service after U.S. markets closed could lead to a downgrade within 12 to 18 months. That could raise borrowing costs for U.S. companies and consumers as the economy risks slipping back into recession. The Senate's approval by 74-26 votes of the $2.1 trillion deficit-reduction plan warded off the immediate specter of a catastrophic U.S. debt default. The bill passed the Republican-controlled House of Representatives on Monday. Obama immediately signed it into law, lifting the $14.3 trillion debt ceiling with just hours to spare before the government was due to run out of money to pay all its bills. The bitter feud between Democrats and Republicans has bruised Obama as he heads into a campaign to win a second term in 2012. The $2.1 trillion deficit-reduction plan fell well short of a $4 trillion "grand bargain" that was nearly agreed last month between the White House and congressional leaders. Another ratings agency, Standard & Poor's has said $4 trillion in deficit-reduction measures would be needed as a "downpayment" to put America's finances in order. S&P said in mid-July there was a 50-50 chance it would cut the U.S. rating in the next three months if lawmakers failed to craft a meaningful deficit-cutting plan. Investors are on tenterhooks about the chance of a downgrade by S&P. The deal leaves political battles ahead over spending cuts and tax reform as the deficit-cutting plan is implemented. Obama and Democratic and Republican leaders said the agreement, while a welcome first step, was not enough on its own. "We just kicked the can down the road ... the agreement doesn't really do anything about what got us into debt," Republican Senator Lindsey Graham told Reuters Insider. "We had a good opportunity, we let it pass so we will keep struggling." China, the largest creditor to the United States, urged Washington to act responsibly to deal with its debt issues, saying uncertainty in the U.S. Treasurys market will undermine the global monetary system and hamper global growth. "We hope that the U.S. government and the Congress will take concrete and responsible policy measures ... to properly deal with its debt issues, so as to ensure smooth operation of the Treasury market and investor safety," central bank chief Zhou Xiaochuan said, in China's first official reaction to the last-minute passage of the U.S. debt deal. THREAT OF CHAOS RECEDES The deal drew a line — for the moment — under months of bitter partisan squabbling over debt and deficit strategy that had threatened chaos in global financial markets and dented America's stature as the world's economic superpower. The law lifts the debt ceiling enough to last beyond the November 2012 elections, calls for $2.1 trillion in deficit savings spread over 10 years and creates a bipartisan joint House and Senate committee to recommend further cuts by late November. It does not yet include any tax increases. International Monetary Fund chief Christine Lagarde said the deal reduced uncertainty in the markets. The governor of the central bank of China, the biggest foreign holder of U.S Treasurys, urged the United States to responsibly protect investor interests. Questions lingered about the fragile U.S. economy and whether the bipartisan deficit-cutting compromise could deliver the desired results. Data on Tuesday showed U.S. consumer spending dropped in June for the first time in nearly two years and incomes barely rose, the latest in a string of gloomy economic indicators. Moody's said the deal was a step towards fixing the budget problems but the United States risked a downgrade if fiscal discipline weakened in the coming year, if no further steps were taken in 2013 or if the economy deteriorated. "We would expect that growth would accelerate in 2012 from the first half of the year," Steven Hess, Moody's top U.S. analysts told Reuters in an interview. "But if it doesn't, that means that the whole process of fiscal consolidation and the plans to achieve lower deficits and lower debt ratios will be made all the more difficult." Fitch Ratings did not rule out putting a negative outlook on the U.S. AAA rating when it concludes a review of the country later this month, the agency's top analyst for the United States told Reuters on Tuesday. TUSSLE OVER TAXES Investors said the move by Moody's on Tuesday was expected and did not ruffle financial markets. Earlier, Wall Street stocks slumped broadly by more than 2 percent, ending down for a seventh consecutive session as gloom over the economy mounted, marking the longest losing streak since the financial crisis period in October 2008. "I think that the most troubling aspect we have going on right now is the performance of U.S. equities. The equity market for whatever reason seems to think that this deal is not sufficient," said Greg Salvaggio, senior vice president at Tempus Consulting in Washington. U.S. Treasury Secretary Timothy Geithner said in an opinion piece in the Washington Post that the debt deal should allow room for Congress to implement short-term measures to strengthen the economy this fall such as extending a payroll tax cut and funding infrastructure projects. Obama said the sacrifices required to reduce the deficit needed to be fairly shared, apparently nodding to anger among many Democrats that the deal did not include tax increases and risked hurting social programs. "We cannot balance the budget on the back of the very people who have borne the brunt of the recession ... everyone is going to have to chip in, that's only fair," the president said in an address from the White House Rose Garden. He said he expected tax reform to emerge from deliberations by the new congressional committee, and that a "balanced approach" in which the wealthier pay more taxes was needed. Only moments after final passage, rival congressional leaders were handing out their political recipes for the way forward -- Republicans in favor of more spending cuts, and Democrats looking for tax reform or hike. The United States stepped back from the brink of default on Tuesday but congressional approval of a last-ditch deficit-cutting plan failed to dispel fears of a credit downgrade and future tax and spending feuds. President Barack Obama and lawmakers from across the... US,Default,Economy,Fears

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Homebuilder confidence falls, slowing housing recovery Confidence among U.S. homebuilders unexpectedly dropped in February from a more than six-year high, a sign the real-estate market will take time to accelerate. The National Association of Home Builders/Wells Fargo builder confidence index fell to 46 from January’s 47 that matched the highest reading since April 2006, a report from the Washington-based group showed today. The median forecast in a Bloomberg survey of 50 economists called for a rise to 48. Readings lower than 50 mean more respondents said conditions were poor. Faster gains in employment and income and easier access to credit are needed to foster a stronger rebound in the industry that was at the center of the 2008 financial crisis. At the same time, rising sales at companies like PulteGroup Inc. and Lennar Corp. show near record-low mortgage costs are attracting buyers, putting a floor under demand. “Following solid gains over the past year, builder confidence has essentially leveled out,” Rick Hudson, chairman of the National Association of Home Builders and a builder from Charlotte, N.C., said in a statement. “This is partly due to ongoing uncertainties about job growth and consumer access to mortgage credit,” along with “rising costs for building materials.” Estimates in the Bloomberg survey ranged from 46 to 50. The index, which was first published in January 1985, averaged 54 in the five years leading to the recession that began in December 2007. It reached a record low of 8 in January 2009. The builders group’s index of present single-family home sales fell to 51 this month from a revised 52 in January. A measure of sales expectations for the next six months climbed to 50 from 49. The gauge of buyer traffic decreased to 32, the lowest since September, from a more than six-year high of 36 the prior month. The confidence survey asks builders to characterize current sales as “good,” “fair” or “poor” and to gauge prospective buyers’ traffic. It also asks participants to gauge the outlook for the next six months. N.J. NEWS ON THE GO Our redesigned mobile site has quick page loads and app-style navigation, and lets you join the conversation with comments and social media. Visit NJ.com from any mobile browser. Confidence improved among builders in two of the four U.S. regions, led by the Northeast, where it jumped to 41 from 36. Builders in the West saw an increase to 60, the highest since June 2006, from 59. The confidence measure held at 46 in the Midwest and fell to 44 from 51 in the South. “Having risen strongly in 2012, the HMI hit a slight pause in the beginning of this year as builders adjusted their expectations to reflect the pace at which consumers are moving forward on new-home purchases,” David Crowe, the association’s chief economist, said in a statement. “We expect home building to continue on a modest rising trajectory this year.” PulteGroup, the largest U.S. homebuilder by market value, said orders rose 27 percent in the fourth quarter from the same time a year earlier, while Lennar reported a 32 percent gain. Toll Brothers Inc., the largest U.S. luxury-home builder, is among companies looking to garner more sales as builders gear up for the spring selling season, traditionally viewed as starting the weekend after the National Football League’s Super Bowl. The event was held Feb. 3. “All signs point to a very good spring,” Chief Executive Officer Doug Yearley said in a January interview, citing the number of visitors to Toll Brothers model homes and the amount of closings. Demand may be outstripping supply, contributing a rising prices. New listings in 21 of the largest U.S. cities plunged 21 percent in January from a year earlier, according to Redfin, a Seattle-based brokerage. At the same time, declining mortgage costs are making it cheaper to buy a home for those who qualify for credit. The average fixed rate on a 30-year loan held at 3.53 percent in the week ended Feb. 14, down from 3.87 percent a year ago, according to McLean, Virginia-based Freddie Mac. Follow @Ledgerbiz Comments

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Back Monday, October 29, 2012 World Bank senior economist to examine the 'Great Recession' Jamus Jerome Lim, senior economist for the World Bank, will share his examination of the political economy of the international financial crisis and the channels the led to the Great Recession of 2008 when he visits Oakland University on Tuesday, Nov. 6. This free Economics Advisory Board lecture, presented by Oakland University's School of Business Administration, will take place at 5 p.m. in 242 Elliott Hall and is open to the public. Lim will show that since the crisis, the U.S. economy has been recovering slowly and the European countries are still battling with high debt to GDP ratios. With his professional expertise and rigorous research background, he will shed light on the causes and consequences of the crisis. A senior economist in the World Bank's Development Prospect Group unit, Lim is also a research associate at the Santa Cruz Institute for International Economics and a research consultant for the GLG (Gerson Lehrman Group). Previously, he was an assistant professor of Economics at Centre College (Kentucky) and a research associate in the Regional Economic Studies Department at the Institute of Southeast Asian Studies in Singapore. Lim's research in international economics, political economics, development economics, applied econometrics and positive political economy theory has been published in a number of academic journals, including the Journal of Policy Modeling, Economics of Transition, Journal of Bioeconomics, Journal of Economic Education, and the Journal of International Development. In addition he has presented his research at more than 30 conferences, workshops and seminars. For more information on the upcoming Economics Advisory Board lecture, contact Mohamad Karaki at (248) 370-3282 or [email protected]. For interactive and printable maps of the Oakland University campus, visit oakland.edu/map. 2200 N. Squirrel Road Rochester, Michigan 48309-4401

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The U.S. job market is proving surprisingly strong and raising hopes that the economy will be resilient enough this year to withstand pressure from a Washington gridlock and the threat of government spending cuts. WASHINGTON — The U.S. job market is proving surprisingly strong and raising hopes that the economy will be resilient enough this year to withstand a budget standoff in Washington and potentially deep cuts in federal spending.Employers added 157,000 jobs last month, and hiring turned out to be healthier than previously thought at the end of 2012 just as the economy faced the threat of the "fiscal cliff."Still, unemployment remains persistently high. The unemployment rate ticked up to 7.9 percent last month from 7.8 percent in December.Many economists, though, focused on the steady job growth — especially the healthier-than-expected hiring late last year. The Labor Department revised its estimates of job gains for November from an initial 161,000 to 247,000 and for December from 155,000 to 196,000.The department also revised its figures for all of 2012 upward — to an average of 180,000 new jobs a month from a previously estimated 150,000."The significantly stronger payroll gains tell us the economy has a lot more momentum than what we had thought," Joseph LaVorgna, chief U.S. economist at Deutsche Bank, said in a research note.The government frequently revises the monthly job totals as it collects more information. Sometimes the revisions can be dramatic, as in November and December.The January jobs report helped fuel a powerful rally on Wall Street. Stock averages all jumped more than 1 percent. The Dow Jones industrial average closed above 14,000 for the first time since October 2007, two months before the Great Recession officially began.Beyond the job market, the economy is showing other signs of health. Factories were busier last month than they have been since April 2012. Ford, Chrysler and General Motors all reported double-digit sales gains for last month, their best January in five years.Home prices have been rising steadily. Higher home values tend to make Americans feel wealthier and more likely to spend.Housing construction is recovering, too. Construction spending rose last year for the first time in six years and is expected to add 1 percentage point to economic growth this year.The housing rebound appears finally to be producing a long-awaited return of construction-industry jobs, which have typically help drive economic recoveries. Construction companies added 28,000 jobs in January. Over the past three months, construction has added 82,000 jobs — the best quarterly increase since 2006. Even with the gains, construction employment is about 2 million below its housing-bubble peak of 7.7 million in April 2006.Health care employers added 28,000 jobs in January. Retailers added 33,000, and hotels and restaurants 17,000. The job growth in retail, hotels and restaurants suggests that employers have grown more confident about consumer spending, which fuels about 70 percent of the economy.The government uses a survey of mostly large businesses and government agencies to determine how many jobs are added or lost each month. That's the survey that produced the gain of 157,000 jobs for January.It uses a separate survey of households to calculate the unemployment rate. That survey captures hiring by companies of all sizes, including small businesses, new companies, farm workers and the self-employed. From month to month, the two surveys sometimes contradict each other. Over time, the differences between them usually even out.The household survey for January found that 117,000 more Americans said they were unemployed than in December. That's why the unemployment rate inched up from 7.8 percent to 7.9 percent.Some economists had feared that federal budget standoffs might chill spending, investing and hiring. They worried that companies wouldn't hire and consumers would scale back spending in November and December because big spending cuts and tax increases were to take effect Jan. 1 if the White House and congressional Republicans couldn't reach a budget deal.It turns out, the fears were overblown. In the midst of the budget fight late last year, employers kept hiring.And Friday's jobs report showed that average hourly wages — up 4 cents to $23.78 in January — were staying ahead of inflation. They had generally failed to keep up with prices since the recession ended in June 2009.The steady hiring gains should help cushion the economic pain from higher Social Security taxes, which last month began shrinking most workers' take-home pay. A person earning $50,000 a year will have about $1,000 less to spend in 2013. A household with two high-paid workers will have up to $4,500 less.Analysts expect the Social Security tax increase to shave about a half-point off economic growth in 2013, because consumers drive about 70 percent of economic activity.The hit to consumers is coming at a precarious time. The economy contracted in the fourth quarter of 2012 for the first time in 3� years. The drop was due mainly to a steep cut in defense spending and declining exports. Most analysts think those factors will prove temporary and that the economy will grow this quarter and the rest of the year.Friday's report did serve as a reminder that unemployment has been stuck at 7.8 percent or more since September. The rate would be even higher if many Americans hadn't retired or stopped looking for work. The proportion of the adult population that is working or looking for work is near a 32-year low. If labor force participation were still at its prerecession level, unemployment could exceed 11 percent.And despite the consistent hiring gains, the job market has a long way to go to fully heal from the recession. Between January 2008 and February 2010, the United States lost 8.7 million jobs. Since then, it's regained 5.5 million — 63 percent of the lost jobs."We are still in a crisis-level jobs hole," says Heidi Shierholz, an economist with the liberal Economic Policy Institute.Long-term unemployment remains a chronic problem. About 4.7 million people have been out of work for six months or more. That's down 15 percent in the past year. But it's still much higher than it's ever been after previous recessions.Among the long-term unemployed is Will Nielsen, who has struggled to find work for more than a year. He worked as a contractor doing graphic design and video production for a startup company that went bust in December 2011.The job search has been frustrating: Most of the jobs he's seen advertised are part-time or freelance. Permanent jobs with salaries and benefits seem to him nonexistent.Contractors aren't eligible for unemployment benefits, so he's been relying on his girlfriend's salary, which has "strained" their relationship.Nielsen, 37, who lives in Santa Rosa, Calif., applied last month for an electrician's apprenticeship program that would pay a stipend while he learned a new trade. But when he arrived at the training center to submit his application, at least 20 people were there ahead of him."It looked like the Great Depression," he said.Yet the burst of hiring at the end of 2012 has raised hopes that the recovery from the Great Recession is finally strengthening."This could be a breakout year for the economy," Bernard Baumohl, chief global economist at the Economic Outlook Group, wrote in a note to clients. "The economy, sales, employment and the stock market are all higher in spite of the bickering and rancor in Washington."Kaltura, a New York-based online video software company, plans to hire 100 people in 2013, which would bring their staff to 300. The company has 17 open jobs.Company President Michal Tsur said Kaltura has managed to benefit from the sluggish economy: Companies use its software to post training videos online, reducing the cost of training. Universities are also pushing online video courses to reach more students.Entertainment companies like HBO are using Kaltura's software to post videos on YouTube, Facebook and on the websites of video providers like Verizon.Even with high unemployment, Tsur said, it's hard to find the software engineers, sales people and programmers Kaltura needs."If we stumble upon superstars," she said, "we'll hire them immediately."

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The 1995-W Proof Silver Eagle a Big Winner In 1995, the United States Mint issued a special 10th Anniversary set which was comprised of four Proof Gold Eagles and a special One-Ounce Proof Silver Eagle bearing the "W" mint mark. The 1995-W Proof Silver Eagle in this set would be the first Silver Eagle to bear the W mint mark and would also have the lowest mintage for any Silver Eagle ever produced by the U.S. Mint. A total of 45,000 sets were authorized to be produced for the five-piece set containing the 1995-W Silver Eagle, but only 30,125 total sets were sold. Consequently, for the past 17 years the 1995-W Proof Silver Eagle has become the rarest and most desirable of all Silver Eagles. The obverse of the 1995-W as well as all other U.S. Silver Eagles would continue the retro trend going back to 1917 and continue throughout 1947, depicting Adolph A. Weiman's prominent Walking Liberty design for the circulating half dollar series. The reverse would illustrate an artistic large heraldic eagle designed by re-known sculptor John Mercanti. The initial introduction by Mercanti would illustrate a beautiful three-sided heraldic eagle. Notably, the final version would portray a full frontal view as currently seen on all U.S. Silver Eagles. Above the eagle 13 stars and in front of the eagle is a large shield with 13 stripes, both representing the original 13 colonies. The only way to obtain the low-mintage 1995-W Silver Eagle directly from the U.S. Mint would be by purchasing the entire Eagle proof set offered by the Mint in 1995. The Mint offered the four-gold piece set at $999 and as a free bonus buyers could choose to receive the special five-piece set, which included the 1995-W Silver Eagle. The accompanying 1995-W Gold Eagles had the following mintages: 46,484 for the one ounce, 45,442 for the half ounce, 47,484 for the quarter ounce, and 62,673 for the tenth ounce. Many people who are collecting Silver Eagles are building complete sets. To complete a Silver Eagle proof set, collectors need to acquire the 1995-W Silver Eagle. With a low mintage of 30,125 in one of the most widely collected modern U.S. coin series, attaining this piece will become a great challenge. Subsequent to the 10th Anniversary Eagle program, the Mint did not celebrate a 20th Anniversary for 2005. Instead, they celebrated the 20th Anniversary in 2006, making things more confusing for Eagle collectors. Since the program first started in 1986, its 10th Anniversary would have been completed in 1996, but instead the Mint used 1995 as the 10thAnniversary by counting 1986 as the first completed year instead of using 1987 as the first complete year. For the anticipated 20th Anniversary Program, they used a different method by actually counting a year after 1986 as the first complete year, and in return, offering special 20th Anniversary Eagle options for 2006. Offering the 1995-W Silver Eagle with the Gold Eagle proof sets could have been a strategy used by the U.S. Mint to encourage silver collectors to purchase Gold Eagles or visa versa. Originally, Canada was the leading force for gold bullion coins by first offering Canadian Maple Leafs in 1979. At the same time, Mexico was producing a one-ounce silver bullion coin, the Mexican "Onza." The U.S. Mint wanted to receive its own share of the bullion coin market, so it began offering Gold and Silver Eagles in 1986. Canada would enter the silver bullion market two years after the U.S. Proof Silver Eagles were introduced by the U.S. Mint. Since 1986, the U.S. Mint has offered Proof Silver Eagles directly to collectors at a significant premium over silver spot metal prices. Unlike mint state Silver Eagles, that are offered to the public through a select group of authorized dealers. American Proof Silver Eagles have a set maximum mintage, but the mint state coins are sold in large quantities to meet the public's demand. There are great opportunities when purchasing modern issues offered by the U.S. Mint if you do your homework and pick the right coins. The 1995-W Proof Silver Eagle is just one out of dozens of different modern coins that has been a big winner so far, and more than likely, there are still many more winners to come from the U.S. Mint. PCGS Library

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dansk Deutsch español Français italiano Nederlands norsk português suomeksi svenska Diamondhead Casino Corporation Closes On First $1 Million Of $3 Million Convertible Debenture Offering And Appoints Ted Arneault As Chairman Of The Board Of Directors from Diamondhead Casino Corporation DIAMONDHEAD, Miss., April 2, 2014 /PRNewswire/ -- Diamondhead Casino Corporation ("DHCC"), which intends to build a casino resort on its 404-acre property in Diamondhead, Mississippi, announced today that it has appointed Ted Arneault, formerly Chairman, President & CEO of MTR Gaming Group, Inc., as Chairman of the Board of the Company and President & CEO of Casino World, Inc., a wholly-owned subsidiary of the Company and proposed developer of the Diamondhead casino site. The Company also announced today that it accepted subscriptions in Escrow in the amount of $3 million for the purchase of collateralized debentures, convertible to common stock, subject to certain events, and $1 million of that amount had been released from Escrow to the Company at the first of three intended closings. The two remaining closings are contingent upon certain events. Henley & Company, LLC acted as sole placement agent in connection with the offering. The Company owns, through a wholly-owned subsidiary, approximately 404 acres of land in Diamondhead, Mississippi. The property fronts Interstate 10 for approximately two miles and fronts the Bay of St. Louis for approximately two miles. Approximately 18 million vehicles pass the site yearly. The property, which is located entirely within the recently-incorporated City of Diamondhead, is already zoned for a casino. In commenting on his appointment, Mr. Arneault stated: "I believe the Diamondhead site remains one of the last, great gaming opportunities in the country. The site is recognized in the casino industry as one that is expected to grow the entire Gulf Coast market because of its sheer size and the numerous amenities it could support. I am looking forward to working with the State of Mississippi and the City of Diamondhead to create a destination resort that will bring economic benefits to the entire State as well as the City. This is a unique opportunity to be associated with a project that has the potential to become a major tourist attraction on the Gulf Coast and one of the premier resort locations in the casino industry." Ms. Vitale, who is stepping down as Chairman of the Board of the Company, stated: "Mr. Arneault's addition to the Board and his extensive background, experience and expertise in the gaming industry will allow us to move this project forward. Mr. Arneault knows the casino industry, knows the Gulf Coast market, recognizes the potential of this project and, of utmost importance, has successfully taken casinos from the ground up before. I have every confidence in Mr. Arneault, who has a proven track record in the industry, to spearhead the development of this particular project. In addition, Mr. Arneault brings extensive, unrelated business experience, as well as his background as a CPA, to the Board. I am honored to have Mr. Arneault on our team and the Board and I look forward to working with him in the future." The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in such statements. All statements, trend analysis and other information contained in this release relative to performance, trends in operations or financial results, plans, expectations, estimates and beliefs, as well as other statements including words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "will," "could" and other similar expressions, constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. In connection with certain forward-looking statements contained in this release and those that may be made in the future, there are various factors that could cause actual results to differ materially from those set forth in any such forward-looking statements. The forward-looking statements contained in this release were prepared by management and are qualified by, and subject to, permitting, significant business, economic, financial, competitive, environmental, regulatory and other uncertainties and contingencies, all of which are difficult or impossible to predict and many of which are beyond the control of the Company. Accordingly, there can be no assurance that the forward-looking statements contained in this release will be realized. The forward-looking statements in this release reflect the opinion of the management as of the date of this release. Readers are hereby advised that developments subsequent to this release are likely to cause these statements to become outdated with the passage of time or other factors beyond the control of the Company. The Company does not intend, however, to update the guidance provided herein prior to its next release or unless otherwise required to do so. Readers of this release should consider these facts in evaluating the information contained herein. In addition, the business and potential operations of the Company are subject to substantial risks, including but not limited to risks relating to liquidity and cash flows, including the Company's need for additional funds to develop the Diamondhead property, which increase the uncertainty inherent in the forward-looking statements contained in this release. The inclusion of the forward-looking statements contained in this release should not be regarded as a representation that the forward-looking statements contained in the release will be achieved. In light of the foregoing, readers of this release are cautioned not to place undue reliance on the forward-looking statements contained herein. For further information, contact:Deborah Vitale, PresidentDiamondhead Casino CorporationOffice: (703) 683-6800 SOURCE Diamondhead Casino Corporation View Table Fullscreen Preview: Diamondhead Casino Corporation Status Report

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dansk Deutsch español Français italiano Nederlands norsk português suomeksi svenska NuTech Energy Resources, Inc. to Convene for Majority Shareholder Vote on Stock Repurchase Agreement in Preparation for NASDAQ Listing Effective Immediately Upon Approval Company Will Commence Stock Buyback from NuTech Energy Resources, Inc. GILLETTE, Wyo., Jan. 28, 2016 /PRNewswire/ -- NuTech Energy Resources, Inc. (OTC: NERG), a natural gas and oil exploration and development company, is pleased to announce that the Company has initiated plans to organize a meeting between its Board of Directors and Majority Shareholders for the authorization of an open market stock repurchase program, in its continuing effort to attain a NASDAQ listing. NuTech Energy Resources has recently retained a Security and Exchange Commission approved Auditing firm to complete the necessary action required to fulfill its goal of achieving a Nasdaq Listing. The evaluation process has been initiated, and upon preliminary review of the Company's financial report, the firm will be disclosed. NuTech Energy has also retained the auditing services of a distinguished Full-Service CPA firm, in order to fulfill the 2-year audit requirement, and to collaborate with legal counsel, to assist in the Company's strategy to uplist to the world's first and largest "electronic" stock market, the prestigious Nasdaq Exchange. "We believe that buying back our shares is the best course of action as we move forward. Upon approval, this new share buyback program would demonstrate our continued confidence and our commitment to build true value for our investors," stated Kevin Trizna, Chief Executive Officer, NuTech Energy Resources, Inc. The Company also recently announced that the Company is already set up and producing natural gas at the Emerald Operating property, and plan to be producing from the additional 2000 wells through NuTech's state-of the-art proprietary equipment as early as 1st quarter of this year. NuTech Energy Resources had previously announced an agreement to acquire Emerald Operating and Rocky Mountain Exploration Wells, an operation representing 74 existing wells, and their underlying lease agreements. Additionally, Nutech will acquire Emerald's minority non-operator interest in 42 of Mountain Hawk Exploration's wells. Emerald Operating currently has 27 of NuTech Energy's state-of-the-art IGOR tools installed on location. Gas from this location is being produced and sold, using the Company's patented, proprietary Natural Gas Production Technology, but no production results are available as of yet. Emerald Operating personnel have, over the past several months, extensively tested, and continue actively running diagnostics in an effort to optimize the production and transportation process. Management is confident that the best strategy has been developed in regards to the installation of the Company's proprietary equipment, as well as the production of coalbed methane. The Company continues to focus on adding to the current inventory of its coalbed methane wells in the Powder River Basin of Wyoming, and plans to convert those wells into profitable producing assets. The Company has a patented, proprietary technology to produce natural gas without pumping water out of the ground from inside a well. This device reduces overhead from conventional methods of natural gas production by as much as eighty percent (80%). About NuTech Energy Resources, Inc.: Nutech Energy Resources, Inc. (OTC Markets Symbol: NERG) is a natural gas and oil exploration and development company that has developed a patented technology for the production of coalbed methane (CBM) without the need to pump water. Nutech currently operates wells in the Powder River Basin area of northern Wyoming and has commitments to acquire thousands of additional wells. Nutech Energy Resources, Inc.'s development of proprietary equipment uniquely positions the Company to be able to acquire and profitably operate wells that were previously cost prohibitive. For more information visit: http://www.nutechenr.com/ Safe Harbor: This press release contains forward-looking statements. Such forward-looking statements are subject to a number of risks, assumptions and uncertainties that could cause the Company's actual results to differ materially from those projected in such statements. Forward-looking statements speak only as of the date made and are not guarantees of future performance. We undertake no obligation to publicly revise any forward-looking statements. Contact: Investor and Media Steffan Dalsgaard, CEO Everest Corporate Advisors, Inc.702-902-2361702-982-1139 SOURCE NuTech Energy Resources, Inc. RELATED LINKS http://www.nutechenr.com Preview: NuTech Energy Resources, Inc. Acquires Flowpower LLC, Creator of Revolutionary Green Power Generating Technology, to Generate Additional 15-20 Million Dollars in Revenues Per Year Preview: NuTech Energy Resources, Inc. Imminent NASDAQ Listing NuTech Energy Resources Addresses OTC Market Action NuTech Energy Resources, Inc. Acquires Flowpower LLC, Creator of... OTC, SmallCap

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dansk Deutsch español Français italiano Nederlands norsk português suomeksi svenska WSP Holdings Limited Enters into Definitive Agreement for Going Private Transaction from WSP Holdings Limited WUXI, China, Feb. 21, 2013 /PRNewswire/ -- WSP Holdings Limited (NYSE: WH) ("WSP Holdings" or the "Company"), a leading Chinese manufacturer of API (American Petroleum Institute) and non-API seamless casing, tubing and drill pipes used in oil and natural gas exploration, drilling and extraction ("Oil Country Tubular Goods" or "OCTG"), and other pipes and connectors, today announced that it has entered into an Agreement and Plan of Merger (the "Merger Agreement") with WSP OCTG GROUP Ltd. ("Parent"), a company owned by H.D.S. Investments LLC, and JM OCTG GROUP Ltd., a company with limited liability and a direct wholly-owned subsidiary of Parent ("Merger Sub"). The transaction contemplated under the Merger Agreement represents a total transaction value of approximately $893.6 million, including the assumption of the Company's outstanding debt. Subject to satisfaction or waiver of the closing conditions in the Merger Agreement, Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation (the "Merger"). Pursuant to the Merger Agreement, each of the Company's ordinary shares issued and outstanding immediately prior to the effective time of the Merger (the "Shares") will be cancelled and cease to exist in exchange for the right to receive $0.32 without interest, and each American Depositary Share ("ADS"), which represents ten Shares, will represent the right to surrender the ADS in exchange for $3.20 in cash without interest, except for (a) Shares held of record by Expert Master Holdings Limited ("EMH"), a company wholly-owned by Mr. Longhua Piao, the Company's Chairman and Chief Executive Officer, and UMW China Ventures (L) Ltd. ("UMW"), which will be contributed to Parent immediately prior to the Merger in exchange for equity interests of Parent, and (b) Shares owned by shareholders who have validly exercised and have not effectively withdrawn or lost their rights to dissent from the Merger under the Cayman Islands Companies Law (the "Dissenting Shares"), which will be cancelled for the right to payment of fair value of the Dissenting Shares in accordance with the Cayman Islands Companies Law. The $0.32 per Share or $3.20 per ADS offer represents a premium of 60.0% over the Company's closing price of $2.00 per ADS (adjusted for the change in the ratio of the ADSs from one ADS representing two ordinary shares to one ADS representing ten ordinary shares effective February 15, 2012) on December 12, 2011, the last trading day prior to the Company's announcement of its receipt of a "going-private" proposal, and a premium of 52.5% to the volume-weighted average closing price calculated using the market data quoted on the New York Stock Exchange (the "NYSE") of the ADSs during the 60 trading days prior to December 12, 2011. H.D.S. Investments LLC has provided the Company with a limited guarantee in favor of the Company guaranteeing the payment of certain monetary obligations of Parent and Merger Sub arising under the Merger Agreement up to a capped amount. H.D.S. Investments LLC has committed, at or prior to the closing of the Merger, to contribute to Parent, and to cause Parent to contribute to Merger Sub, an equity investment in an amount sufficient to fund the merger consideration and related transaction expenses upon the terms set forth in an equity commitment letter. The Company's Board of Directors, acting upon the unanimous recommendation of a committee of the Board of Directors comprised solely of independent and disinterested directors (the "Special Committee"), approved the Merger Agreement and the Merger and resolved to recommend that the Company's shareholders vote to authorize and approve the Merger Agreement and the Merger. The Special Committee negotiated the terms of the Merger Agreement with the assistance of its legal and financial advisors. The Merger, which is currently expected to close during the second quarter of 2013, is subject to the authorization and approval of the Merger Agreement by an affirmative vote of shareholders representing at least two-thirds of the Shares present and voting in person or by proxy as a single class at a meeting of the Company's shareholders, as well as certain other customary closing conditions. EMH and UMW collectively beneficially own sufficient Shares to approve the Merger Agreement and the Merger and have agreed to vote in favor of such approval. If completed, the Merger will result in the Company becoming a privately-held company and its ADSs will no longer be listed on the NYSE. Houlihan Lokey (China) Limited is serving as financial advisor to the Special Committee, Kirkland & Ellis is serving as U.S. legal advisor to the Special Committee, and Conyers Dill & Pearman is serving as Cayman Islands legal advisor to the Special Committee. Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP is serving as legal advisor to H.D.S. Investment LLC. Additional Information about the Transaction The Company will furnish to the Securities and Exchange Commission (the "SEC") a report on Form 6-K regarding the proposed Merger, which will include the Merger Agreement. All parties desiring details regarding the proposed Merger are urged to review these documents, which will be available at the SEC's website (http://www.sec.gov). In connection with the proposed Merger, the Company will prepare and mail a proxy statement to its shareholders. In addition, certain participants in the proposed Merger will prepare and mail to the Company's shareholders a Schedule 13E-3 transaction statement. These documents will be filed with or furnished to the SEC. INVESTORS AND SHAREHOLDERS ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THESE MATERIALS AND OTHER MATERIALS FILED WITH OR FURNISHED TO THE SEC WHEN THEY BECOME AVAILABLE, AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, THE PROPOSED MERGER AND RELATED MATTERS. In addition to receiving the proxy statement and Schedule 13E-3 transaction statement by mail, shareholders will also be able to obtain these documents, as well as other filings containing information about the Company, the proposed Merger and related matters, without charge, from the SEC's website (http://www.sec.gov) or at the SEC's public reference room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. In addition, these documents can be obtained, without charge, by contacting the Company at the following address and/or telephone number: WSP Holdings LimitedNo. 38 Zhujiang RoadXinqu, WuxiJiangsu ProvincePeople's Republic of ChinaTelephone: +86-510-8536-0401 The Company and certain of its directors, executive officers and other members of management and employees may, under SEC rules, be deemed to be "participants" in the solicitation of proxies from the Company's shareholders with respect to the proposed Merger. Information regarding the persons who may be considered participants in the solicitation of proxies will be set forth in the proxy statement and Schedule 13E-3 transaction statement relating to the proposed Merger when they are filed with the SEC. Additional information regarding the interests of such potential participants will be included in the proxy statement and Schedule 13E-3 transaction statement and the other relevant documents filed with the SEC when they become available. This announcement is neither a solicitation of a proxy, an offer to purchase nor a solicitation of an offer to sell any securities, and it is not a substitute for any proxy statement or other filings that may be made with the SEC should the proposed Merger go forward. About WSP Holdings Limited WSP Holdings develops and manufactures seamless Oil Country Tubular Goods (OCTG), including seamless casing, tubing and drill pipes used for on-shore and off-shore oil and gas exploration, drilling and extraction, and other pipes and connectors. Founded as WSP China in 1999, the Company offers a wide range of API and non-API seamless OCTG products, including products that are used in extreme drilling and extraction conditions. The Company's products are used in China's major oilfields and are exported to oil producing regions throughout the world. For further information, please visit WSP Holdings' website at http://www.wsphl.com/. This press release contains forward-looking statements relating to the potential acquisition of the Company by an affiliate of H.D.S. Investment LLC, including the expected date of closing of the Merger. These are "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. The actual results of the transaction could vary materially as a result of a number of factors, including: uncertainties as to how the Company's shareholders will vote at the extraordinary general meeting; the possibility that competing offers will be made; and the possibility that various closing conditions for the transaction may not be satisfied or waived. These forward-looking statements reflect the Company's expectations as of the date of this press release. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law. WSP Holdings Limited CCG Investor Relations - Strategic Communications Ms. Judy Zhu, IR Director Mr. Crocker Coulson, President Elaine L. Ketchmere E-mail: [email protected] Email: [email protected] Email: [email protected] Phone : +86-510-8536-0401 Phone: 310-954-1345 (Los Angeles) http://www.wsphl.com www.ccgir.com SOURCE WSP Holdings Limited RELATED LINKS http://www.wsphl.com Preview: WSP Holdings Appoints New Director Preview: WSP Holdings Announces Third Quarter 2012 Results

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Share This Story!Let friends in your social network know what you are reading aboutFacebookEmailTwitterGoogle+LinkedInPinterestCracker Barrel shareholders reject sale proposalCracker Barrel shareholders rejected proposals to put the company up for sale.Post to FacebookCracker Barrel shareholders reject sale proposal Cracker Barrel shareholders rejected proposals to put the company up for sale. Check out this story on Tennessean.com: http://tnne.ws/1ifxY8U Join the ConversationTo find out more about Facebook commenting please read the Conversation Guidelines and FAQsCracker Barrel shareholders reject sale proposal By G. Chambers Williams III, [email protected] 11:07 a.m. CDT April 23, 2014 Cracker Barrel investor Sardar Biglari is pushing for a company sale. (Photo: FILE )Shareholders of Lebanon-based Cracker Barrel Old Country Store Inc., on Wednesday overwhelmingly rejected proposals by dissident investor Sardar Biglari that the company put itself up for sale, and work to change Tennessee law to allow Biglari to buy it himself.Cracker Barrel said that preliminary results indicate that approximately 70 percent of the shares voted were cast against the Biglari proposals, "including more than 92 percent of the shares voted by shareholders other than Biglari Capital.""We are pleased that our shareholders once again demonstrated strong support for our management and voted overwhelmingly in favor of our current strategy," Cracker Barrel President and CEO Sandra Cochran said in a statement.Biglari, chairman and CEO of Biglari Holdings of San Antonio, Texas, had asked the Cracker Barrel board of directors in December to consider selling the company, citing what he called "a failing operating plan" that endangers shareholder value.The investor, who controls 19.9 percent of Cracker Barrel's shares, also had called upon the board to pursue a change in Tennessee law that would allow him to buy the rest of the company. That option is currently not open to him.Biglari had called for a special meeting to decide the issue.In a letter to shareholders in March, Cracker Barrel (NASDAQ: CBRL) bashed Biglari and said its management plan has the company on track to maximize shareholder value and continue the company's growth."The board continues to believe that execution of the current operational and strategic plan outlined by the company over the past two fiscal years — which the board believes has been primarily responsible for delivering the positive results to shareholders during those years — remains the best means for promoting the long-term interests of shareholders by maximizing value and future returns," Cochran said in the letter.Cracker Barrel's position was supported by three leading proxy advisory firms, all of which recommended that shareholders reject Biglari's proposals.One of the firms, Glass Lewis & Co., questioned Biglari's motives, especially in light of his three failed attempts to gain seats on the company's board of directors."We believe there is considerable cause to doubt the intentions of the Dissident, an entity which has continued to submit very fluid arguments, flatly ignore resounding defeats and harshly lament Cracker Barrel's performance and strategy despite the fact that the Company has generated twice as much value for shareholders as Biglari has been able to generate for its own investors," the Glass Lewis report said.The other two firms, Institutional Shareholder Services and Egan-Jones Proxy Services, cited Cracker Barrel's strong financial performance since 2011 as indicators that the company's current financial strategy is working."We continue to believe that execution of the current operational and strategic plan remains the best means for creating long-term value for all of our shareholders," Cochran said in a prepared statement.Wednesday's meeting was in Washington, D.C., rather than at Cracker Barrel's headquarters in Lebanon, where the annual meetings usually are held.Biglari said in December that if his efforts to force a sale should fail, he would, among other things, review his investment in Cracker Barrel and "may in the future take such actions" such as "selling some or all of (his) shares in the open market."He was rebuffed three years in a row in his efforts to gain seats on the Cracker Barrel board for himself and associate Philip Cooley, yet had given no indication that he might exit his position in the restaurant/retail chain.He holds the shares through entities that he controls, including the San Antonio, Texas-based Biglari Capital Corp.; The Lion Fund II, L.P.; and Steak n Shake Operations, Inc.During the Cracker Barrel annual meeting in November, shareholders not only refused to elect Biglari and Cooley to the board, they also rejected a Biglari proposal to declare a one-time special dividend of $20 per share, at a cost of about $476 million. Biglari suggested that Cracker Barrel pay for the dividend by nearly doubling its current debt.Analysts have said that Biglari's persistence in trying to gain seats on the board or otherwise exert control over Cracker Barrel is unusual, and that his only real option would be to sell the shares and move on. But they also have said they had seen no signs that he was willing to walk away.Despite owning two large restaurant chains – Steak 'n Shake and Western Sizzlin – the majority of the value of Biglari Capital is in Cracker Barrel stock.Reach G. Chambers Williams III at 615-259-8076 and on Twitter @gchambers3. COMMENTEMAILMORERead or Share this story: http://tnne.ws/1ifxY8U Police identify man killed in Bellevue apartment complex robbery Download Things to Do Nashville for a chance to win happy hour tickets at the Nashville Sounds July 19, 2016, 7:55 a.m. Vols trailblazer Lester McClain weighs in on racial tensions

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SEC Chief Defends Budget Request to Skeptical Lawmakers White tells appropriations subcommittee that 250 more examiners are needed to police advisors Securities and Exchange Commission Chairwoman Mary Jo White told the House Subcommittee on Appropriations Tuesday that the agency’s $1.67 billion budget request for FY 2014 would help the agency fulfill one of its top priorities: to add 250 examiners for advisors. White told lawmakers that the 250 examiners would increase the proportion of advisors examined each year, the rate of first-time examinations, and the examination coverage of investment advisors and newly registered private fund advisors. Fulfilling this goal, “would be an important step in a multiyear effort to increase coverage by our examination program to meet our regulatory responsibilities to investors who increasingly turn to investment advisers for assistance navigating the securities markets and investing for retirement and family needs,” White (right) told lawmakers. While Rep. Ander Crenshaw, R-Fla., chairman of the subcommittee, reiterated that the SEC should not just get “thrown” additional funds considering its failures in catching the Bernie Madoff and Allen Stanford Ponzi schemes, White defended the SEC’s budget request, saying it was “essential to get the funding or we won’t be able to do our job.” Crenshaw went on to note that since 2001, the SEC’s budget has increased by 300%. “Most agencies don’t get this kind of increase each year,” he said to White. “How do you think the average investor has benefited from these large increases?” White responded that during her few weeks on the job she has “been struck by how vast, difficult and complex” the agency’s responsibilities are, and that the agency needs additional funding to keep up with the ever-changing markets and the SEC’s increased responsibilities under Dodd-Frank. She added that she would be a “faithful steward” of the additional funds. The $1.674 billion budget request under President Barack Obama’s budget is a 27% increase, or $353 million, over the $1.321 billion provided by the continuing resolution (CR) the SEC was operating under this year. Under the sequester, the SEC’s budget was cut by $108 million for 2013. Rep. José Serrano, D-N.Y., ranking member on the subcommittee, noted that while it would be an “unwise investment choice” for the subcommittee to cut funding for the agency that’s the “cop on the beat” for Wall Street and that ensures “a fair playing field” for the nation’s markets, he told White that “further cuts” were likely from the subcommittee. White said in her testimony that if enacted, the budget request would allow the agency to add 676 new staff positions, “both to improve core operations and implement the agency’s new responsibilities.” While the agency “understands that this request comes during a time of serious fiscal challenges, we have tried to be as targeted as we could in making these requests in the areas where the immediate deployment of resources is most critical.” White also said the SEC’s National Examination Program, which is “critical to improving compliance, preventing and detecting fraud, and monitoring market risks,” lacks the resources to allow the SEC to examine regulated entities and enforce compliance with the securities laws “in a way that investors deserve and expect.” Under the budget request, the SEC would be able to add 60 positions to improve oversight and examination functions related to broker-dealers, clearing agencies, transfer agents, self-regulatory organizations (SROs), and municipal advisors. White reiterated that her “top priority” was to finish the remaining rulemakings under the Dodd-Frank and JOBS Acts, stating that as of now the SEC has proposed or adopted 80% of those rules, “but there are a lot that remain to be done.” When asked if she would do a further restructuring of the agency’s various divisions, White responded that she would be “looking across the agency for further enhancements” to those made by former SEC Chairwoman Mary Schapiro to the enforcement and examination divisions. As to breaking down silos within the agency, “My management style is to break down silos anyway,” White said. Read Mary Jo White: The 2013 IA 25 Extended Profile on AdvisorOne. Allen Stanford Ponzi House Subcommittee on Appropriations

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SEC, FINRA Enforcement Roundup: Husband and Wife Divert Funds to Buy Home FINRA fines Deutsche Bank Securities for reporting failures; more SEC headquarters in Washington. Among recent enforcement actions by the SEC were charges against a husband and wife, executives at China-based RINO International Corp., for diverting funds from a securities offering for their own use. In addition, FINRA censured and fined firms for violations ranging from reporting failures to lack of supervisory personnel with foreign language skills adequate to track employee communications in that language and lack of sufficient barriers to safeguard nonpublic information to failure to monitor employee trading activity in outside brokerage accounts and failure to prevent interaction between a firm’s investment banking and research departments. Husband and Wife Charged by SEC With Diverting Funds The SEC charged a couple, executives of China-based RINO International Corp., with overstating company revenues and then diverting millions from a securities offering to buy a California home, cars and designer clothes and accessories. RINO is a holding company for subsidiaries that manufacture, install and service equipment for the Chinese steel industry. It became a China-based U.S. issuer through a reverse merger in 2007. In 2011, the SEC had issued a trading suspension against the company, based on questions raised about its public filings from 2008 to 2010, which were signed and certified by its CEO, Dejun “David” Zou, and chairwoman of the board, Jianping “Amy” Qiu, and which overstated company revenues by the inclusion of false sales contracts. It turned out that RINO maintained two sets of books: one for China filings and another for U.S. filings. According to the Chinese books, from Q1 2008 through Q3 2010, the company had sales of approximately $31 million. The U.S. books, on the other hand, indicated sales that were more than 15 times higher than the figures reported in China, by means of phony contracts that boosted the figures to about $491 million for the same period. Zou and Qiu used $3.5 million of the company’s money to buy themselves a luxury home in Orange County, and then hid the fact from company investors, according to the SEC. They also offered varying explanations in response to questions about those funds from the company’s outside auditor. They also used company funds on a shopping spree for other luxury goods and neither disclosed them in the company’s public filings, nor recorded them as personal expenses. When RINO’s outside auditor discovered and questioned the $3.5 million diversion, the couple first told the auditor that RINO intended the money for a down payment on a U.S. joint venture opportunity. The auditor questioned further, and was then told by Zou that he had authorized the money to be used to buy a property that would be used as an office and temporary housing for RINO’s employees on visits to the U.S. Not satisfied by these tales, particularly because of the kind of house that the couple had purchased, the auditor went to RINO’s audit committee with his concerns. The couple then agreed to recategorize the $3.5 million as a loan, and signed a promissory note bearing interest at current market rates. They purportedly repaid the loan on May 10, 2010, using funds wired from a Chinese bank account to RINO’s U.S. bank account. That money was later wired back to an account in China. Without admitting or denying the SEC’s allegations, RINO, Zou and Qiu consented to a number of penalties. Zou and Qiu agreed to pay $150,000 and $100,000, respectively, and have also paid the disgorgement amount of $3.5 million into a related class-action settlement. They also have been prohibited from serving as officers and directors of a public company for 10 years. The settlement is subject to court approval. Reporting Failures Bring Deutsche Bank Securities FINRA Fine, Censure Deutsche Bank Securities was censured by FINRA and fined $215,000 over failures in reporting and over execution of trades in securities while a trading halt was in effect. Without admitting or denying FINRA’s findings, the firm consented to the sanctions on failures in trade reporting and compliance engine (TRACE) reporting that included failure to report the correct contra-party’s identifier for transactions in TRACE-eligible securities; to report some transactions in TRACE-eligible securities it was required to report; to report transactions in TRACE-eligible securities to TRACE within 15 minutes of the execution time; to report the correct trade execution time for transactions in TRACE-eligible securities; and to show the correct execution time on brokerage order memoranda. Other failures included failure to disclose required information on customer confirmations; to report the correct trade time to the Real-time Transaction Reporting System (RTRS) in municipal securities transaction reports; to report information regarding purchase and sale transactions in municipal securities to the RTRS in the correct manner and in a timely fashion; and to show the correct trade time on brokerage order memoranda. In addition to numerous other reporting issues, the firm also carried out transactions in securities while a trading halt was in effect with respect to each of the securities. Failure to Communicate Brings FINRA Fine, Censures Global Hunter Securities found itself the target of FINRA censure and a fine of $150,000 after it was found, among other violations, to have failed to establish and maintain an adequate system to supervise written communications conducted in a foreign language. The firm did not have supervisory personnel fluent in the language of associated persons when certain aspects of its research and investment-banking businesses involved written communications in that language. As a result, it did not effectively monitor communications in that language. Other violations included failure to establish and maintain an adequate system for monitoring employee trading activity in accounts held at other FINRA member firms; to enforce its own procedures requiring newly hired personnel to disclose their outside brokerage accounts; and to adequately monitor employee trading activity in those accounts. That led to the firm’s failure to identify improper trading activity by a member of its research department in an account held at another FINRA member firm. The firm lacked an information barrier to keep employees from misusing nonpublic information, and also lacked a means to track whether such misuse was occurring, and although it maintained a restricted list as specified in a joint NYSE/FINRA memo, it did not do so in accordance with the memo’s requirements or even its own policies and procedures. It also issued equity security research reports that failed to comply with FINRA disclosure requirements, and failed to restrict relationships between its investment banking and research departments. Read SEC Enforcement Roundup: Harrisburg, Pa., Charged With Securities Fraud on AdvisorOne. Also in Legal & Compliance More Legal & Compliance bank account Deutsche Bank Securities outside auditor Diverting Funds investment-banking businesses written communications

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Croghan bank honored for 125 years of service BY BLADE STAFF FREMONT — Croghan Colonial Bank is celebrating 125 years in business, which prompted recognition from the Independent Community Bankers of America (ICBA). “It’s community banks like the Croghan Colonial Bank that drive economic stability and prosperity on Main Street and make their communities a better place to work and live,” said Camden R. Fine, ICBA president and chief executive officer. “They are the definition of relationship bankers, passionately committed to serving the needs of their local customers and communities.” Rick Robertson, the president and CEO of the Fremont bank, said, “It’s been an honor to support our community all these years, and to see it grow and thrive.” ,Croghan Bank

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» $240m PAID-UP CAPITAL Saudi Arabia's home finance firm eyes year-end launch Riyadh, April 22, 2014 Saudi Arabia's national home finance company, Bidaya, may open its doors by the end of this year, part of efforts to raise low levels of home ownership in the country, its founding sponsor said. In development since 2010, the company is a venture between the finance ministry's Public Investment Fund and the Jeddah-based Islamic Corporation for the Development of the Private Sector (ICD), a unit of the Islamic Development Bank . Bidaya is in its last phase of development prior to launch and will submit an application for a licence as soon as regulations under the kingdom's mortgage laws are finalised, ICD chief executive Khaled Al-Aboodi told Reuters. "Practically, we are planning to have the company operational by the end of 2014." A shortage of affordable housing is an economic and social issue, and a source of price inflation, in the fast-growing country of about 30 million people, most of whom are under the age of 30; a lack of low- and medium-cost housing has been compounded by limited financing options for home ownership. "Bidaya will increase access to finance for middle-income home buyers across the Kingdom. Bidaya is an important project for the ICD and Saudi Arabia given its impact on the Saudi market and the sustainability of the sector," Al-Aboodi said. He did not specify the number of customers or volume of business which Bidaya expected, but said the "target size" of its paid-up capital would be 900 million riyals ($240 million). The firm will use sharia-compliant financing contracts such as ijara (Islamic leasing), diminishing musharaka and hybrid structures designed to meet local regulations, Al-Aboodi added. In diminishing musharaka, the lender and home buyer share the costs of purchasing a home; the home owner then pays rent to the lender while purchasing the lender's share of the house in instalments. Capitas Group International, an international management firm with experience in setting up sharia-compliant mortgage and real estate finance platforms, has been helping to prepare Bidaya for launch. Home ownership in Saudi Arabia is just 30 percent, compared to a global average of 70 percent, while mortgage penetration is estimated at just 2 percent of gross domestic product, Al Rajhi Capital said in a research note in January. Mortgage loans exceed 50 percent of GDP in many developed countries. Home financing options offered by Saudi banks in the past have been limited; for example, buyers have had home payments automatically deducted from their salaries by lending banks. In 2012 the kingdom introduced a package of mortgage laws to stimulate home financing, and since last December, the central bank has issued six real estate financing licences to institutions including Riyad Bank, Arab National Bank and Amlak International. But commercial banks are still feeling their way towards using the laws in practice, so authorities aim to supplement their efforts with financing from other organisations such as Bidaya. – Reuters Saudi | Bidaya | home finance | More Finance & Capital Market Stories

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Accounts and accountability: UK committee says bankers must take more responsibility By: Danica Kirka, The Associated PressPosted: 06/19/2013 3:36 AM| Last Modified: 06/19/2013 3:25 PM This article was published 19/6/2013 (1131 days ago), so information in it may no longer be current. LONDON - British bankers could soon be facing harsher penalties for behaving badly.After a year which has seen major scandals involving rate-rigging, money-laundering and rogue-trading rock the UK's financial industry, an influential parliamentary committee recommended Wednesday that senior bankers should be held more accountable for their bank's actions. One measure, it said, should be a new criminal offence of "reckless misconduct" — one that could carry a prison sentence. A RBS, Royal Bank of Scotland, illuminated sign and logo are seen through a window of their offices as a bus is reflected driving past in London, Thursday, June 13, 2013. Bailed-out U.K. lender Royal Bank of Scotland said Wednesday that Stephen Hester will step down as chief executive later this year — a move that creates some uncertainty as the bank prepares to return to the private sector. The board of the bank, which is 81 percent owned by the taxpayer after it was rescued by the U.K. government in 2008, said Hester was unable to make an open-ended commitment to lead the bank back into the private sector after having already served five years. The search for a successor will begin immediately. (AP Photo/Matt Dunham) "The health and reputation of the banking industry itself is at stake," Andrew Tyrie, the chairman of the parliamentary commission on banking standards, said in a statement. "Many junior staff who may have done nothing wrong have been impugned by the actions of their seniors. This has to end."Treasury chief George Osborne praised the commission on his Twitter feed, describing it as "impressive." He said the report would "help our plan for stronger safer banks."The report, compiled by a panel which includes lords, lawmakers and the Archbishop of Canterbury, takes a scythe to the industry. It suggests changes that will make many a banker wince.The committee argues that there has been a "misalignment of incentives" in the financial industry and that pay structure has become "dysfunctional." Because bankers are "paid too much for doing the wrong things," the report says, lapses of standards shouldn't be surprising."Public anger about high pay in banking should not be dismissed as petty jealousy or ignorance of the operation of the free market," the report said. "Rewards have been paid for failure. They are unjustified."Among many of the committee's recommendations is the creation of a code that defers bonuses for longer, and better aligns risk and rewards.Again and again, the report demanded accountability, arguing that executives turned a blind eye so they would not be punished for what they could not see."Where they could not claim ignorance, they fell back on the claim that everyone was party to a decision, so that no individual could be held squarely to blame — the 'Murder on the Orient Express' defence," the report said."It is imperative that in future senior executives in banks have an incentive to know what is happening on their watch —not an incentive to remain ignorant in case the regulator comes calling."Britain's financial community greeted the headline-grabbing aspects of the report with alarm. Gary Greenwood, an analyst with Shore Capital, expressed concern whether the industry would be able to attract top talent, given pay restraints and the possibility of jail time for "getting the job wrong.""We think the proposal to put financial safety ahead of shareholder interests suggests an industry that is unlikely to generate above-average returns for its owners in the long run," he said.The commission also addressed one of the biggest bank bailouts. Royal Bank of Scotland was rescued in 2008 with a 45 billion-pound ($71 billion) injection of state capital that has proved crippling to the British economy. The country's political leaders are anxious to return the bank, which is more than 80 per cent owned by the taxpayer, to the private sector. But the timing, and therefore whether taxpayers will get their money back, remains up in the air.The commission says that RBS continues to be weighed down by uncertainty over the bad assets it still holds and by having the government as its main shareholder.It said the government should make a commitment to undertake a detailed analysis of whether or not to split off the bank's bad assets into a separate legal entity — known as the good bank/bad bank split. The governor of the Bank of England, Mervyn King, is among those who have argued that the losses for the taxpayer might be lessened if they were split, with the bad bank left with the state and unwound over time.Osborne said that selling a share in RBS is "some way off," but announced the government will "urgently investigate" the case for breaking up RBS and creating a "bad bank" of risky assets.In his annual Mansion House address in London on Wednesday evening, Osborne said that review will be swift and a decision will be made in the fall.He confirmed that the government is "actively considering" options for selling shares in Lloyds —but did not set out a timeline for disposing of the government's 40 per cent stake in the bank."Nothing better signals Britain's move from rescue to recovery than the fact that we can start to plan for our exit from government share ownership of our biggest banks," Osborne said.The commission was backed by both houses of Parliament. Its recommendations will form the basis for legislative and other action.The commission also urged the banks to honour the report's recommendations in letter and in spirit, hoping that in this way the institutions would earn public respect and build trust.The report's authors felt the need to offer a more philosophical look in resolving the big issues. It argued that it was time to learn the lessons of the past."Banking history is littered with examples of manipulative conduct driven by misaligned incentives, of bank failures born of reckless, hubristic expansion and of unsustainable asset price bubbles cheered on by a consensus of self-interest or self-delusion," the report said. "An important lesson of history is that bankers, regulators and politicians alike repeatedly fail to learn the lessons of history: this time, they say, it is different."

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Home | Mises Library | Milton Friedman, 1912-2006Milton Friedman, 1912-2006 BiographiesU.S. HistoryMoney and Banking12/26/2006Hans F. SennholzFew American economists have wielded as much influence on economic thought and policy as the late Milton Friedman. He was an articulate and ardent advocate of free markets and personal liberty.In 1962, his Capitalism and Freedom, which continues to be in print with nearly one million copies sold, pointed the way not only to economic but also political freedom. A year later his Monetary History of the United States, 1867–1960, co-authored with Anna Schwartz, cast a new light on the Great Depression and the policies that caused it. He was a passionate critic of all versions of socialism and a fervent censor of Keynesian economics, which stands as the most influential economic formulation of the 20th century.One of the most prolific writers of his time, Professor Friedman wrote many pertinent economic columns in Newsweek. His outstanding achievements earned him the Nobel Prize in 1976.It may be folly to criticize and censure a famous author whom all the world admires. Yet this economist has been at odds with Professor Friedman ever since he advanced his monetarist thought. It is strange that Professor Friedman and his fellow monetarists, who are such defenders of the market order, should call on politicians and bureaucrats to provide the most important economic good — money. Granted, monetarists do not trust them with discretionary powers, which led Friedman to write a detailed prescription, a constitutional amendment; however, the Constitution is supreme force, backed by courts and police. The amendment is a political formula to be adopted by political authorities and, when enacted, a constitutional prohibition of monetary freedom.The amendment calls for issue of government money in the form of non-interest bearing obligations that would not alter the nature of currency expansion, it merely would change its technique. The stock of these obligations is supposed to grow, year after year, without any obligation to repay, which changes their nature from being "obligations" to being mere government paper. The Friedman proposal would merely simplify the technique of money issue; instead of having the Federal Reserve creating and lending its funds to the US Treasury, earning an interest thereon and then returning the interest to the Treasury as "miscellaneous receipts," Friedman would have the Treasury issue non-interest bearing US notes. This would save the US Treasury the interest it is now paying and eliminate the "miscellaneous receipts" the Treasury is now receiving.In its search for stability, the Friedman amendment, unfortunately, proceeds on the old road to nowhere. There is no absolute monetary stability, never has been, and never can be. Economic life is a process of perpetual change. People continually choose among alternatives, attaching ever-changing values to economic goods; therefore, the exchange ratios of their goods are forever adjusting. Economists searching for absolute stability and measurement are searching in vain, and they become disruptive and potentially harmful to the economic well-being of society when they call upon government to apply its force to achieve the unattainable.Money is no yardstick of prices. It is subject to man's valuations and actions in the same way that all other economic goods are. Its subjective, as well as objective, exchange values continually fluctuate and, in turn, affect the exchange ratios of other goods at different times and to different extents. There is no true stability of money, whether it is fiat or commodity money. There is no fixed point or relationship in economic exchange. Yet, despite this inherent instability of economic value and purchasing power, man is forever searching for a dependable medium of exchange.The precious metals have served him well throughout the ages. Because of their natural qualities and their relative scarcity, both gold and silver were dependable media of exchange. They were marketable goods that gradually gained universal acceptance and employment in exchanges. They even could be used to serve as tools of economic calculation because their quantities changed very slowly over time. This kept changes in their purchasing power at rates that could be disregarded in business accounting and bookkeeping. In this sense, we may speak of an accounting stability that permits acting man to compare the countless objects of his economic concern.Contrary to monetarist doctrine, an expansion of the money stock of three to five percent suffices to generate the business cycle. Economic booms and busts occur in every case of fiat expansion, whether the expansion is one percent or hundreds of percents. The magnitude of expansion does not negate its effects; it merely determines the severity of the maladjustment and necessary readjustment.Monetarists are quick to proclaim that business recessions in general, and the Great Depression in particular, are the result of monetary contraction. Mistaking symptoms for causes, they prescribe policies that treat the symptoms; however, the prescription, which is reinflation, tends to aggravate the maladjustments and delay the necessary readjustment.The Friedman amendment, unfortunately, would cause the same economic and social conflicts as the present fiat system. It would create income and wealth with the stroke of a pen, and then distribute the booty to a long line of eager beneficiaries. The amendment would fix the quantity of issue, but the mode of its distribution, which confers favors and assigns losses, would be left to the discretion of the monetary authorities. It would enmesh them in ugly political battles about "credit redistribution," which soon would spill over to the halls of Congress, just as it does today.The monetarists actually have no business cycle theory, merely a prescription for government to "hold it steady." From Irving Fisher to Milton Friedman the antidote for depressions has always been the same: reinflation. The central banker who permits credit contraction is the culprit of it all. If there is a recession, he must issue more money, and if there is inflation — that is, rising price levels — he must slow the increase in the supply of money, but increase it nevertheless.Professor Friedman himself seems to have been aware of his lack of business cycle theory when he admitted "little confidence in our knowledge of the transmission mechanism." He had no "engineering blueprint," but merely an "impressionistic representation" that monetary changes are "the key to major movements in money income." His "gap hypothesis," therefore, is designed to fill the gap of theory and allow for the time it takes for all adjustments to be corrected. He sought to time the recession without explaining it.The increasing importance of government obligations as bank assets gives great confidence to monetarists; however, it creates anxiety because government obligations merely are receipts for money spent and savings consumed. Every budgetary deficit that creates more government obligations consumes productive capital and thereby hampers economic production. The growing importance of government obligations in bank portfolios actually signals government consumption of economic substance and wealth. To commercial banks, it means the loss of real property securing the loans, and the addition of yet more government promises to tax, print, and pay. A banking system built primarily on government IOUs is in a precarious condition.What Professor Friedman called the "dethroning" of gold was, in truth, the default of central banks to make good on their legal and contractual obligations. Following the example set by the United States on August 15, 1971, central banks all defaulted in their duty to redeem their currencies in gold. The default, unfortunately, did not bring stability and prosperity; it opened the gates for worldwide inflation. It made the US dollar the world currency, elevated the Federal Reserve System to the world central bank, and inundated the world with US dollars.

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CommunityFDL Main Blog The Pecora Committee in Context: The Myth of the Banking Culture Bill Moyers posed the exact right question last week: “Is it time for a commission to investigate today’s Wall Street crash?” He also invited his listeners to respond to the question: “What would you ask new Pecora hearings to investigate?” A mere glance at today’s New York Times offers plenty of reasons for a modern “Pecora Committee” to investigate the causes of the Crash. As I write, the lead story at the Times Website informs us that, “U.S. Economy in 2nd Straight Quarter of Steep Decline,” with GNP shrinking at a 6.1 percent annual rate, “worse than economists predicted.” The print edition of the Times today carried the no longer startling news that unemployment has grown from 11.1 million in December to 13.2 million in March. Meanwhile, the lead story in the Business section announced that, “Feeling Secure, Some Banks Want to be Left Alone.” What that means, of course, is that the bankers want to go back to giving themselves whopping pre-Crash bonuses; continue to rip-off credit card consumers with fine print and surprise rate increases; and haven’t the least intention of letting their Congressmen change the laws to allow a bunch of bankruptcy judges to modify the mortgage terms of desperate homeowners. Any why should they? As the economist Simon Johnson—a guest on Moyers’ Friday night program—keeps reminding us at his blog, The Baseline Scenario, the nation’s Banking Culture has all but overwhelmed its political culture. Like any true Third World country, the United States of America is in the grip of a banking elite. It matters not that the same elite recently led the entire world to the edge of the abyss. The myth of the Banking Culture—“Too Big to Fail,” too powerful to be joined in battle—lies at the heart of the crisis we face today. The need to shatter that myth is why the times demand a modern Pecora Committee. First, though, let’s examine the origins and context of the original “Pecora Committee.” Consider. By 1932, almost 13 million Americans were unemployed. That, incidentally, is the same number as today, though measured as a percentage of the population (125 million at the time) the situation was far graver still then. Of course, by 1932, the economic crisis was three years old—and had only deepened over time. The Crash of 1929 had led to the Depression. Government, meanwhile, was all but paralyzed. Contrary to the faux-revisionist views of the Wall Street Journal editorial board and my old friend Amity Shlaes, Herbert Hoover was hardly an economic interventionist. The reality, as Ron Chernow tells us in his excellent “The House of Morgan,” was just the opposite. Hoover, Chernow notes, “refused to renounce economic orthodoxy and mount a vigorous attack on the Depression.” Rather than act, the dour Hoover preferred to sit and stew. At least we don’t have that to deal with today. When Hoover did act, it was to create the Reconstruction Finance Corporation (the RFC), which, in Republican hands, proved, as Chernow says, “a major boon to the Morgan interests,” making loans “to banks, railroads, and other hard-pressed businesses.” The once mighty railroad barons, the feckless Van Sweringen brothers, —deeply indebted to Morgans—borrowed $75 million from the RNC. Needless to say, the bank didn’t object to that government bailout. By the autumn of 1932—with the presidential election on the horizon—Hoover, as Chernow says, “presided over one last humiliation—a nationwide banking crisis.” The fact was that the past three years’ deflation had eroded the collateral behind loans. (Does this sound familiar to anyone?) The banks called in the loans—all too like the banks of today with their unyielding attitude towards modifying home loans—with the result that the slump only worsened. When Franklin Roosevelt trounced Hoover in November, the bankers—the big bankers, the Wall Street bankers—did not, at first, go into mourning. Roosevelt, with his pedigree—Hudson Valley Dutch aristocracy, Groton, Harvard—was one of their own. So they thought. Morgans advanced one of their own, the handsome Russell Leffingwell, for a high Treasury post under Roosevelt. A Morgan partner in the new administration would be, as Chernow says, “a litmus test of Roosevelt’s financial soundness.” (Does this not also sound familiar today?) The reason Russ Leffingwell didn’t make it into the inner circle of a Roosevelt Treasury: The man Pecora, who would, more than anyone shatter the myth of the Twenties Banking Culture. How this came about and why it came about will be the subject of my next post. Stay tuned. Meanwhile: Read your Chernow. View the Moyers program online. Check out “The Baseline Scenario.” And, above all, take time to ponder Simon Johnson’s “The Quiet Coup,” in The Atlantic. That’s a start. [This is part one of a series on The Pecora Committee and its modern implications.] Obama on Torture Next post Obama on Torture: "It was a Mistake" John Anderson The Pecora Committee in Context: The Myth of the Banking Culture

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Government prepares to sell GM stock The Treasury Department said that it will sell its remaining stake in General Motors by early 2014, writing the final chapter of a $50 billion bailout that saved the auto giant but stoked a heated national debate about the government's role in private industry. DETROIT -- The U.S. government's short stint in the auto business is coming to an end. Taxpayers are sure to lose billions of dollars in the deal, even though GM has bounced back from the darkest days of 2008, when it almost ran out of cash. The company has racked $16 billion in profits during the past three years and added more than 2,000 American workers. Now GM is looking forward to the day when it can shed the stigma of government ownership and bury the derisive moniker of "Government Motors," which it says kept customers away from dealerships. "This is very attractive to the company and to our shareholders," GM Chief Financial Officer Dan Ammann said. The deal is "obviously good for the business in terms of continuing to remove the perception of government involvement in the company, which is going to be good for sales." When the government sells its last GM shares, the Treasury Department projects that autos will be the biggest money-loser of all the corporate bailouts connected to the Great Recession. The government already lost more than $1 billion on the bailout of Chrysler, which has repaid all its loans. "There should be no expectation about getting back the taxpayers' money," said Phillip Swagel, professor of public policy at the University of Maryland and a former assistant treasury secretary under President George W. Bush who authorized the first installment of GM's bailout. Under the deal, GM will spend $5.5 billion to buy back 200 million shares from the Treasury at $27.50 each, with the sale closing before year's end. That will leave the government with 300 million shares, or a 19 percent stake, which it plans to sell during the next 12 to 15 months. GM will fund the deal from its cash balance, which at the end of September was close to $32 billion. The Treasury Department has held the stock for more than two years while awaiting a better price. It issued a statement Wednesday that said the bailout protected the business at a critical time. "The auto industry rescue helped save more than a million jobs during a severe economic crisis," said Timothy Massad, Treasury's assistant secretary for financial stability. "The government should not be in the business of owning stakes in private companies for an indefinite period of time." Treasury officials declined to answer questions from The Associated Press about why the government is selling now. The government clearly waited until after the presidential election to unload the stake and close the bailout, which was a contested issue in the campaign between President Barack Obama and Republican challenger Mitt Romney. Yet the sale comes as U.S. auto sales are rising, and many analysts predict a higher GM stock price in the coming years. GM shares sold for $33 each when the company returned to the public markets two years ago. Analysts expected further growth, and the shares rose shortly after the sale. But they fell dramatically early this year as the U.S. economy slowed and Europe headed toward recession. Citi analyst Itay Michaeli said the government ownership has held down the stock price because investors feared the Treasury would flood the market with big blocks of shares. The government, he said, is probably expecting a big price bump because of the GM buyback. "The thinking is perhaps you sell some of it now, that starts to lift the overhang and that potentially allows a better exit (price) for the remaining shares," he said. GM will buy the 200 million shares at $27.50 each, about an 8 percent premium over Tuesday's closing price of $25.49. The shares shot up more than 9 percent Wednesday to $27.91, the highest price of the year before falling back somewhat. Breaking even would require selling the remaining 300 million shares for an average of about $70 each -- more than double the current trading price. The government bailed out GM during the financial crisis in 2008 and 2009, when the economy teetered on the brink of a depression. Without government help, the wheezing automaker would likely have been auctioned off in pieces. At the time, GM was a sick company, racking up more than $86 billion in losses since 2005. It had $53 billion in debt, burdensome labor contracts and a weak lineup of cars at a time when global markets were shifting to smaller vehicles. Even during GM's 2009 bankruptcy, government officials said they never expected to get all the bailout money back. Former auto czar Steve Rattner conceded in 2009 that the government would lose billions bailing out Chrysler and GM. But he said saving thousands of jobs and keeping the industrial Midwest alive was worth the money. The government sold 412 million shares in the 2010 initial public offering. The shares rose shortly after the IPO, but then slid as the U.S. economic recovery faltered and Europe's economy took a turn for the worse. As the shares fell, the government balked at further sales. Even with the government ownership, GM has made money for 11 straight quarters. But there are signs of trouble. It has lost money in Europe for a dozen years, and its U.S. sales aren't growing as fast as competitors or the overall market. The company has never been prohibited from paying a dividend to shareholders, but so far has decided against it. Government-ordered pay restrictions will remain in effect until the Treasury completes the sale of its remaining 19 percent stake. CEO Dan Akerson has complained the pay limits have hurt the company in its efforts to recruit top talent. Although GM is paying a premium for the government shares, GM's other shareholders could benefit because the number of shares on the market will be reduced about 11 percent. That should increase the value of the remaining shares. The bailouts of GM and rival Chrysler were part of the Troubled Asset Relief Program created by Congress to save banks during the 2008 financial crisis. So far, the government has recovered 92 percent of the $418 billion in funds disbursed through the TARP. Last week, Treasury sold its final shares of insurance giant American International Group, which had received the largest amount of government support. The government actually made money on its bailout of big banks, and it expects to recoup all but $1.8 billion of the $14.6 billion supplied to smaller banks. But in the end, TARP programs are expected to lose $42.1 billion, including a $45.6 billion loss on programs supporting homeowners who are battling foreclosure. Mark Zandi, chief economist at Moody's Analytics, said Treasury's estimate of final losses from TARP is overstated because much of the money for homeowners will never be used. Private economists rated the TARP effort as an unqualified success in stabilizing the banking system during the crisis. "It was a slam-dunk success," Zandi said. "It was vitally necessary and proved to be a key to ending the financial panic and jump-starting an economic recovery." He expects the final government loss on TARP to be $24 billion. "No one liked bailing out the banks," Zandi added. "But without a banking system on solid ground, the economy would have never found its footing."

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USCANADALog In Lambert Private Equity to invest $45 mln in K2 Design & Strategy By Iris Dorbian Lambert Private Equity has agreed to provide $45 million to K2 Design & Strategy. K2 Design & Strategy is an advanced analytics and digital innovation firm. CHICAGO, April 16, 2014 /PRNewswire/ — K2 Design & Strategy, Inc., (the “Company”) has entered into a USD $45 million equity subscription facility with a leading private equity investment firm, Lambert Private Equity LLC (the “Investor”). The company plans to list initially on the OTCBB or equivalent exchange. K2 Design & Strategy, Inc. is an advanced analytics & digital innovation company; bringing advanced technologies to market which enhance performance of high stakes teams in complex business environments. The company is led by George C. Pell, Founder, Principal and CEO of the company. Mr. Pell brings over 20 years of success in digital innovation, technology strategy, executive consulting, and performance strategy for many of the largest corporations in the world. Mr. Pell shared, “Having Lambert Private Equity as a strategic partner enables our team to develop some of the most advanced technologies in the world; while initiating an entirely new market segment specializing in optimal potential for the high stakes enterprise.” The company may draw on the facility from time to time, as and when it determines appropriate in accordance with the terms and conditions of the Investment Agreement. The maximum amount that the company is entitled to put to the investors is no more than $4,000,000 per draw down notice. Per the agreement, the company agreed to issue 128,572 shares of common stock to the investor with an option to purchase an additional 6,428,572 shares of common stock. Dr. Mishe Harvey, the Chief of Innovation & Strategy for the company stated, “This funding agreement with Lambert Private Equity LLC serves as a catalyst for K2 Design & Strategy to begin its acquisition “roll-up” growth strategy by enabling the company to now aggressively lock in new acquisition targets. This is truly a very exciting time for us.” K2 Design & Strategy, Inc. is now aggressively pursuing additional strategic acquisitions to enhance shareholder value and seeking companies in the software development, mobile technology, or cloud computing sectors with the following criteria: Minimum EBITDA of USD $2 Million Fully audited financials or able to be audited quickly For further information please visit www.k2-ds.com. About Joseph Lambert: Lambert Private Equity LLC http://www.lambertfunds.com Lambert Private Equity LLC invests, through its unique equity and equity-linked structures, in publicly traded companies around the globe. Lambert Private Equity LLC generally looks to invest amounts from $10 million up to $500 million directly into listed companies for a variety of activities including working capital, accretive EBITDA acquisitions and other growth opportunities. Lambert focuses on equity investments in public companies as well as private companies that will be listed on a securities exchange within six months of a funding commitment. Lambert Private Equity LLC has no outside investors and is considered a private group run by its principals, similar to a merchant bank that invests its own capital and as such is seeking capital appreciation through the identification and funding of growth companies. Lambert Private Equity LLC is not an underwriter and the funding it provides is based on specific terms and conditions, including the price and volume of the company’s shares once the company is publicly listed. Lambert Private Equity LLC does not provide volume, liquidity, investor relations or public relations services.

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We noticed you have Javascript disabled. Some features may not work correctly. For the full site experience, please enable Javascript on your web browser. Important Security Alert: Apple Safari browser. Click here for more information. Notice: Enhancing our Anti-Money Laundering Procedures Ghana BrazilEN | Português We are one of the world's most international banks, with over 1,700 branches, offices and outlets in 70 countries across the globe. Get to know us » Login Menu Who We Are Americas News and Media Straight2Bank Online Security Standard Chartered Completes Move to Expanded Space At 1095 Avenue of the Americas Google Standard Chartered Completes Move to Expanded Space At 1095 Avenue of the Americas New York, 10 April, 2011 Standard Chartered Bank has completed the relocation of its Americas headquarters to 1095 Avenue of the Americas in midtown Manhattan. The bank's 500 New York-based staff now occupy three floors of the Met Life building totalling 107,000 square feet. The new work space includes a state-of-the-art trading floor with floor-to-ceiling windows along with expanded client facilities and staff meeting space. Standard Chartered is aiming for LEED® gold certification for the space, which features energy- and water-efficient systems, a "living wall" of greenery linking the three floors and extensive use of recycled materials. "I am extremely proud of our new office space, which fuses cultural influences from Asia, Africa, the Middle East and South America with stunning New York architectural design and cityscapes," said David Stileman, CEO of Standard Chartered, Americas. "As we continue to grow in the Americas, this space will not only accommodate us, it will enable us to work more collaboratively and to live our values regarding the environment and sustainable business practices." The Met Life Building is owned by the Blackstone Group, with Equity Office acting as the leasing agent. For more information, please contact: Julie M. Gibson Corporate Affairs, Americas Tel: +1 646.845.1114 E-mail: [email protected] Standard Chartered - leading the way in Asia, Africa and the Middle East Standard Chartered PLC is a leading international bank, listed on the London and Hong Kong stock exchanges. It has operated for over 150 years in some of the world's most dynamic markets and earns around 90 per cent of its income and profits in Asia, Africa and the Middle East. This geographic focus and commitment to developing deep relationships with clients and customers has driven the Bank's growth in recent years. With 1700 offices in 70 markets, Standard Chartered offers exciting and challenging international career opportunities for its 75,000 staff. It is committed to building a sustainable business over the long term and is trusted worldwide for upholding high standards of corporate governance, social responsibility, environmental protection and employee diversity. The Bank's heritage and values are expressed in its brand promise, 'Here for good'. About Standard Chartered Bank in the Americas Standard Chartered Bank operates in 12 markets in the Americas, including the U.S., Canada, Mexico, the Caribbean, Argentina, Brazil, Chile, Colombia, Peru, Uruguay and Venezuela. The bank's primary function in the region is to facilitate trade and investment flows between the Americas and Standard Chartered Bank's core geographies of Asia, Africa and the Middle East. Standard Chartered's New York-based wholesale bank provides financial products and services to corporations, financial institutions and development organizations in the Americas. Wholesale banking comprises of Origination and Client Coverage, Transaction Banking, Financial Markets and Corporate Finance groups. Key products include trade finance services, cash management, treasury, foreign exchange and interest rate products, commodity finance, and structured import and export finance services. From its head office in Miami, the Standard Chartered Private Bank in the Americas offers its Latin America-based clients unparalleled access to the growth markets along with traditional capabilities in investment advisory, securities execution, trust and fiduciary services and portfolio management. The Private Bank in the Americas operates on an advisory center model, emphasizing the role of the trusted financial advisor and capitalizing on the global product strength and intellectual capital of Standard Chartered. For more information on Standard Chartered, please visit: www.sc.com. Here for good in the Americas Thought Leadership in the Americas Important Regulatory Notices Community Investment in the Americas We've operated for over 150 years in some of the world's fastest-growing markets. We aim to lead the way in Asia, Africa and the Middle East. Learn about our global business » Here for good Here for good is the essence who we are. It's about sticking by our clients and customers through good times and bad, and always trying to do the right thing. Find out how we are Here for good » SCB Home Standard Chartered Completes Move to Expanded Space At 1095 Avenue of the Americas Our Global Website Global About Us Global Sustainability Global Media Centre Straight2Bank: Scroll Up: © Standard Chartered 2015 Data Protection & Privacy Policy March 3rd 2014 A material security flaw has been discovered affecting Apple devices. If you are using an Apple product (desktop, laptop, iPhone, iPad), please do not use the Safari browser to perform your online banking or Straight2Bank transactions, especially from public or unsecured Wifi networks (cafes, hotels, public lounges). Apple has released security patches for iPhones, iPads and Mac computers and you are advised to install them promptly. In the meantime, you can use an alternative browser or use the Breeze App for your Online Banking transactions.

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http://blogs.wsj.com/eurocrisis/2012/02/21/quick-guide-to-the-greece-rescue-deal/ The Euro Crisis Quick Guide to the Greece Rescue Deal Euro-zone finance ministers early Tuesday agreed to an ambitious €130 billion rescue deal that will see Greece’s private creditors take an even larger loss in order to put the debt-laden country on a sustainable footing and avert a catastrophic default. The market reaction was muted as several hurdles to a final agreement remain and many are still uncertain that Greece will be able to stick to the terms of the deal given that its economic situation is continuing to deteriorate. Private-sector participation: Debt exchange calls for private investors to waive 53.5% of their principal under a massive debt swap that will cut Greece’s outstanding debt stock by EUR107 billion. That goes beyond a 50% haircut agreed at a summit in October. Greek Debt: The deeper private-sector haircut will help bring Greece’s debt as a proportion of gross domestic product to 120.5% by 2020 from over 164% currently. That appears to satisfy the demands of the International Monetary Fund, which had insisted that the final targeted debt ratio be as close to 120% as possible in order for it to participate in the bailout. ECB Holdings: The agreement spares the European Central Bank, as well as national central banks, from taking any losses on their holdings of Greek debt. Instead, the ECB will disperse any profits it makes on the portfolio of bonds it holds under its Securities Markets Program. National central banks in the euro zone will transfer to Greece any profits arising from those Greek bonds they hold as investments. Rates: Greece’s official creditors agreed to reduce the interest rate payable on loans disbursed under the first Greek bailout program, approved in 2010, a move that could shave EUR1.4 billion off Greek debt. Oversight: Greece had to agree to a permanent representation of official creditors in Athens overseeing a blocked account for receiving aid payments. This account will favor debt servicing and availability will be subject to Greek compliance with budget targets. Enough of Greece’s private-sector investors still must agree to the new terms of the restructuring, which requires them to take a deeper writedown on their Greek bonds than previously expected. The key will be how many will be forced into accepting the deal. A number of euro-zone parliaments, including Germany’s Bundestag, must agree to free up their share of the public funding for the new Greek bailout. THE WORD FROM EUROPE IIF’s Dallara: A large number of Greek creditors are expected to participate in a debt restructuring deal that will contribute to restoring confidence in the euro zone, said Charles Dallara, managing director of the Institute of International Finance. “The lack of resolution of the Greek issue has hung over euro zone for the better part of two years now,” he said, adding investors all over world have been deeply concerned. EU’s Barroso: The deal “is an essential step forward for the country and for the euro area as a whole”. The agreement “closes the door to a scenario of an uncontrolled default. I am very confident a high number of private sector bondholders will participate,” said European Commission President Jose Manuel Barroso. Denmark’s Vestager: The aid package is a “balance between solidarity and discipline,” and “a very tough agreement,” said Danish Economy Minister Margrethe Vestager. Netherlands’ de Jager: “We’ve seen Greece derailing several times in the last two years,” said Dutch Finance Minister Jan Kees de Jager. “Implementation risks are very high in the case of Greece.” EURO REACTION The euro gave up most of its overnight gains in European trading Tuesday as investors fretted over Greece’s capacity to make the savings required by the deal. At 1315 GMT Tuesday, the euro traded at $1.3222 against the dollar, down 0.5% from its earlier high of $1.3293 during Asian trading. THE WORD FROM MARKET WATCHERS Barclays Capital: “So many hurdles remain. The focus will now be on the implementation of the private-sector involvement and the participation rate which, if not enough, could lead to a credit event. The details of the deal will be resolved over the next few weeks and an orderly Greek default cannot be completely ruled out. Watch euro-area yields for signs of whether investors think the problems are contained in Greece, and expect the 100-day moving average of $1.3310 to hold for the euro for now. “ ING: “It looks like a deal, it walks like a deal, it almost is a deal, but the crisis marathon is not over yet. While Greece should be saved, at least for the next couple of months, the feeling of relief is not likely to last for long. So far, the return of economic growth in Greece is largely based on the principle of wishful thinking. The combination of more austerity, social unrest and European impatience could become explosive, with a high risk that the Greek crisis could still derail. “ HSBC: The end of the process has been reached and it blows away all those conspiracy theories about a Greek default and/or a euro-zone break up. While the news isn’t necessarily a reason to buy the euro, it certainly isn’t a reason to sell it either. It will be interesting to see the U.S. reaction later. A key level to break Tuesday would be $1.3320. What the euro bears will be worrying about now is implementation risk, but overall this is a win for the bulls. More reactions from economists and analysts. Guide to the Greece deal Peripheral Europe's Treadmill to Hell Will Germany Be Richer Than the U.S. by 2030?

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Frank Holmes: The global real gross domestic product [GDP] annual growth rate has declined from a peak 5.4% in 2010 to 3% last year. With the U.S. economy turning up, constructive news out of China and new leadership in India, the global GDP could rise to 3.5%. This is very positive for commodities from energy to copper to gold. Modi's goal of 400 million people having access to electricity would mean a lot of copper demand and energy consumption. TER: Aside from China and India, what energy resource areas are poised to do better in the second half of 2014? BH: We are very constructive across the spectrum for energy. Oil prices are moving above $100/barrel [$100/bbl], whether it's West Texas Intermediate [WTI] or Brent crude, and that's going to be very positive for North American energy companies. We are seeing more signs of instability in key producing areas in the Middle East, including Libya and Iraq. That is going to weigh on global supply and keep oil prices well supported. Companies with production in geopolitically safe areas should do quite well in this environment. We are very positive on natural gas. There has been some complacency about refilling storage after the extremely cold winter, and that should support natural gas prices for the near future. As we get into the summer months, cooling demand could strengthen gas prices again. TER: We recently published an interview with T. Boone Pickens, and he is very optimistic about the shale oil space and the possibility of oil independence for America. Do you share his optimism? BH: We sure do. I'm not quite sure about energy independence, but we are certainly making inroads in that direction. Within our portfolio, we are investing heavily in the shales through upstream oil and gas companies, oil services companies and equipment companies. Shale is transformational; it is really changing the energy landscape. Almost overnight, companies are developing resources that are long-lived and repeatable. Remember, only five years ago we were talking about peak oil. Now, we're producing roughly 8.4 million barrels per day [8.4 MMbbl/d]. That's the highest we've seen since the mid-'80s. It is a trend that is going to continue. At present, the Permian Basin is developing just as the Bakken and the Eagle Ford did a few years ago. The Delaware Basin, in particular, could be larger than what we've seen in the Bakken and Eagle Ford combined. It looks like we will be able to unlock millions of barrels of reserves, and increase production from that historic base. The Delaware is a very exciting example of how technology, innovation and investment have changed the conversation over the last five or six years. TER: With all that oil and gas coming out of the shales, do you see an opportunity for money to be made in refiners? BH: We have already had success investing in refiners. San Antonio is home to two of the largest independent refining companies in the country, so we follow that area closely. We also see opportunities for Gulf Coast refiners, such as Valero Energy Corp. (NYSE:VLO). If inventory levels continue to rise, you're going to see a discount between Louisiana light sweet oil, WTI and Brent. With that spread, refiners with Gulf Coast exposure are able to source lower feedstock costs for crude oil, refine it into gasoline and diesel, then sell it at competitive global prices. That is very good for margins. And it could be sustainable. TER: What about the majors versus the junior explorers and producers? Which has better upside? BH: I think there are opportunities in all of the above. Some majors have tremendous resources. Suncor Energy Inc. (NYSE:SU), in the Canadian oil sands, is going to be producing for the next 40 years or so. The company has put a lot of money into infrastructure to grow production. And it pays a nice dividend yield. It looks attractive on just about any metric. Juniors are investing in shales domestically and internationally. There are opportunities throughout the market cap spectrum. That is why we take a diversified approach, and look to invest within all those areas. FH: I love many of the royalty companies, such as San Juan Basin Royalty Trust (NYSE:SJT) and BP Prudhoe Bay Royalty Trust (NYSE:BPT), which offer attractive high yields, growth and rising oil and gas prices. TER: What companies in the junior oil and gas exploration and production space are poised to take advantage of these trends? BH: We have some junior companies that have grown so much they aren't very junior anymore. Pacific Rubiales Energy Corp. (OTCPK:PEGFF) [PRE:TSX; PREC:BVC] is now more of a small- to mid-cap company trading in the $6­-7 billion [$6-7B] range. But we still see it as extremely cheap. Other operators in Columbia, such as Gran Tierra Energy Inc. (NYSEMKT:GTE), look attractive to us as well. BH: Other areas, such as Kurdistan, have more oil and more proven reserves than Mexico. It's a huge resource space. Gulf Keystone Petroleum Ltd. (OTCQX:GUKYF) [GKP:LSE] is drilling for oil in an area with huge reserves. It has the potential to eventually produce as much as 100,000 barrels per day. We think there's tremendous opportunity there. TER: Are you worried about the conflict in Iraq? BH: That is something we factor in, but Gulf Keystone is working in the north, where it is safer. At some point the dust will settle, and we will get production out of Iraq and Kurdistan. Therein lies the opportunity. If you take a long-term view and buy assets when nobody else wants them, they are cheap. That is how you can create alpha-by investing within the context of a portfolio so you're not buying a large chunk. You only need to buy a small amount of a stock like Gulf Keystone for it to make an impact. TER: Any names closer to home that you like? BH: We used to own Raging River Exploration Inc. (OTC:RRENF) [RRX:TSX.V]. We almost doubled our money, so we took profits as we entered the second quarter, which seasonally can be a little slow for the juniors. We will look to reload on that name as we get into the fall, and in other names as well. TER: The Raging River stock price really went up in the last six months. What was pushing that? BH: We have seen a resurgence in the junior space in Canada, which has been neglected for the last two or three years as development in the U.S. shale plays have taken hold. Now we are seeing a bit of a handoff back to Canada. Horizontal drilling is developing in the Montney and Duvernay formations, and we're seeing companies operating there rise to the top. They are starting to do very well with their own unconventional drilling. We have seen value unlocked, and it's very exciting. A number of companies in the sub-$1B or $500 million market-cap range are starting to grab hold. TER: What other contrarian opportunities do you see out there? BH: Large oil equipment and services companies are an opportunity. Companies like Schlumberger Ltd. (NYSE:SLB), Halliburton Co. (NYSE:HAL) and Baker Hughes Inc. (NYSE:BHI) are bundling up smaller companies to provide a one-stop shop. That is attractive. Pressure pumping prices are starting to move up. On the drilling side, more rigs are being contracted into the Permian Basin. A company like Patterson Energy Inc. (NASDAQ:PTEN) should benefit from that. A smaller operator, such as the Canadian drilling company CanElson Drilling Inc. (OTC:CDLRF) [CDI:TSX.V], also has exposure to the Canadian sands and the Permian Basin. It is benefiting from those two growth areas. Moving down the market cap spectrum, Xtreme Coil Drilling Corp. (XDC) is doing quite a bit in the Eagle Ford. Higher-spec coil tube drilling is starting to catch on down in that area. I recently returned from a site visit with Xtreme Coil in the Eagle Ford, and it looks like the company is doing quite well. Xtreme recently announced it is going to expand its XSR coil tubing fleet in the U.S. by six additional units, costing $54M. TER: The Global Resources Fund [PSPFX] was up almost a percent for the first three months of 2014, after a couple of negative years. It's tilted strongly toward oil and gas. Is that part of a strategy to move toward energy stocks? BH: We are overweight in oil and gas. We have some conviction in that area, and we feel like there's more running room. We've shifted at the margin, but we're holding steady. We're in an environment where we might see more volatility in the summer months due to instability overseas, so we are keeping a little bit of dry powder. TER: Do you have any advice for readers looking to adjust their energy portfolios going into the rest of 2014? BH: I would focus on the shale plays; the companies in the core regions within these plays. There are opportunities in the juniors-in the small- and mid-cap spaces in North America-that should continue to do well. There are probably attractive opportunities overseas as well, so keep an eye out for those. Overall, it's going to be a very constructive environment for energy investing. TER: Thanks to you both. This interview was conducted by JT Long of The Energy Report. Frank Holmes is CEO and chief investment officer at U.S. Global Investors Inc., which manages a diversified family of mutual funds and hedge funds specializing in natural resources, emerging markets and infrastructure. The company's funds have earned many awards and honors during Holmes' tenure, including more than two dozen Lipper Fund Awards and certificates. He is also an adviser to the International Crisis Group, which works to resolve global conflict, and the William J. Clinton Foundation on sustainable development in nations with resource-based economies. Holmes coauthored The Goldwatcher: Demystifying Gold Investing [2008]. Holmes is a former president and chairman of the Toronto Society of the Investment Dealers Association, and he served on the Toronto Stock Exchange's Listing Committee. A regular contributor to investor education websites and a much-sought-after keynote speaker at national and international investment conferences, he is also a regular commentator on the financial television networks and has been profiled by Fortune, Barron's, The Financial Times and other publications. Brian Hicks joined U.S. Global Investors Inc. in 2004 as a comanager of the company's Global Resources Fund [PSPFX]. He is responsible for portfolio allocation, stock selection and research coverage for the energy and basic materials sectors. Prior to joining U.S. Global Investors, Hicks was an associate oil and gas analyst for A.G. Edwards Inc. He also worked previously as an institutional equity/options trader and liaison to the foreign equity desk at Charles Schwab & Co., and at Invesco Funds Group, Inc. as an industry research and product development analyst. Hicks holds a master's degree in finance and a bachelor's degree in business administration from the University of Colorado. DISCLOSURE: 1) JT Long conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an employee. She owns, or her family owns, shares of the following companies mentioned in this interview: None. 2) The following companies mentioned in the interview are sponsors of The Energy Report: None. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment. 3) Frank Holmes: I own or my family owns shares of the following companies mentioned in this interview: None. I personally am or my family is paid by the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview. 4) Brian Hicks: I own or my family owns shares of the following companies mentioned in this interview: None. I personally am or my family is paid by the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview. 5) The following securities mentioned were held by the Global Resources Fund as of 6/17/14: Xtreme Coil Drilling Corp., CanElson Drilling Inc., Patterson Energy Inc., Schlumberger Ltd., Halliburton Co., Gulf Keystone Petroleum Ltd., Gran Tierra Inc., Pacific Rubiales Energy Corp., Suncor Energy Inc., Valero Energy Corp. and Baker Hughes Inc. 6) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts' statements without their consent. 7) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. 8) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise. The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article. Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.About this article:ExpandTagged: Macro View, Commodities, Alternative Investing, 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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Reaching the Unbanked in South AfricaStandard Bank and technology partner SAP worked together to serve the country's rural and unbanked population. Adding the ranks of the unbanked as customers can be a daunting task for any financial institution. For Standard Bank of South Africa, which serves a nation with a large unbanked population, the key to reaching this segment is treating them like any other banking customer, and realizing they cannot be served through traditional banking channels. Willie Stegmann, an executive with Standard Bank, discussed how the bank partnered with SAP to make significant inroads with South Africa's unbanked population, during a presentation at the International SAP Conference for Financial Services in London. According to Stegmann, 67& of the adult population in South Africa is unbanked, while 37% also live in rural areas. In many parts of the country, cash is still the preferred financial instrument. However, he added that despite those statistics the population is very tech savvy; most of the population has mobile devices and is "very comfortable with technology." To better capture this market, Standard Bank created what it calls the AccessAccount -- an account designed to be simple, convenient and comprehensive, Stegmann said. These accounts are offered as a "pay as you bank" model with no monthly fees, as well as premium accounts with different degrees of monthly fees and added services. To sign up new customers -- many of which live in rural areas -- Stegmann said "AccessAgents" are deployed in promotional tents or at local stores around the country, and can sign up new customers via a mobile device as long as they provide proof of residence and identification. "This information gets processed and sent to our back end," he added. "Accounts can be opened up in eight to ten minutes." Customers are then not only signed up for mobile banking, but also receive a debit card, which can be used at "AccessPoints," at around 5,000 locations throughout the country -- usually small retail shops, where customers can deposit or withdraw cash, make money transfers and even buy prepaid electricity or mobile telephone airtime. "New branch construction is very expensive, so we looked at other means of low cost distribution," Stegmann explained. According to Stegmann, 5,000 new customers per month have opened an AccessAccount since March 2012. Additionally, another 3.5 million legacy accounts were moved onto the Access system during a core transformation that took place over a weekend in April. The bank migrated on to a new SAP core platform, which Stegmann said will help Standard modernize and expand in certain areas, such as an improved CRM system. Standard Bank also faces some challenges and areas it is looking to improve upon. Stegmann said about 50% of new Access accounts are activated; the bank is looking to get that number in excess of 80%. Standard Bank is also looking to drive transactions on these accounts to an average of more than five per month per customer. Ultimately, what makes Standard's initiative to reach the unbanked successful is inclusion, Stegmann said. "If you are an Access customer, your are formally in our banking systems," he added. "We are not treating this customer any different; they are a standard Bank customer with access to a range of services." [See Also: Banking the Unbankable Requires a Targeted Effort] User Rank: Author7/11/2013 | 10:58:46 AM re: Reaching the Unbanked in South Africa It would be interesting to see if a US-based financial institution could be nimble enough to adopt these types of ideas to attract the underbanked population here. Also, I'm guessing there would be regulatory/security/risk management concerns with setting up mobile tents that might derail an effort like this even before it got off the ground. re: Reaching the Unbanked in South Africa With the growing rate of underbanked consumers here in the U.S. financial institutions should be paying close attention to the efforts around underbanked populations in other parts of the world and seeing how they can apply those lessons here. re: Reaching the Unbanked in South Africa It seems a bit skewed to talk about the unbanked as the outliers in a market where 2/3 of the population is unbanked. I wonder if there have been some lessons learned that the bank is applying to the smaller "banked" segment -- for example, are there efficiencies or profits in the types of products they are marketing to the unbanked that could be extended to the banked? Another question -- from a tech standpoint, are there particular challenges in supporting products targeted to unbanked customers? More security risks? Less data-related opportunities? Zarna Patel, re: Reaching the Unbanked in South Africa Untapped markets like South Africa, South East Asia, and parts of the Pacific might seem especially daunting with the differences in banking regulation in addition to the need for tailoring products to the community. There are a few reports on the number of companies trying to get a banking license in India. Even the number of available licenses are unknown. re: Reaching the Unbanked in South Africa I think Standard has found a creative way to reach customers by going directly to them in areas where they would shop, etc., as opposed to trying to get new customers to come to them. Deploying tents at local retail stores not only creates visibility, but it also saves the bank money in constructions costs, as it does not have to build permanent structures. Tower and Small Cell Infrastructure Track at TSCS 2016Gain Valuable Knowledge to Advance Your Career at GTECGet Prepared for Big Data Breaches at GTEC How to Prep for Millennials Being the Decision Makers, Are You Ready?Pros, Cons, & Considerations to Implementation ApproachesA Look at Tomorrow's Data Scientist

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Jim O'Neill: Expect ECB's Mario Draghi to deliver Bruno J. Navarro | @Bruno_J_Navarro Wednesday, 4 Jun 2014 | 1:29 PM ETCNBC.com Don't underestimate Draghi: Pro The FMHR traders share their predictions for just how aggressive European Central Bank President Mario Draghi will be at Thursday's meeting. Jim O'Neill, former Goldman Sachs Asset Management Chairman, weighs in. Don't underestimate Draghi: Pro Wednesday, 4 Jun 2014 | 12:01 PM ET Don't underestimate European Central Bank President Mario Draghi, Jim O'Neill said Wednesday. At a Chatham House event a day earlier, O'Neill, former chairman of Goldman Sachs Asset Management, noted that he had been sitting in the same exact seat in which Draghi made his "whatever it takes" comment two years ago. Read MoreStakes high for Draghi, ECB ahead of meeting: CNBC survey "And it reminds me, obviously having worked with the guy at some point, he shouldn't be underestimated," O'Neill said. "So, I think the key is what he says, as opposed to what they do. He knows what he's done by setting the market up to have some strong expectations to some rate cut and maybe more. I think the thing to really watch will be what he has to say about any follow-up moves and any subtleties about the importance of the euro." European equities closed lower a day ahead of the ECB meeting in anticipation of stimulus measures. Read More Europe stocks close lower ahead of ECB meeting show chapters India could outpace China next few years: O'Neill A close look at India's economy and global investment, with Jim O'Neill, former Goldman Sachs Asset Management chairman. India could outpace China next few years: O'Neill Wednesday, 4 Jun 2014 | 12:09 PM ET O'Neill said that he expected Draghi to parse words carefully. "In particular, my suspicion is what he'll try to create is the notion that the euro has no upside from here, so the market might as well sell the euro for him, which, of course, would take pressure off the ECB actually doing any more," he said. "That'd be my hunch." Read More US yields set to spoil ECB easing party for emerging markets O'Neill added that he expected a just-right response from the central bank. "Anybody that's got too-high expectations for the ECB hasn't been around for the past 13 years. I mean, that's not generally how they are," he said. "But that said, I think, as we saw two years ago with his 'I'll do whatever it takes,' when he really needs to deliver, Draghi has quite the capability of it. "On balance, I don't think he'll disappoint—whatever that means—tomorrow." Mario Draghi, President of the European Central Bank If whatever action Draghi takes falls short of what markets had expected, the euro could rise, but O'Neill said that he didn't foresee a long-term rise for the currency. Read MoreECB will be the biggest market mover this week: Pro "I guess tomorrow there's a chance for a small bounce in the euro if he doesn't say the right thing as such. But I think the really interesting thing is how weak the bounce would be because my hunch is we're starting in the beginnings of what could be a multi-month decline of the euro," he said. "One twenty-eight I kind of had in mind back in the spring, and I see no real reason to change that. But it could go further than that." O'Neill also said that India's election of reformer Narendra Modi as prime minister provided a good deal of potential for the subcontinent. "I think the markets were right to be really excited about him in advance of the election," he said. "Lost a tiny bit of the momentum the past few days now that things have settled down, but I really think this could be the beginning of a big rerating of India, not just within the emerging world but on the basis of India relative to the rest of the world, too." —By CNBC's Bruno J. Navarro. Follow him on Twitter @Bruno_J_Navarro. Bruno J. NavarroOnline Producer EUR1M=

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Market indexes approach record highs By Jasen Lee, Deseret News Follow @JasenLee1 Published: Tuesday, Feb. 5 2013 12:45 p.m. MST In this Tuesday, Dec. 11, 2012 file photo, specialist Christian Sanfilippo works on the floor of the New York Stock Exchange, in New York. Just a few years ago, the U.S. economy was at one of the lowest points in history with double digit unemployment and falling market conditions that left many wondering if it would ever recover. SALT LAKE CITY — Just a few years ago, the U.S. economy was at one of the lowest points in history with double digit unemployment and falling market conditions that left many wondering if it would ever recover. Well, according to some analysts, the answer is a resounding “yes.” It took more than five years, but it now appears that the stock market is poised to climb to a new all-time high. In October 2007, both the Dow Jones Industrial Average and the Standard & Poor’s 500 hit their historic record highs of 14,164 and 1,565 respectively. Both are currently within percentage points of their historic highs. "We’ve come a long way in what seems like a relatively short period of time,” said Jason Ware, market strategist with Albion Financial Group, a Salt Lake City-based money management firm. “It wasn’t that long ago that we were all concerned about American capitalism. (This) would be a very important milestone to hit.” The Dow Jones Industrial Average is a stock market index created by Wall Street Journal editor and Dow Jones & Co. co-founder Charles Dow. The average is named after Dow and one of his business associates, statistician Edward Jones. Founded in May 1896, the index shows how 30 large, publicly-owned companies based in the United States have traded during a standard trading session in the stock market. The S&P 500 is an index based on the market values of 500 leading companies that are publicly traded on the U.S. stock market as determined by financial services firm Standard & Poor's. The S&P 500 index — which began in its present form in March 1957 — is widely employed as a measure of the general level of stock prices. The Dow index closed at a 12-year low of 6,547 on March 9, 2009, after an intra-day low of 6,470 during the March 6 session. On the same day, the S&P index fell to a nearly 13-year closing low at 677. As the indexes approach their respective record-high levels, Ware said the milestone should indicate a strengthening economy after several years of recessionary struggle. “We seen a lot of improvement in corporate profitability,” he said. “But individual investors are not quite sure this (improvement) is real.” He said because of the economic uncertainly of the past few years, some people have been reluctant to participate in the recent growth in the stock market, but that could change when they realize how strongly the market has recovered. “There has been a lot of doubt and a lot of naysayers concerning the economy,” Ware said. “But if you look at the underlying economic data, it looks pretty encouraging.” He added, ”Things are much better than they were four years ago.” He said because the stock market “is healthier now,” there is reason to believe that the nation should begin to experience a period of “sustained economic growth” over the next few years. One of the main implications to the overall economy will be that the market will begin expanding, which could boost fortunes on many fronts, said Mike Cooper, David Eccles professor of finance at the University of Utah. “When the market goes up, economic sentiment goes up,” he explained. “We then usually see that firms in the U.S. economy start to invest more and start to grow more — which usually means more jobs.” He said that historically as the stock market has offered higher returns, corporate investment increases as they add “new factories, plants and employees.” Overall, Cooper said, the milestone would likely have a positive impact on the national economy. “When market volatility is low, there is not a lot of uncertainty,” he explained. “People are feeling better, sentiment is up … so all these things bode well for economic growth.” E-mail: [email protected] Twitter: JasenLee1 Recommended Stories Irony guy,yeah, since BO has devalued the dollar by so much, you have to move your assetsinto something else. the intrinsic value of the stock is not that much higher,just the dollar is set for a major plunge. Dow reaches record highs? I blame Obama... @lostSet for a giant plung based on what? Your very often repeated desire to seeObama fail? You have been predicting major failure for four years. Aren'tyou one of those that told is we would all be paying $5.00 a gallon for gasalready? Jasen Lee Jasen Lee is a journalist for Deseret News/KSL reporting primarily on business, technology and utilities. Having started in radio, he has reported at KCPW and Metro Networks in Utah as well as WTMJ in Milwaukee and WMAY in more ..

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> World War II (1939–45) What did the government do to control wartime inflation during World War II? Download Answers Asked on April 17, 2012 at 10:22 PM by sejjis12 The main thing that the government did to prevent this was to impose rationing using coupons rather than cash. By doing this, the government prevented people from bidding up the prices of whatever consumer goods were still available. Another thing that the government did was to borrow money. During the war, there were many war bond drives in which the government persuaded the people to lend money to the government. This soaked up much of the money that might otherwise have been the cause of inflation during the war. By reducing the money supply and by making it harder to buy goods using cash, the government prevented inflation. like mkoren (Level 2) Senior Educator During World War II, the government attempted to control inflation. Often during a war, prices would rise due to an increased demand for products by the military and/or a shortage of supplies needed to meet the demand. To protect the consumers, the government often takes steps to control inflation. During World War II, our government took steps to control inflation. The Office of Price Administration controlled the prices of non-farm products. The Office of Economic Stabilization controlled the prices of farm products. These agencies were established to keep prices from rapidly rising. Another action the government took was to ration supplies. People were limited in terms of how much they could buy each month of essential supplies like meat and sugar. People were issued ration coupons each month to buy these essential supplies. The government even had a national speed limit of 35 miles per hour to conserve gasoline. A third step taken by the government was to create the War Labor Board. This group mediated strikes so products would be produced and to prevent workers from demanding big pay raises that would fuel inflation. The government worked hard to keep prices under control during World War II. like kandi125 The continuous increase in the general cost of goods and services over a period of time, usually a year, is defined as inflation. During World War II, economies experienced high levels of inflation. Subsequently, the governments of these countries enacted measures to curb the rising inflation rate. 1. Decreased local production and importation. Governments placed restrictions on the production and importation of some goods, for example, appliances and cars, so as to focus the country's resources on the importation and production of arms and weaponry. They also reduced the number of goods available to consumers, thereby decreasing spending and the money supply in the economy. 2. Imposition of maximum price controls. Governments passed price ceiling laws which stipulated that the price of some items should not pass a stated amount. Suppliers, therefore, lessened their production levels at this stipulated price resulting in shortages of goods and services on the market. This was successful in causing less access to goods and as such lessening the chances of an increased money supply in the economy by way of local consumption. 3. Rationing coupons. The combined effects of the previously listed measures lead to a scarcity of goods in the economy. But governments worsened this problem through the irregular distribution of rationing coupons which were made necessary for purchases as the pricing system was eradicated to ensure money was not utilized in the economy in order to eliminate any further chances of increased inflation. Sources: http://en.wikipedia.org/wiki/Inflation http://www.enotes.com/topics/understanding-inflation What were the similarities between WWI and WWII? How did the rise of totalitarianism lead to WWII? Why did Japan invade China in 1937? To what extent did militarism contribute to the origin of World War II? Name the Axis powers and their leaders and the Allied powers and their leaders during World War II. What were the postive and negative impacts on American families during World War II? How did Hitler's foreign policy from 1933 to 1939 lead to war? How did the bombing of Pearl Harbor impact WWII either socially, economically, or politically?I'm... How did isolationism contribute to the march of aggression that led to World War II? More World War II (1939–45) Questions

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Transaction Banking: Evolution Rebecca Brace BUILD OR BUY? By Rebecca Brace As regulation and competition in the transaction banking space spur higher levels of technology investment, banks and vendors have found new ways of working together. The demands on global transaction banks for technology investment have never been greater. Over and above the need to invest in solutions to meet changing regulatory requirements, banks must also invest just to remain competitive. But with so many areas to invest in, they have revisited the way in which they develop their technology. Gone are the days when banks would build their own proprietary systems. Today global transaction banks are increasingly working with technology vendors to deliver corporate solutions in order to reduce costs and free their internal resources for more value-added services. “It’s becoming less feasible for banks to build rather than buy, both from a cost point of view and also in terms of resource capacity,” comments Robert Mancini, senior analyst at Celent. Mandatory spend falls into two categories, notes Rajesh Mehta, EMEA head of treasury and trade solutions at Citi Transaction Services. “The first is regulatory-driven, whether that’s in relation to Dodd-Frank or the Volcker rule or greater reporting requirements to central banks. The second element relates to infrastructure change such as SEPA [Single Euro Payments Area].” Banks have made heavy investments around providing data to companies to help them achieve straight-through reconciliation, notes Cindy Murray, treasury solutions executive for infrastructure, platforms and e-commerce at Bank of America Merrill Lynch. She adds: “Banks are really starting to invest in replacing their core platforms, and there’s a strong focus on the concept of a payment hub, which interfaces more easily with the bank’s internal systems as well as with clients.” BofAML has moved to a payment hub model and Deutsche Bank was one of the first big transaction banks to do so. Now, even Tier 2 banks are starting to move to hub solutions from external vendors for payments. There is also a growing focus on collaborative projects. For example, mobile payments system Google Wallet is a collaboration between Citi, Google, MasterCard, First Data and Sprint. Although most such solutions are designed for a wide customer base, in some cases banks are using vendors to support a specific corporate customer. “The banks come to us and say they have a challenge with one of their largest corporate customers, such as helping the corporate send the bank bulk files,” comments Marcus Hughes, director, business development, at Bottomline Technologies. Kevin Brown, global head, transaction services products, RBS, says the bank is using Clear2Pay to deliver its SEPA solution, rather than build an engine in-house. “Working with vendors can be cheaper as the vendor is already working on the solution,” he comments. “They have experience in the specific area of development, and as a result it means that we can deliver a solution which is faster to market.” Brown says leveraging vendors also helps future-proof systems. “Banks are really starting to invest in replacing their core platforms, and there’s a strong focus on the concept of a payment hub” –Cindy Murray, Bank of America Merrill Lynch Increased collaborat ion has change d the relationship between a bank and its technology vendors. “When we first started working with vendors, it was more of a transactional relationship,” says Rhomaios Ram, global head of product management and chief information officer, GTB, Deutsche Bank. “You would write a set of requirements, and you would kind of flip it over the wall and hope they turned up with what you wanted later. Invariably that ended in failure and disappointment, which is what drove a lot of the development proprietary in the first place. What we’ve discovered over time is that actually you have to treat vendors like they are part of your in-house IT department and work with them continuously. That way, you get a much better result.” As banks work more closely with technology vendors, interest in initiatives such as the Banking Industry Architecture Network has grown. Initiated in 2005, BIAN aims to create a flexible underlying technology architecture for banking services development. It now has more than 30 members, including banks, software vendors and systems integrators. “BIAN sets out to reduce the cost of integration and makes it easier for banks to take the risk of a transformation project,” explains Jens-Peter Jensen, head of banking architecture and technology at SAP. However, for most corporates, the key issue is not how it’s put together. As one treasurer at a technology company noted: “Most corporates do not particularly care where our banks source their technology. What matters is how well it works, and how quickly it can be updated to match industry trends. Generally, most of us would expect the technology to be more flexible if it is outsourced. But what matters is the result, not how it is achieved.” While much has changed in the past few years, GTB technology continues to evolve. Mobile is one important driver; the Cloud is another. Banks are only just beginning to become comfortable with the concept of the Cloud, but as this gains a greater foothold, new solutions will inevitably evolve. THE CHANGING WORLD OF TRANSACTION BANKING The world of global transaction banking has changed significantly in recent years, particularly since the 2008 global financial crisis. “Every bank that we know on the planet is investing in global transaction banking right now, whether that’s because it’s a more reliable part of the bank in terms of producing profit, or because interest rates have been low for so long that it’s hard to make money,” notes George Ravich, executive vice president at Fundtech. Poonawala, Deutsche Bank: It is important to see the big picture Banks are also restructuring their internal operations—for example, converging their cash management and trade finance activities. A survey carried out by financial technology provider Misys in 2012 found that 81% of bank respondents had already combined their cash management and trade finance businesses, and that only 10% had no plans to do so. How important are such changes to corporate clients? On the one hand, the quality of products and services offered by a bank are of greater interest to a company than the bank’s internal structure. On the other, it’s fair to say that the bank’s structure can have a significant bearing on the treasurer’s overall experience. “Clients want to work with individuals who can see the big picture,” observes Akbar Poonawala, regional head of global transaction banking for the Americas at Deutsche Bank. “It doesn’t make sense for one product person to walk into a client’s office representing the trade finance business, and as they are walking out, have a depositary receipt person walk in. Corporates expect coordination and understanding of the overall relationship and of their needs, as well as the ability to think beyond one product or one country. Tags Foreign Exchange This article appeared in issue January 2013 < Previous Article Advertisement

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Home » Blogs » REwired » Christopher Whalen: So what is today's nonbank business model? REwired Opinion, commentary and analysis on everything that makes the U.S. housing economy tick -- not to mention the ghosts in the machine, too. Written by HW's team of editors and reporters each business day. Christopher Whalen: So what is today's nonbank business model? Regulatory pressures amount to legalized extortion Christopher Whalen KEYWORDS CFPB Lawsky Nationstar Nonbank Ocwen Wells Fargo Whalen So far 2014 is turning into a mixed bag for nonbank financial firms focused on the mortgage sector. And it's not likely to change given the current regulatory attitude that amounts to nothing short of the legalized extortion of the mortgage business. The Consumer Financial Protection Bureau and other federal regulators put the brakes on bulk loan transfers from the largest banks. The New York State regulator halted the transfer of about $39 billion in unpaid balance of mortgage loans rights to Ocwen Financial (OCN) from Wells Fargo (WFC). Since last summer, federal regulators have quietly put in place a review process for loan transfers that requires both the seller and buyer of loans and mortgage servicing rights to gain approval. Most recently, the State of New York has said it has concerns about Ocwen Financial and Nationstar (NSM), two of the nation’s largest mortgage servicing companies. Echoing the disinformation of the consumer protection community, Benjamin M. Lawsky, supervisor of the state’s Department of Financial Services, said his office had found a “number of potential conflicts of interest” between Ocwen and other public companies with which it has relationships. He said that these relationships could “harm borrowers and push homeowners unduly in foreclosure.” What is happening with the nonbank financial firms at the state level is a continuation of the pro-consumer effort by various liberal groups and elected officials that has been underway since the start of the subprime crisis. As I told a housing panel at American Enterprise Institute in Washington, D.C. earlier this month, the cause of the subprime crisis was securities fraud – not the violation of consumer rights. Yet looking at the Dodd-Frank law, the state AG settlement and the regulations promulgated by the CFPB, you’d believe that the problems with consumers were the sole cause of the 2008 financial crisis. “One of the factors causing the foreclosure crisis to sludge along and even to large degree run-in-place, is the amount of misinformation that has been allowed to proliferate throughout the country,” notes Martin Andelman, host of the “Mandelman Matters” program and a keen observer of the industry. He continues: “As time passed and the crisis worsened, absent any factual communications to the contrary, the problems of correlation and causation started to multiply. Georgetown Law professor Adam Levitin and Tara Twoomy, in an effort to explain what was happening to homeowners, published a paper in 2010 titled Mortgage Servicing, that became the gospel for consumer attorneys and then homeowners across the country... and it remains so today. The problem is the paper's conclusions were wrong.” The basic thrust of the Levitan Twoomy paper is that mortgage lenders and servicers want to push home owners into foreclosure, gain control over the homes and thereby profit. This fundamental error -- that it is good business to push a homeowner into foreclosure – is repeated constantly in the Big Media and by regulators like the CFPB and the State of New York. Anybody with even the slightest idea about the world of distressed servicing knows that the law now requires that loan modification is the first order of business when a borrower gets into trouble. But apparently the folks at the CFPB and the State of New York, where it can take a creditor up to three years to foreclose on a house, have not gotten the memo. If you actually know the world of distressed servicing, there are three golden rules when it comes to a non-performing loan. First is keep the owner in the house. Second is protect the asset and make sure that maintenance, taxes and insurance are current. And third is to preserve the cash flow of the loan via loan modification, if possible. Keeping the family in the house and protecting the asset and cash flow, even with a substantial modification, is always better for the note holder, whether that is Uncle Sam or a private investor. The conflicting regulatory guidance coming from the CFPB and other regulators makes the job of the nonbank mortgage companies and the large banks problematic. This lack of visibility in terms of costs and business processes makes it very difficult for investors and research analysts to assess the operations of the nonbanks and make informed decisions as to whether or not to recommend these stocks to investors. For example, in the most recent conference call held by Nationstar regarding its 2013 financial results, Paul Miller from FBR Capital Markets asked CEO Jay Bray repeatedly how the bank is going to go from the current 6bp of profit on its servicing operations to the 11bp target that Nationstar has targeted for investors in its official guidance. Miller noted that the various “extraordinary” expenses and restructuring costs had reduced the profitability of Nationstar below 6bp. At one point, Bray and Nationstar CFO David C. Hisey contradicted each other, suggesting that they really don’t know whether the “extraordinary” expenses that have occurred in the past few quarters won’t continue in the future. Part of the reason that nonbank servicers such as Nationstar, Ocwen and Walter Investment (WAC) are not able to describe the “steady state” earnings and revenue of their businesses accurately for investors is that regulators like the CFPB and the State of New York are prescribing conflicting and often nonsensical regulations. For example, the Consumer Financial Protection Bureau is probing "zombie" foreclosures, a phenomenon first revealed by a report by Reuters last year: Zombie foreclosures result when banks begin a foreclosure — even going so far as to send the homeowners a foreclosure notice — but then abandon it, failing to alert the homeowners, who have often moved out, that they are still responsible for their vacant properties. Borrowers, who don't realize they still own their homes, are then left responsible for mortgage debt, taxes and upkeep. Technically, when a lender or servicer makes a decision to abandon a home, they are supposed to release the lien and notify the debtor. But if the debtor has already abandoned the property, what is the lender/servicer supposed to do? This situation is complicated by another CFPB rule, which states that lender/servicers may not foreclose on delinquent borrowers until they exhaust the possibility of modification or other alternatives short for foreclosure. The CFPB and many states also have “cooling off” rules that essentially prohibit the lender/servicer from contacting a borrower in default for as much as a year. In effect, these rules make it possible for a home owner in default on a mortgage with a fully perfected lien to live in the house for free for years depending on the location. The CFPB’s final regulations regarding mortgages, which became effective Jan. 10, 2014, prohibit mortgage servicers from beginning foreclosure proceedings until a mortgage loan is 120 days delinquent. During this period, the borrower may apply for a loan modification or other option and the servicer cannot begin foreclosure until the application has been addressed. What this means is that a home owner can default on their mortgage and basically live in the house for free for at least half a year before the bank can even contact the debtor. In states like Massachusetts, the home of Democratic Senator Elizabeth Warren, there is an additional cooling-off period set by state law that starts after the federal cooling-off period is done. Bottom line is that a Massachusetts resident can default on their mortgage and live in the house for free for a year before the lender/servicer is allowed to contact them. So now you know why the large banks don’t want to touch a new borrower with less than a mid-700 FICO score. Because of the pro-consumer legal regime in states like MA, home sales volumes are a fraction of pre-crisis levels. For this reason, secondary market prices for non-performing loans in states like MA, CT, NY and NJ are typically among the lowest in the nation. The examples above illustrate why the largest banks are intent upon transferring servicing on many legacy loans to nonbank servicers with “high touch” capabilities necessary to deal with delinquent mortgages. But the obvious question is whether or not the special servicers can make money dealing with distressed loans given the interference and conflicting laws and regulations coming from the CFPB. Indeed, even if servicers do everything right, it still may not be possible to satisfy the doctrinaire liberals that populate the CFPB and state regulatory agencies. Ocwen CEO William Erbey noted in the company’s most recent earnings conference call: "I'd like to address various comments I've seen in news reports regarding data on Ocwen's ability to serve distressed borrowers… Ocwen has completed more HAMP modifications than any other servicer, including Wells Fargo, Bank of America, Citibank and JPMorgan Chase, according to data from the U.S. Treasury. Indeed, we have done 20% of the total for all HAMP modification and 36 more -- 36% more HAMP modifications than the next highest servicer. Our performance on HAMP principal modifications relative to other servicers is even more impressive. We've accounted for about 39% of all HAMP principal modifications and exceed the number of the next highest servicer by a ratio of 2:1." Unfortunately, when you speak to federal and state regulators, they seem to believe that firms such as Ocwen are in business to exploit and abuse American consumers. The fact that keeping families in their homes clearly is the optimal business strategy for servicers does not seem to impress hardened political climbers such as CFPB chief Richard Cordray and his lieutenants. Indeed, at the end of the day, it appears that career politicians like Richard Cordray are not interested in fixing the mortgage market, but instead seem only interested in extracting settlements and payments from banks and nonbank firms alike. This legalized extortion is done in the name of “protecting consumers,” but the true objective of the exercise is clearly political. Until the attitude of regulators changes, it will be very hard for nonbank firms to be able to stabilize their businesses and describe them accurately for investors. Fed watching Big finance RealtyCheck trulia trends blog Christopher Whalen is an author and investment banker who lives in New York City. Whalen is the Senior Managing Director and Head of Research at Kroll Bond Rating Agency, where he also is responsible for financial and corporate ratings. He is a member of the Advisory Board of Weiss Residential Research in Natick, MA. He is the co-author of a new book scheduled for publication in the Second Half of 2014 by John Wiley & Sons: "Financial Stability: Fraud, Confidence & the Wealth of Nations"

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FOR IMMEDIATE RELEASEApril 4, 2008 Why the Treasury’s Plan for “Overhauling” the Fed Will Be Disastrous OAKLAND, Calif., April 4, 2008—This week, Treasury Secretary Henry Paulson announced his proposal to overhaul the Federal Reserve. Describing the blueprint not as a quick fix, but rather a long-term plan to address unnecessary complexities and to streamline regulatory processes, Paulson recommended adopting it gradually. While some critics argue that the proposal should go much further to revamp a system long overdue for major reform, and others have condemned supposed “deregulatory” aspects of the plan, the net effect will be the consolidation of regulatory burdens under the Federal Reserve, with some of its current responsibilities simply shifted to other federal agencies. Overall, it would be a stark expansion of the regulatory state. Independent Institute Senior Fellow William Shughart says that scrapping some agencies like “the Office of Thrift Supervision and the Commodity Futures Trading Commission while increasing the Fed’s regulatory responsibility of financial markets is reminiscent of the political overreaction to 9/11 that led to the creation of the Department of Homeland Security.” He sees the proposed federal Mortgage Commission and Office of National Insurance as “Orwellian Washington power grabs.” Senior Fellow Robert Higgs, author of the Institute’s recent book, Depression, War and Cold War (Oxford University Press), likewise sees this as just another bureaucratic takeover, opportunistically launched at a time of crisis. “This development is but the latest in a long series of missteps. The Fed is given great powers, which it misuses to disastrous effect. It then uses the disaster of its own making as the pretext for assuming even greater future powers. The only escape from this misbegotten monetary central planning is the separation of money and banking from state.” Unfortunately, the federal government does not recognize culpability. “The current troubles are the result of inflationary policies pursued by the Fed in the last five years which resulted in a money monopoly,” says Senior Fellow Alvaro Vargas Llosa. Although the government now seeks to avoid irresponsible lending and borrowing and the tying of globally traded mortgages to sophisticated financial instruments, such practices were “simply the market response to the perverse incentives created by the Fed's inflation of money.” The most troubling aspect of the plan explicitly charges the Fed with ensuring “market stability,” says Shughart. If Wall Street executives, the market’s best forecasters in such matters, fail to foresee such economic debacles, we can hardly expect better from politically appointed bureaucrats. Under the plan, according to Shughart, “the average consumer can expect higher fees on financial market transactions to help defray financial institutions' compliance costs,” as well as more paperwork and an erosion of the important distinctions between state and national banks, as well as “thrifts” and commercial banks. In such Institute books as Money and the Nation State and Depression, War, and Cold War, economic instability is shown to be directly traceable to the Federal Reserve’s central banking powers. As Higgs concludes, “In monetary matters, as in all other areas, the free market is superior to central planning for the promotion of the broad public interest.” # # #

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Hot airline stocks will continue to soar Michael Kahn Published: June 6, 2014 12:01 a.m. ET Opinion: Airlines have come a long way, and still have a ways to go MichaelKahn New York (MarketWatch) — Anyone who has ever paid baggage fees and “filled up” on a dinner of peanuts and diet coke knows that airlines have gotten it figured out. By squeezing travelers — literally and figuratively — they have seen their share prices beat the market handily over the past two years. The charts suggest it is not over yet. With all the consolidation and changes seen in the industry, some favorite measures of its performance can become obsolete. But we go with what we have and over my career it has been the NYSE Arca Airline index, also known as the XAL index for its options symbol root. First, a little history. The sector was moving sideways during the years leading up to the Sept. 11 attacks and, of course, that event sent the sector much lower. However, unlike most of the rest of the market, it never recovered. It managed a small gain as the 2003-2007 bull market began, but quickly settled back down into its private bear (see chart). In 2009, when the next bull market arrived, it finally started to improve and enjoyed strong gains that continue today. Late last year, the XAL index finally exceeded its 2003 high. It has indeed been a long road, and there is still a long way to go to get back to its pre-attack levels. It is no wonder this group is, pardon the pun, flying under investors’ radar. But with the index moving from a low of roughly 53 last August to its current trading above 85, its performance has been the market’s best-kept secret. While the S&P 500 climbed about 18% over that span, the airlines index gained 60%. TRADING STRATEGIES: JUNE MarketWatch photo illustration • A hidden gem leisure stock • 15 stocks for summer • Hot airline stocks will soar • See full Trading Strategies report for June Usually, this is just looking in the rearview mirror, but in this case, the trend is so strong and technical indicators so solid that there is a good chance for gains to continue. Perhaps the pace will slow a bit, and of course, the natural ebb and flow of a bullish trend can lead to a small corrective dip at any time. The latter does seem likely at this time. But if measurements of money flowing into the stock translate into demand for shares, then the overall bull market is far from over. I don’t want to project targets based on pre-2001 resistance levels because the industry is vastly different now than it was back then. And I don’t want to extrapolate the sector’s path based solely on past performance. But I do want to say that this group has a lot going for it, and maintaining some exposure to it is likely to be a good idea. Within the group, Delta Air Lines DAL, +1.14% is a clear leader, having doubled since last August. Technically, however, it seems a bit stretched. That’s not necessarily a bad thing, but it does add a bit more risk for new purchases. Its trailing 12-month price/earnings ratio of 3.2 even piques the interest of technical analysts. JetBlue Airways JBLU, +1.03% has a different story. In April, it broke down from a five-month trading range after its pilots voted to unionize. However, the losses were reversed within a few days, and the stock shot higher to follow the sector (see chart). In technical jargon, it was a breakdown failure, and that often leads to a breakout in the opposite direction — up, in this case. I like the fact that on-balance volume, which measures money flowing into the stock, also made an abrupt turn higher. Once the union news settled in, demand recovered in spades. As with the sector index, momentum indicators are extended here so a pullback is likely at any time. However, the long-term trend remains up, so a dip should create a good buying opportunity in the near future. The bottom line for most airlines is that short-term conditions present a bit of risk, but long-term rising trends are still intact. Most show continued inflows of money, or demand. They are not all in the same shape but the ones in rising trends look poised to keep going for weeks, if not months, to come. Michael Kahn writes the Getting Technical column for Barron’s Online, which analyzes sectors and markets. Follow him on Twitter@mnkahn. U.S.: Nasdaq: JBLU P/E Ratio8.1

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BUSINESS PEOPLE; Leader of Pension Fund Plans 'New Strategies' As he prepares to take over the country's largest private pension fund system, Clifton R. Wharton Jr. has not only been meeting with the organization's top executives, but with its chief critics as well. Dr. Wharton, the Chancellor of the State University of New York, was recently named chairman and chief executive officer of the two companies that provide retirement funds primarily for teachers and educators -the Teachers Insurance Annuity Association-College Retirement Equities Fund. With Dr. Wharton's appointment , many in academia felt they finally had a friend inside the huge $50 billion system, which has been accused of a creaky, inflexible conservatism. A number of educational groups have complained that the companies are blind to the new financial realities. And Dr. Wharton, who will assume his new post in February, conceded that many contributors have asked for wider options and more ''transferability.'' He said he planned to introduce ''new ideas and new strategies'' into the system, but he has not fully formulated those yet. Dr. Wharton hopes to bridge the gap between the fund's professional pension managers and its 890,000 contributors in more than 3,800 colleges, universities, independant schools and eductional associations. ''I've gotten hundreds of letters from friends and collegues congratulating me and, in the next breath, reminding me that I now control a large chunk of their net worth,'' Mr. Wharton said, laughing. Dr. Wharton, who is 60 years old, has no direct experience in pension fund management, but he has a doctorate degree in economics from the University of Chicago and has served on a number of corporate boards. He is currently a director of the Ford Motor Company, Time Inc. and Federated Department Stores Inc. The educator and scholar has a deskful of honorary degrees and awards, all attesting to the success of a career dotted with a remarkable series of firsts - from the first black announcer on the Harvard student radio station, to the first black president of the predominantly white Michigan State University. Today, Dr. Wharton is the first black chairman of the Rockefeller Foundation, and, with his latest appointment, he becomes the first black chief executive officer of a Fortune 500 service company. Inside NYTimes.com Health » Too Hot to Handle

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EconomieEtudes économiques par paysJapan: All on board for a new growth Etudes économiques par pays Perspectives économiques, analyses et projectionsEtudes économiques par paysQuestions monétaires et financièresFinances publiques et politique budgétaireProductivité et croissance à long termeRéforme réglementaire et politique de la concurrenceMarché du travail, capital humain et inégalitésPolitiques économiques pour la croissance verte Japan: All on board for a new growth Remarks by Angel Gurría, OECD Secretary-General, delivered for the launch of the Japan Economic SurveyTokyo, Tuesday 23 April 2013(As prepared for delivery) I am very happy to be back in Japan. This is indeed an exciting time. There is a feeling of optimism and dynamism in the air and this is reflected in recent economic indicators. Confidence is coming back, both in firms and households. This comes after a very difficult five years, with two major shocks -- the global financial crisis and the 2011 Great East Japan Earthquake, which the Japanese people confronted with great courage. Indeed, Japan now appears poised for economic expansion. We project real GDP growth of about 1½ per cent in both 2013 and 2014, on a calendar year basis. The expansion will be driven in part by exports, which will in turn boost business investment and employment, thus sustaining private consumption. This expansion is expected to bring an end to 15 years of flirting with deflation. Abenomics has changed the mood in Japan. Prime Minister Abe deserves much credit for this new spirit of optimism in Japan, an optimism based on the "three arrows" that he is launching to revitalise Japan and exit deflation. As we know from the 16th century samurai, one arrow can be easily broken. But three arrows will reinforce each other and resist any attempt to break them. Our Survey focuses on these three arrows. The first arrow is bold monetary policy. The new Bank of Japan governor, Mr. Kuroda, has launched a new monetary policy framework – "quantitative and qualitative monetary easing" – summarised by the number "2". The central bank aims to achieve the 2% inflation target in about two years. And it will do so by doubling the monetary base and its holdings of Japanese government bonds. This new framework is accompanied by a depreciation of the yen, although Japan is not targeting the exchange rate. Bringing a definitive end to deflation is a top priority. And rightly so; deflation has slowed economic growth and exacerbated the fiscal problem over the past 15 years. The second arrow is a flexible fiscal policy, with a new fiscal package amounting to 2% of GDP. The third one is a new growth strategy, promised by mid-2013. We are anxiously awaiting this strategy and would like to support Japan in its development. A bold strategy to address supply side bottlenecks and increasing the productivity and competitiveness of the Japanese economy is imperative to achieve long-term sustainable growth. The OECD has launched a program for competitiveness of its major member countries, and therefore we applaud this initiative. We also welcome Japan's decision to participate in discussions on the Trans-Pacific Partnership. Addressing Japan's fiscal situation While recent developments are encouraging, we cannot overlook the elephant in the room: the extremely high and rising level of government debt. Gross public debt reached 220% of GDP in 2012, the highest level ever recorded in the OECD area. With a large budget deficit of 10% of GDP, this debt ratio will continue rising further into uncharted territory. The medium-term fiscal plan, promised by the government later this year, should include spending cuts and tax increases large enough to achieve a budget surplus by 2020, thus stabilising the public debt ratio. A detailed and credible package is essential to maintain market confidence, thereby mitigating the risk of a run-up in long-term interest rates. To achieve these ambitious objectives, it is first necessary to implement the planned hike in the consumption tax from 5% to 8% in 2014 and to 10% in 2015, preferably while maintaining a uniform rate. It is also crucial to control the growth of spending. During the past twenty years, public social spending in Japan has doubled from 11% of GDP to 22%, driven by rapid population ageing. Japan now has the oldest population in the OECD area, and is projected to remain the oldest by 2050. This implies continued upward pressure on spending. Reforms are thus crucial to increase effectiveness of government services, such as in the health sector. But Japan will also need additional tax revenue. Even with the hike in the consumption tax to 10%, the rate remains about one-half of the average in OECD countries. Additional revenue could thus come from further hikes in the consumption tax rate, given its relatively small negative impact on economic growth. Japan could also, broaden its income tax basis, primarily by increasing environmental taxes. However, we need to keep in mind the impact of fiscal consolidation on social cohesion. Income inequality and relative poverty have risen in Japan during the past few decades, as in most OECD countries. The level of poverty is now the sixth highest in the OECD. To face this challenge, Japan needs to improve the effectiveness of social welfare programmes. It could do so in part by introducing an earned income tax credit. This would be effective in promoting work and assisting low-income persons, and would also mitigate the regressive impact of the consumption tax hike. To promote social cohesion, it is also important to attack the root causes of inequality, such as labour market dualism. Non-regular workers are indeed paid only about 60% as much per hour as regular workers. Breaking down this dualism is thus essential. Upgrading training programmes and increasing the social insurance coverage of non-regular workers are two measures, among others, to address this. Boosting competitiveness through structural and regulatory reforms The recent positive trends primarily reflect monetary and fiscal stimulus. However, their impact will quickly fade unless they are reinforced by structural reforms to boost Japan's growth potential. Reforms are needed in a wide range of areas, including education and health care, which we discussed in previous OECD Economic Surveys of Japan. This new Survey focuses on two other key areas for reform; agriculture and energy. Agriculture has long been a declining sector in Japan, and is now dominated by part-time farmers working on small plots of land. The average farm is only two hectares, compared to 14 in the European Union. Meanwhile, the average age of farmers has risen to 66, with 56% of rice farmers over the age of 70. Moreover, prices are high due to extensive government support and import barriers. As a result, consumer spending on agricultural goods is nearly two times higher than what it would be in the absence of government policies. If nothing is done, the agricultural sector might wither away. It is clear, though, that Japan can develop a competitive agricultural sector. The vegetable industry, for example, has blossomed without being heavily subsidized and sheltered and it now accounts for a larger share of agricultural output than rice. Japan needs not only to promote the consolidation of farmland, but more critically to phase out supply control measures and shift to less distorting kinds of government support. A more market-oriented agricultural sector would facilitate Japan's participation in international trade agreements, such as the Trans-Pacific Partnership. This would in turn help boost Japan’s growth potential. The Fukushima nuclear accident has also opened the door to a new energy policy, with two priorities. First, increasing renewable energies in the energy mix. At present, renewables play a relatively small role in Japan, accounting for about 11% of electricity generation, half of the OECD average. Developing renewables will promote green growth, while helping Japan achieve its target of reducing its greenhouse gas emissions. This would require a price on carbon, through a carbon tax in combination with an emissions trading system. The Fukushima accident also showed the need for a restructuring of the electricity sector, breaking down its current structure dominated by vertically-integrated regional monopolies. The recent Cabinet decision to move ahead with electricity reforms is an important step. It entails the unbundling of generation and transmission and the expansion of competition in the retail market, which we both strongly welcome. Let me insist now on one last but critical success factor, Japan’s great human resources. Japan needs to make the most of it to face its competitiveness challenge. Your working-age population is projected to fall by 40% by 2050. You need all on board, including women, older persons and youth. This requires profound changes in the society, but also deep reforms in the tax and social systems, education, and in companies’ working practices. Giving women a better start in the jobs markets and improving their participation and contributions is a must. Next year, 2014, will mark the 50th anniversary of Japan's entry into the OECD. During these fifty years, the OECD has been privileged to work closely with Japan in promoting a "stronger, cleaner and fairer economy". Japan has indeed made major contributions to the Organisation, in critical areas such as innovation, green growth, risk management, among others. These contributions have benefited other member countries and the world economy. We look forward to continuing to work with Japan as it embarks on a new growth path, led by Prime Minister Abe's three arrows. We have the utmost confidence in Japan's ability to achieve its objectives and overcome the challenges it faces. We are ready and eager to assist Japan to achieve its goals. Thank you!

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What is the Role and Responsibility of a For-Profit Public Company? The 2015 Global Responsibility Report marks the end of a chapter for Starbucks, and a new beginning. In 2008, Starbucks was fighting for its survival. The financial crisis triggered a global recession, and sales slowed for the first time in the company’s history. Tough decisions were made, stores were closed, and jobs eliminated. Commentators wondered aloud if Starbucks best days were behind us. But in the midst of that crucible, Starbucks did not back away from our commitment to responsibility. Instead we announced a set of ambitious goals – committing that by 2015 we would improve ethical sourcing in coffee and throughout our supply chain, serve our communities and engage young people, and decrease the environmental footprint from our store operations. Looking back, we can see the global impact that we have made in the seven years since we first put that stake in the ground. We nearly doubled our investment in alternative loan programs to $21.3 million from $12.5 million in 2008. We expanded our ethical sourcing program, and are on the cusp of helping make coffee the world’s first ethically sourced commodity. In 2008, nearly three-quarters of Starbucks coffee was certified or verified by a third-party as ethically sourced, and Starbucks had one Farmer Support Center. In 2015, 99% of our coffee met that criteria and we expanded our outreach to farmers around the world with seven new Farmer Support Centers in Latin America, Asia and Africa. We broke ground on our first global agronomy center to develop sustainable farming practices to share with farming communities around the world. In the areas of environmental performance, we have implemented rigorous green building as a standard practice in new construction projects and renovations. In 2008, we had one LEED® certified store, and today, we have more than 800, including the LEED® Platinum Starbucks® Reserve Roastery and Tasting Room in Seattle. We increased our purchases of renewable energy from 20% in 2008 to 100% in 2015, and exceeded an ambitious water conservation goal, reducing consumption more than 26% over 2008 – from 24 gallons of water per square foot of retail space to fewer than 18 gallons. While some environmental targets have been more difficult to achieve than expected, we have learned from these challenges and are working to find innovative environmental solutions. We also have learned in the power of investing in communities and young people to make meaningful change. We elevated our partners’ global efforts, by creating our annual Global Month of Service, with 1,163 partner-led projects in April 2015 alone. Moreover, partners and customers have contributed more than 3 million hours of community service over the past seven years. From 2010-2012, we consistently achieved our goal of engaging more than 50,000 young people to innovate and take action in their communities and have since pivoted our focus to create pathways to employment for young people who face systemic barriers to opportunity. We also found new opportunities. When we saw the need for employment for post 9/11-military service members and their families, we launched a new veteran’s hiring initiative. When we saw our partners (employees) struggling to earn their college degrees, we created the Starbucks College Achievement Plan with Arizona State University to offer full tuition reimbursement to eligible partners. And when we saw young people disconnected to jobs and school, we created the 100,000 Opportunities Hiring Initiative, leading a coalition of companies to offer meaningful jobs to thousands of opportunity youth. We know we can do more. Later this year we will share a new set of aspirations that are higher than ever with a new set of 2020 goals. We will build on our efforts with partners, veterans, and opportunity youth. We will invest in farmers and their communities, and expand the global standard for green retail building and operations. Download the 2015 Global Responsibility Report Independent Assurance Report from Moss Adams Read the 2014 Global Responsibility Report in: Download Past Reports 2007 2006 2005 2004 2003 2002 2001 Responsibility .

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The Advisor's Professional Library Dealings With Qualified Clients and Accredited Investors January 1, 2012 1 Free Preview Remaining You have used 1 of 2 free previews from The Advisor's Professional Library Most RIAs are thrilled to see just about any client come through their door. Depending upon an RIA’s business model and investment strategies, however, it may be important to identify which of them are “qualified clients” and “accredited investors.” The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) authorized the SEC to change which clients are defined by the terms of “qualified client” and “accredited investor.” Congress gave this directive to the SEC in Section 418 of the Dodd-Frank Act, because these definitions had not been updated since 1998 and were outdated. Qualified Client and Performance Fees Compensation based on capital gains or capital appreciation is usually referred to as performance fees. We saw in Do’s and Don’ts of Advisory Contracts that the statute prohibits RIAs from charging performance fees. The rules interpreting the Investment Advisers Act, however, make an exception for qualified clients. Performance fees are based on a share of capital gains or capital appreciation of a client’s account. The fees must be fully disclosed and are not permitted unless the requirements of Rule 205-3 are met. The rule states that the provisions of section 205(a)(1) of the Investment Advisers Act do not prohibit an RIA from entering into, performing, renewing, or extending an investment advisory contract providing performance-based compensation, assuming the agreement is with a qualified client. Thanks to the Dodd-Frank Act, the definition of qualified client found in Rule 205-3 under the Investment Adviser Act of 1940 has changed. The SEC is required to adjust for inflation the financial conditions that must be satisfied in order to be classified as a qualified client. The term qualified client was previously defined as: a natural person or a company with at least $750,000 under management of the RIA immediately after entering into the contract; a natural person or a company that the RIA believes has more than $1,500,000 in assets or is a qualified purchaser as defined by section 2(a)(51)(A) of the Investment Company Act of 1940; a natural person who immediately prior to entering into the contract is an executive officer, director, trustee, general partner, or person serving in a similar capacity, of the RIA; or a natural person employed by the RIA, other than someone performing only clerical, secretarial, or administrative functions, who participates in the investment activities of the firm and has done so for at least twelve months. An employee may also qualify if that person performed the same or similar functions for another firm for at least twelve months. An RIA’s advisory contract and Form ADV should state explicitly if performance fees will be charged to a client. In May 2011, the SEC announced its plan to raise certain dollar thresholds that must be surpassed before RIAs are permitted to charge their clients performance fees. Under the SEC’s proposed rule, a qualified client would be required to have $1 million invested with the RIA or a total net worth of $2 million. Previously, a qualified client was defined as a natural person or company with at least $750,000 under management of the RIA immediately after entering into the contract or a natural person or company that the RIA believes has more than $1,500,000 in assets. The revised thresholds would only apply to new clients, not existing advisory arrangements. The SEC also proposed to exclude the value of a client’s primary residence from the new net worth standard. NASAA strongly supported the SEC’s proposal, because the value of a client’s home does not necessarily indicate an individual’s level of investment sophistication. Clients who own expensive homes are not necessarily financially experienced and able to bear the risks associated with performance fees. By July, 2011, the SEC had issued an order on the plan, and on September 19, 2011 the order became effective. As a result, a federally-registered investment advisor may now charge performance fees if a client has at least $1 million under the management of the RIA, or the client has a net worth of more than $2 million. If either of these two tests is satisfied at the inception of the advisory contract, the RIA may charge performance fees. Although Rule 205-3 permits an RIA to charge performance fees to qualified clients, the fee arrangement must still be consistent with the anti-fraud provisions of the Investment Advisers Act. For an RIA to meet its fiduciary obligation to clients, the fee must be reasonable in relation to the services rendered. The performance fee may not be substantially higher than fees charged by other RIAs for comparable services unless the firm discloses that these services are available elsewhere at a lower cost. In addition, the RIA must disclose all material information relating to the fee, such as how it is calculated. The rules might be different for state-registered investment advisors. Some states prohibit the use of performance fee contracts by RIAs registered in their jurisdiction, even if the agreement is with a qualified client. In addition, certain states impose restrictions on how performance fees are calculated. Some states’ rules are a mirror image of the SEC’s. For example, in August 2011, Massachusetts implemented a regulation stating that RIAs may not receive performance fees unless the compensation complies with Rule 205-3. The new regulation stated that advisors are only able to receive performance-based compensation from qualified clients. Massachusetts’ regulation follows the SEC’s lead and defines qualified clients as investors with either $1 million under the management of the RIA or having a net worth of at least $2 million. Section 205(a)(1) has also been interpreted as being a barrier to charging contingent fees. A contingent fee is an advisory fee that will be waived or refunded, in whole or in part, if a client’s account does not meet a specified level of performance. The danger with contingent fees is giving RIAs an incentive to speculate or take extraordinary risks to reach the performance necessary to earn a higher advisory fee and avoid losing compensation. Accredited Investor The Dodd-Frank Act also changed the definition of an accredited investor. Accredited investors are eligible to participate in certain private and limited offerings, which are exempt from the registration requirements imposed by the Securities Act of 1933. The definition of an accredited investor found in Regulation D includes: any natural person whose individual or joint net worth with a spouse, at the time of purchase, exceeds $1 million; or any natural person who had an individual income in excess of $200,000 in each of the two most recent years, or had joint income with that person’s spouse that exceeded $300,000 in each of those two most recent years, and has a reasonable expectation of reaching the same income level in the current year. On January 25, 2011, the SEC voted to propose amendments to conform the definition of accredited investor to the requirements of the Dodd-Frank Act. Section 413(a) of the legislation amended the definition of accredited investor to exclude the value of a natural person’s primary residence from the $1 million net worth calculation. This exclusion of the primary residence from the calculation took effect as soon as the law passed. The SEC’s proposed rule will clarify how debt owed on that primary residence is treated in the calculation of net worth. The SEC has proposed that the value of the primary residence should be calculated by subtracting all loans tied to the property. However, these loans may not exceed the primary residence’s fair market value for purposes of calculating net worth. The proposed rule can be found at: http://www.sec.gov/rules/proposed/2011/33-9177.pdf. Even if a private offering is exempt under the federal securities law, registration may still be necessary in states where the securities are sold. Almost all states have laws regulating the offering and sale of securities. Because of the Dodd-Frank Act, some states must modify their laws. For example, Oregon has promulgated an administrative rule, aligning its definition of accredited investor with how the term is defined in the Dodd-Frank Act. According to an article published by Jill Radloff, an attorney with Leonard, Street and Deinard, a statute and rule change is not necessary in states like Minnesota. The Minnesota statute’s definition of an accredited investor is based upon how the term is defined in Rule 501(a) of Regulation D. Therefore, Minnesota’s definition of an accredited investor automatically changed upon enactment of the Dodd Frank Act. Form ADV disclosure brochures should state specifically whether a firm charges performance fees. Some disclosure brochures are not as clear as they should be. If performance fees will be charged, the conditions for earning them must be articulated clearly in the advisory agreement, and the language must be unequivocal. Performance-based fees may motivate RIAs to make riskier investments. In order to address this potential conflict of interest, a senior officer of the firm should periodically review client accounts ensuring investments are suitable and that the account is being managed according to the client’s investment objectives and risk tolerance. Performance fees may also create an incentive for an RIA to overvalue investments that lack a market quotation. Firms should address this type of conflict, by adopting policies and procedures that require the RIA to “fairly value” any investments that do not have a readily ascertainable value. If performance fees are charged, the risks arising from side-by-side management should be disclosed. Side-by-side management refers to the practice of managing accounts that are charged performance-based fees at the same time as managing accounts, that are not charged performance-based fees. Side-by-side management can hurt clients who do not pay performance-based fees. For example, the RIA may have an incentive to allocate limited investment opportunities, such as initial public offerings, to clients who pay performance-based fees. Clients paying asset-based fees would miss out on those opportunities. Although an RIA may implement policies and procedures designed to avoid favoring performance-based accounts over asset-based accounts, a potential conflict of interest exists and must be disclosed. Les Abromovitz [email protected] Les Abromovitz is the author of The Investment Advisor’s Compliance Guide, published by The National Underwriter Company/ALM Media. An attorney and member of the Pennsylvania bar, Les has handled hundreds of consulting and publishing projects for National Compliance Services, www.ncsonline.com, a leading compliance and regulatory services firm. He has conducted a number of seminars and training sessions dealing with compliance subjects. Les is also the author of several white papers that analyze compliance issues impacting Registered Investment Advisors (RIAs)‎. To contact Mr. Abromovitz, email [email protected] or call 561-330-7645 Ext. 213‎. Purchase the full The Investment Advisor’s Guide to Compliance in eBook or Print. Visit Bookstore The Investment Advisor’s Guide to Compliance Regulatory Oversight of Investment Advisors Free Advertising Advisor Services and Credentials Agency and Principal Transactions Anti-Fraud Provisions of the Investment Advisers Act $1.99 Best Practices for Working with Senior Investors $1.99 Books and Records Rule $1.99 Client Commission Practices and Soft Dollars Client Communication and Miscommunication $1.99 Code of Ethics Rule $1.99 Conducting Due Diligence of Sub-Advisors and Third-Party Advisors Dealings With Qualified Clients and Accredited Investors $1.99 Differences Between State and SEC Regulation of Investment Advisors $1.99 Disaster Recovery Plans and Succession Planning $1.99 Do’s and Don’ts of Advisory Contracts How to Avoid Sabotaging Your Compliance Exam $1.99 Meeting and Exceeding Clients and Regulators’ Expectations $1.99 Nothing but the Best Execution $1.99 Pay-to-Play Rule $1.99 Preventing and Dealing with Client Complaints $1.99 Privacy Policies and Rules RIAs and Customer Identification Recent Changes in the Regulatory Landscape $1.99 Registration Requirements for Investment Advisor Representatives (IARs) $1.99 Risk-Based Oversight of Investment Advisors $1.99 Scope of the Fiduciary Duty Owed by Investment Advisors $1.99 Suitability and Fiduciary Duty $1.99 The Custody Rule and its Ramifications $1.99 The Few and the Proud: Chief Compliance Officers $1.99 The Need for Thorough and Effective Policies and Procedures $1.99 The New and Improved Form ADV $1.99 Trading Practices and Errors $1.99 Updating Form ADV and Form U4 Use and Misuse of Social Media $1.99 Using Solicitors to Attract Clients $1.99 U.S. Securities and Exchange Commission Information Free Show all

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Home / Top News / U.S. News JPMorgan Chase tried to lower risk | License Photo WASHINGTON, June 19 (UPI) -- The head of JPMorgan Chase Tuesday told a U.S. House panel an effort to limit risk actually led to the bank's massive losses in May. "We did lose some of our shareholder's money and for that we feel terrible," Jamie Dimon, chairman and chief executive officer, said before the House Committee on Financial Services. Dimon also told the panel Italy's financial crisis is less critical than that in Greece. "Italy, surprisingly, is actually a very wealthy nation and they have the wherewithal to meet their debt, but they're having a crisis of confidence which is damaging that," he said. JPMorgan Chase, the largest U.S. bank, suffered an unexpected loss of more than $2 billion, rocking the financial community. The bank lost the money in a lightning-fast 15 days in a series of bets on credit default swaps in a bid to hedge risks. The company's chief investment officer retired in the wake of the losses. Dimon told the panel beginning in December 2011, "we instructed [investment officials] to reduce risk-grade assets and associated risk. To achieve this in the synthetic credit portfolio, the [investment office] could simply have reduced its existing positions. Instead starting in mid-January, it embarked on a complex strategy that entailed adding positions that it believed would offset the existing ones. "This strategy, however, ended up creating a portfolio that was larger and ultimately resulted in even more complex and hard to manage risks," he added. "This portfolio morphed into something that rather than protect the firm, created new and potentially larger risks. As a result, we've let a lot of people down and we are sorry for it." Earlier, Martin Gruenberg, acting chairman of the board of the Federal Deposit Insurance Corp., told the committee: "The FDIC has added temporary staff to assist in our current review. ... [The FDIC and other] agencies are conducting an in-depth review of both the risk-measurement tools used by the firm and the governance and limit structures in place within the chief investment office unit where the losses occurred. He added, the "FDIC joined the [Office of the Comptroller of the Currency] and the New York Federal Reserve Bank in daily meetings with the firm" after the debacle. "Initially these meetings focused on gaining an understanding of the events leading up to the escalating losses." He said the FDIC has continued to participate in the daily meetings between the firm and its primary regulators. "We are looking at the strength of the [chief investment officer's] risk-management, governance and control frameworks, including the setting and monitoring of risk limits." Although the focus of the review is the circumstances that led to the losses, "the FDIC is also working with JPMorgan Chase's primary federal regulators to assess any other potential gaps within the firm's overall risk-management practices," he said. "Without speaking to the specifics of the case ... the recent losses attest to the speed with which risks can materialize in a large, complex derivatives portfolio," he said. "The recent losses also highlight that it's important for financial regulatory agencies to have access to timely risk-related information about derivatives and other market-sensitive exposures, to analyze the data effectively, and to regularly share findings and observations." The committee also heard from Thomas Curry, comptroller of the currency at the Treasury Department; Mary Schapiro, chairwoman of the Securities and Exchange Commission; Gary Gensler, chairman of the Commodity Futures Trading Commission; and Scott Alvarez, counsel for the Federal Reserve System Board of Governors. Dimon apologizes in Senate testimony JPMorgan knew it was taking big risks Dimon invited to testify at Senate panel Shareholders file suits against JPMorgan Topics: Mary Schapiro, Gary Gensler, Jamie Dimon Trending

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Wednesday, August 14, 2013 - 11:53 IST Microfinance firm Janalakshmi raises $53M in Series D led by Morgan Stanley PE The MFI is among the 26 entities that have applied for new banking licence. BY Bruhadeeswaran R Janalakshmi Financial Services Pvt Ltd, a microfinance institution based in Bangalore, has closed its Series D funding round worth Rs 350 crore ($57 million) from a consortium of new and existing investors. This is one of the largest private investment transactions in the Indian microfinance industry since the regulatory crisis in Andhra Pradesh in 2010. In 2009, three venture capital investors invested $75 million in SKS Microfinance Ltd. Of the total, Rs 325 crore represents primary equity funding while Rs 25 crore is the value of secondary component through which two existing investors Lok Capital and Michael & Susan Dell Foundation have exited. Both were early stage investors who came in at the Series A round. The new investors who participated in this round include Morgan Stanley Private Equity Asia (MSPEA) who led the transaction and Tata Capital Growth Fund and QRG Enterprises, the promoter holding company of Havells India. The existing investors—Citi Venture Capital (CVCI), India Financial Inclusion Fund and Vallabh Bhanshali, one of the founders of ENAM Securities, also participated in the current round. Janalakshmi, a for-profit MFI, has assets of more than Rs 1,200 crore, with the entire promoter stake being held in Jana Urban Foundation, a not-for-profit outfit. The structure ensures that no financial benefit arising from the performance of Janalakshmi accrues to the promoter personally, it added. The MFI is among the 26 entities that have applied for new banking licence. Edelweiss Financial Services Ltd and Unitus Capital jointly advised the company on this transaction. Ramesh Ramanathan promoted Janalakshmi is among the MFIs that focus on providing microfinance to borrowers in urban areas. The MFI has been growing its loan book and disbursement aggressively over the last financial year. It increased its gross loan portfolio by 173 per cent to Rs 953 crore as on March 31, 2013; it disbursed Rs 1,126 crore in the same period. It operates in 11 states, with Karnataka and Tamil Nadu together accounting for around 53 per cent of its total loans outstanding as on March 31, 2013 compared with 65 per cent as on March 31, 2012. Janalakshmi reported a net profit of Rs18 crore on a total income Rs 170 crore for 2012-13, against a net profit of Rs 1.2 crore on a total income of Rs 71 crore for 2011-12. VS Radhakrishnan, MD and CEO of Janalakshmi, said, “This investment will help us continue in the path of growth, as we continue to focus on building customer relationships with financial products and new technology like Aadhar-based front end terminals” Aluri Rao, managing director of Morgan Stanley Private Equity Asia, in India, said, “Janalakshmi has emerged as a thought leader in the urban microfinance space. It is well-positioned to become a pioneer in providing inclusive financial services to the urban-underserved”. Gautam Benjamin, senior vice president at Edelweiss Financial Services, said, “The fact that several investors have participated in this round is indicative of the good work that the company has done and its prospects going forward” Eric Savage, co-founder and president of Unitus Capital, said, “With this transaction, Janalakshmi has established itself as a leader in providing inclusive financial services.” (Edited by Joby Puthuparampil Johnson) Tags: Janalakshmi Financial Services Pvt. Ltd. Comments 0 Sponsored Content Janalakshmi Financial Services Pvt. Ltd. Janalakshmi Financial Services Pvt. Ltd. is a non-banking financial company. The firm offers various types of loans to individuals like small batch loans, nano loans, home improvement loans, jana kisan loan and education loan. It also provides loans to enterprises such as super nano loan, micro, small and medium enterprise (MSME) loan, long-term business loans, equipment and machinery financing. The firm also provides credit, savings, insurance, retail financing services and enterprise services. It also provides other services such as savings and pension schemes in association with third parties like badhti bachat, micro pension, loans for life insurance and livestock insurance. The company was incorporated in 2006 and is based in Bengaluru, Karnataka. Head office: www.janalakshmi.com Management:Ramesh Ramanathan, Radhakrishnan Venkata Subramaniam IN NEWS Janalakshmi Financial Services to raise $50 mn from IFCJanalakshmi Financial raises $150M from TPG and othersExclusive: GIC joins existing investors TPG and others to back JanalakshmiJanalakshmi raises $50M from CDCJanalakshmi Financial Services Pvt. Ltd.AU Financiers, several MFIs get nod for small finance bank

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Banks are using us to hedge their bets We only need a tiny part of the financial services industry – the rest is just speculation and it doesn't stand up to close scrutiny. Are you angry about the banks? A lot of Australians are. And a lot of people in the United States and Europe are a lot angrier than we are, with good cause.In Oz, we're annoyed mainly by the banks' very big profits and the way they never seem to miss a trick in keeping those profits high. Anyone who has seen the film The Big Short will be uneasy about the speculative side of the banking industry. Photo: Paramount Pictures In other countries, people are angry about the way the banks and other financial institutions, having stuffed up their affairs to the point where they almost brought the global economy to its knees, were promptly bailed out at taxpayers' expense, so that few went bust, with almost no executives going to jail and many not even being fired.By now, however, you're probably used to bankers and economists saying you don't understand and are quite unreasonable in your criticisms.That's why you need to know about the book, Other People's Money, by John Kay. Kay, who's visiting Australia and this week spoke to a meeting organised by the Grattan Institute, says he wrote the book to help ordinary people understand "what it is they're angry about".You want the dirt on the banks? No one's better qualified to spill the beans than Kay, an economics professor from Oxford and columnist for the Financial Times, who was commissioned to write a report on the sharemarket for the British government. He starts by noting that over the past 30 or 40 years, each of the developed economies has experienced "financialisation" – huge growth in the size of what these days is called their "financial services sector" to the point where it's among their biggest industries.For years, we've been told this is a wonderful thing, a sign of our economy's growing sophistication and ability to manage risk. Kay doesn't believe it.We've always had a financial sector composed of banks, insurance companies and other institutions, and we've always needed one.We've needed it to help us make payments to each other, to bring people wanting to save together with homeowners and businesses wanting to borrow, to help us save for retirement and to help individuals and businesses manage the risks associated with daily life and economic activity (insurance policies being the obvious example).We need a financial sector to service the needs of the "real economy" of households and businesses producing and consuming goods and services. But none of this justifies the huge growth in the financial sector we've seen.Most of that growth has come in the form of massively increased trading between the banks themselves in "financial claims", such as shares and bonds and foreign currencies and "derivatives" (claims on claims, and even – if you've seen The Big Short – claims on claims on claims). This game can continue for as long as everything's on the up and the bubble's getting bigger. Once it bursts, of course, former supposed profits become present, unavoidable losses. If you add together all the financial assets ("claims") owned by all the banks and other financial outfits, they exceed by many times the value of the physical assets – such as houses and business buildings and equipment – which are the ultimate basis for all those claims.The value of foreign currencies changing hands each day vastly exceeds the value of currencies needed by businesses and tourists paying for exports and imports. Similarly, the value of shares changing hands each day vastly exceeds companies' needs to raise new share capital and end-investors' needs to buy into the market or sell out.Kay says that, in Britain, bank lending to firms and individuals in the real economy amounts to only about 3 per cent of their total lending.All the rest is lending to other banks and institutions busy buying and selling bits of paper to each other – making bets with each other that the prices of those bits of paper will rise or fall in coming days.Kay makes what, for an economist, is the very strong condemnation that almost all this speculative activity is "socially unproductive". It might or might not benefit the people doing the trading, but it's of no benefit to the rest of the economy.He observes something I've noticed, too: economists have put little effort into explaining why all this trading in claims is so hugely profitable, allowing people near the top of the banks (but not their many foot soldiers) to be paid such amazing salaries.If all they're doing is making bets with each other, why aren't the gains of the winners exactly cancelled out by the losses of the losers?His answer is that the claims-trading parts of banks have found ways to exaggerate the profits they make by counting expected future profits they haven't actually captured – "paper profits" – but delaying recognition of expected "paper losses" until they're realised.This game can continue for as long as everything's on the up and the bubble's getting bigger. Once it bursts, of course, former supposed profits become present, unavoidable losses. Many banks teeter on bankruptcy, but the government bails them out and they live to gamble another day.Kay says the answer is to rigidly separate the old-fashioned parts of banking – the facilitation of payments, and lending to households and businesses; the bits that must be kept going through recessions – from all the speculative trading in claims.It's a free country and "investment" banks should remain free to bet against each other, but there should be no taxpayer bailouts or other government protection for those that do their dough.Ross Gittins is the Herald's economics editor.

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EH.net is owned and operated by the Economic History Associationwith the support of other sponsoring organizations. HOME ABOUT LOG IN EH.net Home EHA Home Previous Newsletter Issues How Much Is That? SponsorsEconomic History Association Economic History Society The Cliometric Society Economic and Business History Society Please read our page for important copyright information. Comments? Questions? Send email to [email protected] Eh.net Newsletter Eh.net Book Reviews Eh.net Research Eh.net Teach To submit a posting go to click here. Reconstruction Finance Corporation James Butkiewicz, University of Delaware The Reconstruction Finance Corporation (RFC) was established during the Hoover administration with the primary objective of providing liquidity to, and restoring confidence in the banking system. The banking system experienced extensive pressure during the economic contraction of 1929-1933. During the contraction period, many banks had to suspend business operations and most of these ultimately failed. A number of these suspensions occurred during banking panics, when large numbers of depositors rushed to convert their deposits to cash from fear their bank might fail. Since this period was prior to the establishment of federal deposit insurance, bank depositors lost part or all of their deposits when their bank failed. During its first thirteen months of operation, the RFC’s primary activity was to make loans to banks and financial institutions. During President Roosevelt’s New Deal, the RFC’s powers were expanded significantly. At various times, the RFC purchased bank preferred stock, made loans to assist agriculture, housing, exports, business, governments, and for disaster relief, and even purchased gold at the President’s direction in order to change the market price of gold. The scope of RFC activities was expanded further immediately before and during World War II. The RFC established or purchased, and funded, eight corporations that made important contributions to the war effort. After the war, the RFC’s activities were limited primarily to making loans to business. RFC lending ended in 1953, and the corporation ceased operations in 1957, when all remaining assets were transferred to other government agencies. The Genesis of the Reconstruction Finance Corporation The difficulties experienced by the American banking system were one of the defining characteristics of the Great Contraction of 1929-1933. During this period, the American banking system was comprised of a very large number of banks. At the end of December 1929, there were 24,633 banks in the United States. The vast majority of these banks were small, serving small towns and rural communities. These small banks were particularly susceptible to local economic difficulties, which could result in failure of the bank. The Federal Reserve and Small Banks The Federal Reserve System was created in 1913 to address the problem of periodic banking crises. The Fed had the ability to act as a lender of last resort, providing funds to banks during crises. While nationally chartered banks were required to join the Fed, state-chartered banks could join the Fed at their discretion. Most state-chartered banks chose not to join the Federal Reserve System. The majority of the small banks in rural communities were not Fed members. Thus, during crises, these banks were unable to seek assistance from the Fed, and the Fed felt no obligation to engage in a general expansion of credit to assist nonmember banks. How Banking Panics Develop At this time there was no federal deposit insurance system, so bank customers generally lost part or all of their deposits when their bank failed. Fear of failure sometimes caused people to panic. In a panic, bank customers attempt to immediately withdraw their funds. While banks hold enough cash for normal operations, they use most of their deposited funds to make loans and purchase interest-earning assets. In a panic, banks are forced to attempt to rapidly convert these assets to cash. Frequently, they are forced to sell assets at a loss to obtain cash quickly, or may be unable to sell assets at all. As losses accumulate, or cash reserves dwindle, a bank becomes unable to pay all depositors, and must suspend operations. During this period, most banks that suspended operations declared bankruptcy. Bank suspensions and failures may incite panic in adjacent communities or regions. This spread of panic, or contagion, can result in a large number of bank failures. Not only do customers lose some or all of their deposits, but also people become wary of banks in general. A widespread withdrawal of bank deposits reduces the amount of money and credit in society. This monetary contraction can contribute to a recession or depression. Bank failures were a common event throughout the 1920s. In any year, it was normal for several hundred banks to fail. In 1930, the number of failures increased substantially. Failures and contagious panics occurred repeatedly during the contraction years. President Hoover recognized that the banking system required assistance. However, the President also believed that this assistance, like charity, should come from the private sector rather than the government, if at all possible. The National Credit Corporation To this end, Hoover encouraged a number of major banks to form the National Credit Corporation (NCC), to lend money to other banks experiencing difficulties. The NCC was announced on October 13, 1931, and began operations on November 11, 1931. However, the banks in the NCC were not enthusiastic about this endeavor, and made loans very reluctantly, requiring that borrowing banks pledge their best assets as collateral, or security for the loan. Hoover quickly recognized that the NCC would not provide the necessary relief to the troubled banking system. RFC Approved, January 1932 Eugene Meyer, Governor of the Federal Reserve Board, convinced the President that a public agency was needed to make loans to troubled banks. On December 7, 1931, a bill was introduced to establish the Reconstruction Finance Corporation. The legislation was approved on January 22, 1932, and the RFC opened for business on February 2, 1932. The original legislation authorized the RFC’s existence for a ten-year period. However, Presidential approval was required to operate beyond January 1, 1933, and Congressional approval was required for lending authority to continue beyond January 1, 1934. Subsequent legislation extended the life of the RFC and added many additional responsibilities and authorities. The RFC was funded through the United States Treasury. The Treasury provided $500 million of capital to the RFC, and the RFC was authorized to borrow an additional $1.5 billion from the Treasury. The Treasury, in turn, sold bonds to the public to fund the RFC. Over time, this borrowing authority was increased manyfold. Subsequently, the RFC was authorized to sell securities directly to the public to obtain funds. However, most RFC funding was obtained by borrowing from the Treasury. During its years of existence, the RFC borrowed $51.3 billion from the Treasury, and $3.1 billion from the public. The RFC During the Hoover Administration RFC Authorized to Lend to Banks and Others The original legislation authorized the RFC to make loans to banks and other financial institutions, to railroads, and for crop loans. While the original objective of the RFC was to help banks, railroads were assisted because many banks owned railroad bonds, which had declined in value, because the railroads themselves had suffered from a decline in their business. If railroads recovered, their bonds would increase in value. This increase, or appreciation, of bond prices would improve the financial condition of banks holding these bonds. Through legislation approved on July 21, 1932, the RFC was authorized to make loans for self-liquidating public works project, and to states to provide relief and work relief to needy and unemployed people. This legislation also required that the RFC report to Congress, on a monthly basis, the identity of all new borrowers of RFC funds. RFC Undercut by Requirement That It Publish Names of Banks Receiving Loans From its inception through Franklin Roosevelt’s inauguration on March 4, 1933, the RFC primarily made loans to financial institutions. During the first months following the establishment of the RFC, bank failures and currency holdings outside of banks both declined. However, several loans aroused political and public controversy, which was the reason the July 21, 1932 legislation included the provision that the identity of banks receiving RFC loans from this date forward be reported to Congress. The Speaker of the House of Representatives, John Nance Garner, ordered that the identity of the borrowing banks be made public. The publication of the identity of banks receiving RFC loans, which began in August 1932, reduced the effectiveness of RFC lending. Bankers became reluctant to borrow from the RFC, fearing that public revelation of a RFC loan would cause depositors to fear the bank was in danger of failing, and possibly start a panic. Legislation passed in January 1933 required that the RFC publish a list of all loans made from its inception through July 21, 1932, the effective date for the publication of new loan recipients. RFC, Politics and Bank Failure in February and March 1933 In mid-February 1933, banking difficulties developed in Detroit, Michigan. The RFC was willing to make a loan to the troubled bank, the Union Guardian Trust, to avoid a crisis. The bank was one of Henry Ford’s banks, and Ford had deposits of $7 million in this particular bank. Michigan Senator James Couzens demanded that Henry Ford subordinate his deposits in the troubled bank as a condition of the loan. If Ford agreed, he would risk losing all of his deposits before any other depositor lost a penny. Ford and Couzens had once been partners in the automotive business, but had become bitter rivals. Ford refused to agree to Couzens’ demand, even though failure to save the bank might start a panic in Detroit. When the negotiations failed, the governor of Michigan declared a statewide bank holiday. In spite of the RFC’s willingness to assist the Union Guardian Trust, the crisis could not be averted. The crisis in Michigan resulted in a spread of panic, first to adjacent states, but ultimately throughout the nation. By the day of Roosevelt’s inauguration, March 4, all states had declared bank holidays or had restricted the withdrawal of bank deposits for cash. As one of his first acts as president, on March 5 President Roosevelt announced to the nation that he was declaring a nationwide bank holiday. Almost all financial institutions in the nation were closed for business during the following week. The RFC lending program failed to prevent the worst financial crisis in American history. Criticisms of the RFC The effectiveness of RFC lending to March 1933 was limited in several respects. The RFC required banks to pledge assets as collateral for RFC loans. A criticism of the RFC was that it often took a bank’s best loan assets as collateral. Thus, the liquidity provided came at a steep price to banks. Also, the publicity of new loan recipients beginning in August 1932, and general controversy surrounding RFC lending probably discouraged banks from borrowing. In September and November 1932, the amount of outstanding RFC loans to banks and trust companies decreased, as repayments exceeded new lending. The RFC in the New Deal FDR Sees Advantages in Using the RFC President Roosevelt inherited the RFC. He and his colleagues, as well as Congress, found the independence and flexibility of the RFC to be particularly useful. The RFC was an executive agency with the ability to obtain funding through the Treasury outside of the normal legislative process. Thus, the RFC could be used to finance a variety of favored projects and programs without obtaining legislative approval. RFC lending did not count toward budgetary expenditures, so the expansion of the role and influence of the government through the RFC was not reflected in the federal budget. RFC Given the Authority to Buy Bank Stock The first task was to stabilize the banking system. On March 9, 1933, the Emergency Banking Act was approved as law. This legislation and a subsequent amendment improved the RFC’s ability to assist banks by giving it the authority to purchase bank preferred stock, capital notes and debentures (bonds), and to make loans using bank preferred stock as collateral. While banks were initially reluctant, the RFC encouraged banks to issue preferred stock for it to purchase. This provision of capital funds to banks strengthened the financial position of many banks. Banks could use the new capital funds to expand their lending, and did not have to pledge their best assets as collateral. The RFC purchased $782 million of bank preferred stock from 4,202 individual banks, and $343 million of capital notes and debentures from 2,910 individual bank and trust companies. In sum, the RFC assisted almost 6,800 banks. Most of these purchases occurred in the years 1933 through 1935. The preferred stock purchase program did have controversial aspects. The RFC officials at times exercised their authority as shareholders to reduce salaries of senior bank officers, and on occasion, insisted upon a change of bank management. However, the infusion of new capital into the banking system, and the establishment of the Federal Deposit Insurance Corporation to insure bank depositors against loss, stabilized the financial system. In the years following 1933, bank failures declined to very low levels. RFC’s Assistance to Farmers Throughout the New Deal years, the RFC’s assistance to farmers was second only to its assistance to bankers. Total RFC lending to agricultural financing institutions totaled $2.5 billion. Over half, $1.6 billion, went to its subsidiary, the Commodity Credit Corporation. The Commodity Credit Corporation was incorporated in Delaware in 1933, and operated by the RFC for six years. In 1939, control of the Commodity Credit Corporation was transferred to the Department of Agriculture, were it remains today. Commodity Credit Corporation The agricultural sector was hit particularly hard by depression, drought, and the introduction of the tractor, displacing many small and tenant farmers. The primary New Deal program for farmers was the Agricultural Adjustment Act. Its objective was to reverse the decline of product prices and farm incomes experienced since 1920. The Commodity Credit Corporation contributed to this objective by purchasing selected agricultural products at guaranteed prices, typically above the prevailing market price. Thus, the CCC purchases established a guaranteed minimum price for these farm products. The RFC also funded the Electric Home and Farm Authority, a program designed to enable low- and moderate- income households to purchase gas and electric appliances. This program would create demand for electricity in rural areas, such as the area served by the new Tennessee Valley Authority. Providing electricity to rural areas was the objective of the Rural Electrification Program. Decline in Bank Lending Concerns RFC and New Deal Officials After 1933, bank assets and bank deposits both increased. However, banks changed their asset allocation dramatically during the recovery years. Prior to the depression, banks primarily made loans, and purchased some securities, such as U.S. Treasury securities. During the recovery years, banks primarily purchased securities, which involved less risk. Whether due to concerns over safety, or because potential borrowers had weakened financial positions due to the depression, bank lending did not recover, as indicated by the data in Table 1. The relative decline in bank lending was a major concern for RFC officials and the New Dealers, who felt that lack of lending by banks was hindering economic recovery. The sentiment within the Roosevelt administration was that the problem was banks’ unwillingness to lend. They viewed the lending by the Commodity Credit Corporation and the Electric Home and Farm Authority, as well as reports from members of Congress, as evidence that there was unsatisfied business loan demand. Bank Loans and Investments in Millions of Dollars Bank Loans in Millions of Dollars Bank Net Deposits in Millions of Dollars Loans as a Percentage of Loans and Investments Loans as a Percentage of Net Deposits Source: Banking and Monetary Statistics, 1914 –1941. Net Deposits are total deposits less interbank deposits. All data are for the last business day of June in each year. RFC Provides Credit to Business Due to the failure of bank lending to return to pre-Depression levels, the role of the RFC expanded to include the provision of credit to business. RFC support was deemed as essential for the success of the National Recovery Administration, the New Deal program designed to promote industrial recovery. To support the NRA, legislation passed in 1934 authorized the RFC and the Federal Reserve System to make working capital loans to businesses. However, direct lending to businesses did not become an important RFC activity until 1938, when President Roosevelt encouraged expanding business lending in response to the recession of 1937-38. RFC Mortgage Company During the depression, many families and individuals were unable to make their mortgage payments, and had their homes repossessed. Another New Deal goal was to provide more funding for mortgages, to avoid the displacement of homeowners. In June 1934, the National Housing Act provided for the establishment of the Federal Housing Administration (FHA). The FHA would insure mortgage lenders against loss, and FHA mortgages required a smaller percentage down payment than was customary at that time, thus making it easier to purchase a house. In 1935, the RFC Mortgage Company was established to buy and sell FHA-insured mortgages. RFC and Fannie Mae Financial institutions were reluctant to purchase FHA mortgages, so in 1938 the President requested that the RFC establish a national mortgage association, the Federal National Mortgage Association, or Fannie Mae. Fannie Mae was originally funded by the RFC to create a market for FHA and later Veterans Administration (VA) mortgages. The RFC Mortgage Company was absorbed by the RFC in 1947. When the RFC was closed, its remaining mortgage assets were transferred to Fannie Mae. Fannie Mae evolved into a private corporation. During its existence, the RFC provided $1.8 billion of loans and capital to its mortgage subsidiaries. RFC and Export-Import Bank President Roosevelt sought to encourage trade with the Soviet Union. To promote this trade, the Export-Import Bank was established in 1934. The RFC provided capital, and later loans to the Ex-Im Bank. Interest in loans to support trade was so strong that a second Ex-Im bank was created to fund trade with other foreign nations a month after the first bank was created. These two banks were merged in 1936, with the authority to make loans to encourage exports in general. The RFC provided $201 million of capital and loans to the Ex-Im Banks. Other RFC activities during this period included lending to federal government agencies providing relief from the depression including the Public Works Administration and the Works Progress Administration, disaster loans, and loans to state and local governments. RFC Pushed Up the Price of Gold, Devalues the Dollar Evidence of the flexibility afforded through the RFC was President Roosevelt’s use of the RFC to affect the market price of gold. The President wanted to reduce the gold value of the dollar from $20.67 per ounce of gold. As the dollar price of gold increased, the dollar exchange rate would fall relative to currencies that had a fixed gold price. A fall in the value of the dollar makes exports cheaper and imports more expensive. In an economy with high levels of unemployment, a decline in imports and increase in exports would increase domestic employment. The goal of the RFC purchases was to increase the market price of gold. During October 1933 the RFC began purchasing gold at a price of $31.36 per ounce. The price was gradually increased to over $34 per ounce. The RFC price set a floor for the price of gold. In January 1934, the new official dollar price of gold was fixed at $35.00 per ounce, a 59% devaluation of the dollar. Twice President Roosevelt instructed Jesse Jones, the president of the RFC, to stop lending, as he intended to close the RFC. The first occasion was in October 1937, and the second was in early 1940. The recession of 1937-38 caused Roosevelt to authorize the resumption of RFC lending in early 1938. The German invasion of France and the Low Countries gave the RFC new life on the second occasion. The RFC in World War II In 1940 the scope of RFC activities increased significantly, as the United States began preparing to assist its allies, and for possible direct involvement in the war. The RFC’s wartime activities were conducted in cooperation with other government agencies involved in the war effort. For its part, the RFC established seven new corporations, and purchased an existing corporation. The eight RFC wartime subsidiaries are listed in Table 2, below. RFC Wartime Subsidiaries Metals Reserve Company Rubber Reserve Company Defense Plant Corporation Defense Supplies Corporation War Damage Corporation U.S. Commercial Company Rubber Development Corporation Petroleum Reserve Corporation (later War Assets Corporation) Source: Final Report of the Reconstruction Finance Corporation Development of Materials Cut Off By the War The RFC subsidiary corporations assisted the war effort as needed. These corporations were involved in funding the development of synthetic rubber, construction and operation of a tin smelter, and establishment of abaca (Manila hemp) plantations in Central America. Both natural rubber and abaca (used to produce rope products) were produced primarily in south Asia, which came under Japanese control. Thus, these programs encouraged the development of alternative sources of supply of these essential materials. Synthetic rubber, which was not produced in the United States prior to the war, quickly became the primary source of rubber in the post-war years. Other War-Related Activities Other war-related activities included financing plant conversion and construction for the production of military and essential goods, to deal and stockpile strategic materials, to purchase materials to reduce the supply available to enemy nations, to administer war damage insurance programs, and to finance construction of oil pipelines from Texas to New Jersey to free tankers for other uses. During its existence, RFC management made discretionary loans and investments of $38.5 billion, of which $33.3 billion was actually disbursed. Of this total, $20.9 billion was disbursed to the RFC’s wartime subsidiaries. From 1941 through 1945, the RFC authorized over $2 billion of loans and investments each year, with a peak of over $6 billion authorized in 1943. The magnitude of RFC lending had increased substantially during the war. Most lending to wartime subsidiaries ended in 1945, and all such lending ended in 1948. The Final Years of the RFC, 1946-1953 After the war, RFC lending decreased dramatically. In the postwar years, only in 1949 was over $1 billion authorized. Through 1950, most of this lending was directed toward businesses and mortgages. On September 7, 1950, Fannie Mae was transferred to the Housing and Home Finance Agency. During its last three years, almost all RFC loans were to businesses, including loans authorized under the Defense Production Act. Eisenhower Terminates the RFC President Eisenhower was inaugurated in 1953, and shortly thereafter legislation was passed terminating the RFC. The original RFC legislation authorized operations for one year of a possible ten-year existence, giving the President the option of extending its operation for a second year without Congressional approval. The RFC survived much longer, continuing to provide credit for both the New Deal and World War II. Now, the RFC would finally be closed. However, there was concern that the end of RFC business loans would hurt small businesses. Thus, the Small Business Administration (SBA) was created in 1953 to continue the program of lending to small businesses, as well as providing training programs for entrepreneurs. The disaster loan program was also transferred to the SBA. Through legislation passed on July 30, 1953, RFC lending authority ended on September 28, 1953. The RFC continued to collect on its loans and investments through June 30, 1957, at which time all remaining assets were transferred to other government agencies. At the time the liquidation act was passed, the RFC’s production of synthetic rubber, tin, and abaca remained in operation. Synthetic rubber operations were sold or leased to private industry. The tin and abaca programs were ultimately transferred to the General Services Administration. Successors of the RFC Three government agencies and one private corporation that were related to the RFC continue today. The Small Business Administration was established to continue lending to small businesses. The Commodity Credit Corporation continues to provide assistance to farmers. The Export-Import Bank continues to provide loans to promote exports. Fannie Mae became a private corporation in 1968. Today it is the most important source of mortgage funds in the nation, and has become one of the largest corporations in the country. Its stock is traded on the New York Stock Exchange under the symbol FNM. Economic Analysis of the RFC Role of a Lender of Last Resort The American central bank, the Federal Reserve System, was created to be a lender of last resort. A lender of last resort exists to provide liquidity to banks during crises. The famous British central banker, Walter Bagehot, advised, “…in a panic the holders of the ultimate Bank reserve (whether one bank or many) should lend to all that bring good securities quickly, freely, and readily. By that policy they allay a panic…” However, the Fed was not an effective lender of last resort during the depression years. Many of the banks experiencing problems during the depression years were not members of the Federal Reserve System, and thus could not borrow from the Fed. The Fed was reluctant to assist troubled banks, and banks also feared that borrowing from the Fed might weaken depositors’ confidence. President Hoover hoped to restore stability and confidence in the banking system by creating the Reconstruction Finance Corporation. The RFC made collateralized loans to banks. Many scholars argue that initially RFC lending did provide relief. These observations are based on the decline in bank suspensions and public currency holdings in the months immediately following the creation of the RFC in February 1932. These data are presented in Table 3. Currency in Millions of Dollars Bank Suspensions Number Data sources: Currency – Friedman and Schwartz (1963) Bank suspensions – Board of Governors (1937) Bank suspensions occur when banks cannot open for normal business operations due to financial problems. Most bank suspensions ended in failure of the bank. Currency held by the public can be an indicator of public confidence in banks. As confidence declines, members of the public convert deposits to currency, and vice versa. The banking situation deteriorated in June 1932 when a crisis developed in and around Chicago. Both Friedman and Schwartz (1963) and Jones (1951) assert that an RFC loan to a key bank helped to end the crisis, even though the bank subsequently failed. The Debate over the Impact of the RFC Two studies of RFC lending have come to differing conclusions. Butkiewicz (1995) examines the effect of RFC lending on bank suspensions and finds that lending reduced suspensions in the months prior to publication of the identities of loan recipients. He further argues that publication of the identities of banks receiving loans discouraged banks from borrowing. As noted above, RFC loans to banks declined in two months after publication began. Mason (2001) examines the impact of lending on a sample of Illinois banks and finds that those receiving RFC loans were increasingly likely to fail. Thus, the limited evidence provided from scholarly studies provides conflicting results about the impact of RFC lending. Critics of RFC lending to banks argue that the RFC took the banks’ best assets as collateral, thereby reducing bank liquidity. Also, RFC lending requirements were initially very stringent. After the financial collapse in March 1933, the RFC was authorized to provide banks with capital through preferred stock and bond purchases. This change, along with the creation of the Federal Deposit Insurance System, stabilized the banking system. Economic and Noneconomic Rationales for an Agency Like the RFC Beginning 1933, the RFC became more directly involved in the allocation of credit throughout the economy. There are several economic reasons why a government agency might actively participate in the allocation of liquid capital funds. These are market failure, externalities, and noneconomic reasons. A market failure occurs if private markets fail to allocate resources efficiently. For example, small business owners complain that markets do not provide enough loans at reasonable interest rates, a so-called “credit gap”. However, small business loans are riskier than loans to large corporations. Higher interest rates compensate for the greater risk involved in lending to small businesses. Thus, the case for a market failure is not compelling. However, small business loans remain politically popular. An externality exists when the benefits to society are greater than the benefits to the individuals involved. For example, loans to troubled banks may prevent a financial crisis. Purchases of bank capital may also help stabilize the financial system. Prevention of financial crises and the possibility of a recession or depression provide benefits to society beyond the benefits to bank depositors and shareholders. Similarly, encouraging home ownership may create a more stable society. This argument is often used to justify government provision of funds to the mortgage market. While wars are often fought over economic issues, and wars have economic consequences, a nation may become involved in a war for noneconomic reasons. Thus, the RFC wartime programs were motivated by political reasons, as much or more than economic reasons. The RFC was a federal credit agency. The first federal credit agency was established in 1917. However, federal credit programs were relatively limited until the advent of the RFC. Many RFC lending programs were targeted to help specific sectors of the economy. A number of these activities were controversial, as are some federal credit programs today. Three important government agencies and one private corporation that descended from the RFC still operate today. All have important effects on the allocation of credit in our economy. Criticisms of Governmental Credit Programs Critics of federal credit programs cite several problems. One is that these programs subsidize certain activities, which may result in overproduction and misallocation of resources. For example, small businesses can obtain funds through the SBA at lower interest rates than are available through banks. This interest rate differential is a subsidy to small business borrowers. Crop loans and price supports result in overproduction of agricultural products. In general, federal credit programs reallocate capital resources to favored activities. Finally, federal credit programs, including the RFC, are not funded as part of the normal budget process. They obtain funds through the Treasury, or their own borrowings are assumed to have the guarantee of the federal government. Thus, their borrowing is based on the creditworthiness of the federal government, not their own activities. These “off-budget” activities increase the scope of federal involvement in the economy while avoiding the normal budgetary decisions of the President and Congress. Also, these lending programs involve risk. Default on a significant number of these loans might require the federal government to bail out the affected agency. Taxpayers would bear the cost of a bailout. Any analysis of market failures, externalities, or federal programs should involve a comparison of costs and benefits. However, precise measurement of costs and benefits in these cases is often difficult. Supporters value the benefits very highly, while opponents argue that the costs are excessive. The RFC was created to assist banks during the Great Depression. It experienced some, albeit limited, success in this activity. However, the RFC’s authority to borrow directly from the Treasury outside the normal budget process proved very attractive to President Roosevelt and his advisors. Throughout the New Deal, the RFC was used to finance a vast array of favored activities. During World War II, RFC lending to its subsidiary corporations was an essential component of the war effort. It was the largest and most important federal credit program of its time. Even after the RFC was closed, some of its lending activities have continued through agencies and corporations that were first established or funded by the RFC. These descendent organizations, especially Fannie Mae, play a very important role in the allocation of credit in the American economy. The legacy of the RFC continues, long after it ceased to exist. Banking data are from Banking and Monetary Statistics, 1914-1941, Board of Governors of the Federal Reserve System, 1943. RFC data are from Final Report on the Reconstruction Finance Corporation, Secretary of the Treasury, 1959. Currency data are from The Monetary History of the United States, 1867-1960, Friedman and Schwartz, 1963. Bank suspension data are from Federal Reserve Bulletin, Board of Governors, September 1937. Bagehot, Walter. Lombard Street: A Description of the Money Market. New York: Scribner, Armstrong & Co., 1873. Board of Governors of the Federal Reserve System. Banking and Monetary Statistics, 1914-1941. Washington, DC, 1943. Board of Governors of the Federal Reserve System. Federal Reserve Bulletin. September 1937. Bremer, Cornelius D. American Bank Failures. New York: AMS Press, 1968. Butkiewicz, James L. “The Impact of a Lender of Last Resort during the Great Depression: The Case of the Reconstruction Finance Corporation.” Explorations in Economic History 32, no. 2 (1995): 197-216. Butkiewicz, James L. “The Reconstruction Finance Corporation, the Gold Standard, and the Banking Panic of 1933.” Southern Economic Journal 66, no. 2 (1999): 271-93. Chandler, Lester V. America’s Greatest Depression, 1929-1941. New York: Harper and Row, 1970. Friedman, Milton, and Anna J. Schwartz. The Monetary History of the United States, 1867-1960. Princeton, NJ: Princeton University Press, 1963. Jones, Jesse H. Fifty Billion Dollars: My Thirteen Years with the RFC, 1932-1945. New York: Macmillan Co., 1951. Keehn, Richard H., and Gene Smiley. “U.S. Bank Failures, 1932-1933: A Provisional Analysis.” Essays in Economic and Business History 6 (1988): 136-56. Keehn, Richard H., and Gene Smiley. “U.S. Bank Failures, 1932-33: Additional Evidence on Regional Patterns, Timing, and the Role of the Reconstruction Finance Corporation.” Essays in Economic and Business History 11 (1993): 131-45. Kennedy, Susan E. The Banking Crisis of 1933. Lexington, KY: University of Kentucky Press, 1973. Mason, Joseph R. “Do Lender of Last Resort Policies Matter? The Effects of Reconstruction Finance Corporation Assistance to Banks During the Great Depression.” Journal of Financial Services Research 20, no 1. (2001): 77-95. Nadler, Marcus, and Jules L. Bogen. The Banking Crisis: The End of an Epoch. New York, NY: Arno Press, 1980. Olson, James S. Herbert Hoover and the Reconstruction Finance Corporation. Ames, IA: Iowa State University Press, 1977. Olson, James S. Saving Capitalism: The Reconstruction Finance Corporation in the New Deal, 1933-1940. Princeton, NJ: Princeton University Press, 1988. Saulnier, R. J., Harold G. Halcrow, and Neil H. Jacoby. Federal Lending and Loan Insurance. Princeton, NJ: Princeton University Press, 1958. Schlesinger, Jr., Arthur M. The Age of Roosevelt: The Coming of the New Deal. Cambridge, MA: Riverside Press, 1957. Secretary of the Treasury, Final Report on the Reconstruction Finance Corporation. Washington, DC: United States Government Printing Office, 1959. Sprinkel, Beryl Wayne. “Economic Consequences of the Operations of the Reconstruction Finance Corporation.” Journal of Business of the University of Chicago 25, no. 4 (1952): 211-24. Sullivan, L. Prelude to Panic: The Story of the Bank Holiday. Washington, DC: Statesman Press, 1936. Trescott, Paul B. “Bank Failures, Interest Rates, and the Great Currency Outflow in the United States, 1929-1933.” Research in Economic History 11 (1988): 49-80. Upham, Cyril B., and Edwin Lamke. Closed and Distressed Banks: A Study in Public Administration. Washington, DC: Brookings Institution, 1934. Wicker, Elmus. The Banking Panics of the Great Depression. Cambridge: Cambridge University Press, 1996. http://www.fsa.usda.gov/pas/publications/facts/html/ccc99.htm Ex-Im Bank http://www.exim.gov/history.html Fannie Mae http://www.fanniemae.com/company/history.html Small Business Administration http://www.sba.gov/aboutsba/sbahistory.doc Citation: Butkiewicz, James. “Reconstruction Finance Corporation”. EH.Net Encyclopedia, edited by Robert Whaples. July 19, 2002. URL http://eh.net/encyclopedia/reconstruction-finance-corporation/ © EH.Net - Economic History Services

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The hacking of NASDAQ (businessweek.com) Submitted by puddingebola puddingebola writes: Businessweek has an account of the 2010 hacking of the NASDAQ exchange. From the article, "Intelligence and law enforcement agencies, under pressure to decipher a complex hack, struggled to provide an even moderately clear picture to policymakers. After months of work, there were still basic disagreements in different parts of government over who was behind the incident and why. “We’ve seen a nation-state gain access to at least one of our stock exchanges, I’ll put it that way, and it’s not crystal clear what their final objective is,” says House Intelligence Committee Chairman Mike Rogers, a Republican from Michigan, who agreed to talk about the incident only in general terms because the details remain classified. “The bad news of that equation is, I’m not sure you will really know until that final trigger is pulled. And you never want to get to that.”" The hacking of NASDAQ

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Overview Culture and People Business Groups Rewards and benefits Inclusion and Diversity Campus Recruiting Job Search Our history Ideas, innovations and growth Beginning with its founding in 1988, BlackRock’s story over a quarter of a century is about a commitment to putting clients first, innovative thinking, passion for performance and a remarkable collaboration. Something different: 1988-1994 BlackRock began in 1988 with eight people in a single room who believed they could build a better asset management firm. They shared a determination to put client needs and interests first and a dedication to clear thinking and fact-based, data-driven investing, as well as a passion for understanding and managing risk. Founded under the umbrella of The Blackstone Group, the firm initially focused primarily on fixed-income. By listening to clients and understanding their unmet needs, the firm was able to develop important early innovations related to closed-end funds, trusts, defined contribution plans and more. One of these was the Blackstone Term Trust, which raised $1 billion and set the business on a path of steady growth and success. Development also began on Aladdin®, the unified investment platform that combines trading, risk management, and client reporting. Aladdin’s capacity for insight would distinguish BlackRock as an investment and risk manager and become the basis for the BlackRock Solutions business. In 1992, the firm adopted the name BlackRock. By the end of that year, BlackRock had $17 billion in assets under management; at the end of 1994, the figure was $53 billion. Aladdin®: Powering our collective intelligence Aladdin is BlackRock's central nervous system. The platform powers the collective intelligence of our people around the globe—helping us see clearer, work smarter, and make better decisions. Video - Aladdin: Powering BlackRock's Collective Intelligence Seeds of diversification: 1995-2004 Now established as BlackRock, in 1995 the firm became a subsidiary of the bank holding company, PNC Financial, and soon began managing open-end mutual funds, including equity funds. The association with PNC gave BlackRock access to PNC’s large distribution network and opportunities for diversification through alliances and mergers with PNC affiliates specializing in equity and other investments. As it diversified, the firm developed the concept of One BlackRock, which would become a core principle. Where many companies were structured with autonomous business units, BlackRock insisted instead on a coordinated platform. Managing fixed-income, equity and other businesses together, BlackRock put in place a client-centric business model in which the entire firm’s resources and products can be leveraged for the benefit of clients. In 1999, BlackRock went public with broad employee ownership. By the end of that year, the firm had $165 billion in assets under management and that figure would grow to $342 billion by the end of 2004. BlackRock is listed on the New York Stock Exchange, 1999. A diversified global asset manager: 2005 to today By 2005 BlackRock had strong fixed-income, equity and advisory businesses. The firm now undertook a series of transformational mergers that added core investment competencies. Beginning with the acquisition of Merrill Lynch Investment Managers early in 2006, these mergers strengthened BlackRock's products and services mix with more offerings in equity, multi-asset products and alternatives, and they greatly expanded the firm's scale and global reach. The biggest of the mergers took place in 2009, when BlackRock acquired Barclays Global Investors, giving the firm additional active, index and exchange traded fund capabilities through iShares. In this period, BlackRock pioneered multi-asset solutions. The firm became the market leader by bringing together teams that provided a range of client offerings into one unit, combining asset allocation and a host of product solutions that spanned asset classes. Leveraging earlier work, including BlackRock Solutions, BlackRock began providing impartial advice through Financial Markets Advisory (FMA). The FMA team helps governments, financial institutions and other public and private capital markets participants around the world understand their investments and risk. Today, BlackRock is the leading global asset manager, serving many of the world's largest companies, pension funds, foundations, and public institutions as well as millions of people from all walks of life. All figures as of 12/31/15

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Home > Regulations and Examinations > Bank Examinations > Supervisory Insights - Summer 2011 Supervisory Insights - Summer 2011 Managing Risks in Third-Party Payment Processor Relationships From the Examiner's Desk Regulatory and Supervisory Roundup From the Examiner's Desk: SBA Lending: Insights for Lenders and Examiners This regular feature focuses on developments that affect the bank examination function. We welcome ideas for future columns. Readers are encouraged to e-mail suggestions to [email protected]. The FDIC encourages banks to lend to creditworthy small businesses, and Small Business Administration (SBA) loans provide an avenue for small business lending that is of interest to many institutions. To participate in SBA lending, lenders must be knowledgeable about the products, rules, and documentation specific to SBA loan programs. This article provides useful information that will help lenders successfully navigate the requirements related to underwriting, servicing, and selling SBA loans. In the wake of the financial crisis, community banks are looking for ways to stabilize and increase revenue and expand lending opportunities to small businesses to help reinvigorate local economies. As a result, interest in Small Business Administration (SBA) lending programs is growing. Created in 1953, the SBA provides support to small businesses through entrepreneurial development, government contracting, advocacy, and access to capital. This article provides information that may be of use to bankers involved in SBA lending and examiners involved in reviewing these activities. Small businesses are a critical driver in the U. S. economy and access to credit is an important component to support their operations. However, these firms often lack sufficient collateral to pledge or require longer repayment periods on loans than most lenders can prudently provide. The federal banking agencies recognize the importance of credit availability to creditworthy small businesses and other borrowers, and have issued industry guidance to encourage prudent lending.1 Addressing the current credit needs of local communities, combined with a goal by some institutions to reduce reliance on higher-risk land development and speculative single-family residential construction lending, have made commercial and industrial (C&I) lending - particularly to small businesses - increasingly attractive to smaller institutions. However, for some community banks, increasing C&I lending can present challenges to loan officers unfamiliar with this business line and can heighten the risk of loss to a bank’s portfolio. SBA lending, traditionally focused on C&I lending, offers a wide range of products and requires specialized expertise to manage the risks and minimize potential losses. SBA products are intended to minimize the risk and increase the profitability of small-business loans by encouraging lenders to loan against lower collateral values and offer longer repayment periods. The SBA guaranty, while an attractive feature, is conditional,2 and a lender’s ability to obtain the guaranty is subject to specific rules requiring considerable documentation (referred to henceforth as “The Rules”).3 This article focuses on the SBA products lenders most often use and the requirements for underwriting, servicing, risk grading, liquidating, and selling SBA loans. SBA Lending Products The SBA is well known for the guaranty programs it administers, including 504 and 7(a) programs. (See Chart 1 for information on the volume of 504 and 7(a) loans outstanding since 2002.) The 504 Loan Program provides small businesses with long-term financing to acquire major fixed assets, such as real estate, machinery, and equipment. Typically, lenders will finance 50 percent of the acquisition with a senior lien. The business will provide at least 10 percent equity and the remaining balance is financed by a Certified Development Company (CDC) with a second lien. A CDC is a private, nonprofit corporation that contributes to local economic development. The CDC receives funding from a debenture that is 100 percent guaranteed by the SBA. The advantage under this program is that the CDC portion is a fixed, below market rate loan for 20 years. The 7(a) Loan Program features a range of products, including standard, special-purpose, express, export, and rural business loans. These loans are funded by lenders and conditionally guaranteed by the SBA. Banks participate in 7(a) Loan Programs as a regular, certified, preferred, SBAExpress, or Patriot Express lender and must submit applications to the SBA to receive approval for these designations. Each designation provides lenders with varying degrees of authority and responsibility. The preferred, SBAExpress, and Patriot Express designations allow lenders to make loan approval decisions without prior review by the SBA; lenders must be approved for these designations every two years. The SBA makes all loan approval decisions under the regular and certified designations. The most widely used 7(a) programs are standard and SBAExpress loans. As of May 2011, Standard 7(a) program loans are for a maximum of $5,000,000 with a guaranty of no more than $3,750,000 or 75 percent of the loan amount. Standard loan terms can be up to 25 years for real estate, up to 10 years for equipment, and up to 7 years for working capital.4 Interest rates are based on published indices as well as the size and maturity of the loan. The SBA Express program features an accelerated loan approval process. As of May 2011, the guaranty is 50 percent of the loan amount, and the maximum loan is $1,000,000.5 The advantage is that lenders can use their own closing documents – rather than SBA closing documents – which saves time and expense. This program also allows lenders to fund lines of credit up to 7 years, which is not allowed under the standard program. Requirements for underwriting, servicing, risk grading, and liquidating SBA loans often differ from those for conventional lending programs. As a result, lenders should identify and understand these requirements and develop an SBA lending program that includes opportunities for ongoing training. Underwriting SBA Loans The 7(a) Program is primarily designed to support loans that have a reasonable assurance of timely repayment but that may have weaker collateral protection. The Rules state the underwriting requirements, including: Lenders must analyze each application in a commercially reasonable manner, consistent with prudent lending standards. On SBA-guaranteed loans, the cash flow of the Small Business Applicant is the primary source of repayment, not the liquidation of collateral. Thus, if the lender’s financial analysis demonstrates that the Small Business Applicant lacks reasonable assurance of repayment in a timely manner from the cash flow of the business, the loan request must be declined, regardless of the collateral available. (SOP 50 10 5 (C), Chapter 4. See http://www.sba.gov/content/lender-and-development-company-loan-programs) For example, a dentist may need working capital to open a practice. Based on a feasible business plan,6 the cash flow for the practice may be acceptable, but only limited collateral may be available for protection. In this case, a lender may seek a guaranty to bolster collateral protection. In short, the guaranty does not make a risky loan viable and should not induce a lender to make a risky loan. The Rules also outline the information required in a credit approval memorandum. The minimum requirements include: A discussion of the owners’ and managers’ relevant experience in the type of business, as well as their personal credit histories. A financial analysis of repayment ability based on historical income statements and/or tax returns (if an existing business) and projections, including the reasonableness of the supporting assumptions. A site visit consistent with the lender’s internal policy for similarly sized non-SBA guaranteed commercial loans. (See also Chapter 2, Paragraph IV.H.7.a)(2) of this Subpart and Paragraph II.C.4 of this Chapter.) (SOP 50 10 5(C), Chapter 4. See http://www.sba.gov/content/lender-and-development-company-loan-programs). If these requirements are not included in a lender’s underwriting practices, the guaranty may be jeopardized, increasing the overall risk of the portfolio. Following approval of the loan, the SBA provides a Loan Authorization to the lender. The Loan Authorization states the terms and conditions of the SBA’s guaranty, including the required structure, collateral, terms, lien position and disbursement of funds. The lender is responsible for closing the loan in compliance with the Loan Authorization; not doing so may place the guaranty at risk. Lenders must disburse the loan proceeds in accordance with the Loan Authorization and document each disbursement. The documentation must contain sufficient detail for the SBA to determine: The recipient of each disbursement; The date and amount of each disbursement; The purpose of each disbursement; and Evidence to support disbursements, such as cancelled checks or paid receipts, to ensure that the borrower used loan proceeds for purposes stated in the Authorization. (SOP 50 10 5(C), Chapter 7. See http://www.sba.gov/content/lender-and-development-company-loan-programs). The underwriting process includes critical steps which lenders must follow, including verifying the eligibility of a business, scrutinizing cash-flow projections, verifying the borrower’s and guarantor’s statement of personal history, obtaining all available collateral, and properly documenting and funding disbursements.7 In addition, the underwriting process will benefit from the incorporation of these best practices: using SBA documentation software, centralizing the documentation preparation process, creating documentation checklists and credit approval reports specific to SBA lending, using attorneys with SBA experience for closings, and centralizing documentation review after closings. Servicing SBA Loans Once a loan is closed and disbursed, lenders must service 7(a) loans as carefully as they would the non-SBA portfolio. For example, throughout the life of a loan, lenders must ensure that documents requiring periodic renewals, such as hazard insurance and Uniform Commercial Code (UCC) -1 financing statements,8 remain current. A lender is also required to submit a report to Colson Services Corp. (Colson Report) every month.9 The Colson Report includes information about the next due date, status of the loan, undisbursed loan amount, guaranteed portion of principal and interest received, and the guaranteed portion of the outstanding balance. Lenders can modify terms by extending maturities, implementing interest-only periods, and releasing collateral. The SBA encourages lenders to work with borrowers as concessions generally are within the framework of The Rules. However, certain modifications require the SBA’s approval. If a concession is granted because of a borrower’s financial difficulties, the modified loan would be a troubled debt restructuring that should be appropriately accounted for and disclosed based on outstanding guidance for such restructurings, including the measurement of impairment under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 310, Receivables (formerly FASB Statement No. 114, “Accounting by Creditors for Impairment of a Loan”), and nonaccrual treatment. Small-business loans are not predominantly collateral dependent; as a result, impairment calculations should be consistent with the present value methodology.10 In cases where the loan book value (Call Report balance) and the customer balance (contractual obligation) are different, lenders are required to report the customer balance in the Colson Report. Common servicing missteps on SBA loans include not renewing appropriate documents, releasing collateral without prior SBA approval (when required), modifying credits inappropriately, or incorrectly assuming that the existence of the guaranty means that problem credits need not be reported as such. As with non-SBA loans, lenders should collect and analyze annual financial statements and consider incorporating the following best practices into their servicing processes and procedures: using SBA documentation software for the Colson Report, referring to the SBA Servicing and Liquidation Actions 7(a) Lender Matrix11 before making any modifications, and documenting the reasons for any modifications in the credit files. Risk Grades for SBA Loans Lenders should risk grade the SBA portfolio using the same metrics applied to the non-SBA portfolio. SBA loans will tend to fall into higher-risk grade categories because of the longer amortizations, weak collateral protection, and general volatility12 given that the majority of these loans are for less-established businesses. Lenders may mistakenly rely on the guaranty in assigning a lower risk grade to a higher-risk loan. Lenders must keep in mind that risk grades should reflect the underlying risk of SBA loans without consideration of the guaranty. If adverse classification is warranted, examiners should consider the extent of the protection provided by the guaranty when determining the portion to be classified. If no deficiencies are identified with the underwriting, servicing, or liquidation documentation, adverse classifications generally will be limited to the unguaranteed portion. However, if deficiencies are identified, the guaranty is put at risk for reduction or denial by the SBA, and examiners should consider adversely classifying the entire loan. Liquidation of Collateral Lenders should make every effort to work with borrowers before considering liquidation of collateral. When a business fails, the lender is responsible for documenting the liquidation of collateral for the highest possible recovery. This includes allowing the borrower to liquidate collateral for the lender,13 or the lender taking possession to liquidate. If a loss14 exists, the lender must file a 10 Tab package for the SBA to purchase the unpaid principal amount of the guaranteed portion of the loan; this package requires certain underwriting, servicing, and liquidation documentation.15 (See Chart 1 for information on the volume of guarantees purchased by the SBA since 2002.) If the lender submits a complete 10 Tab package, the SBA generally will purchase the guaranteed portion within 45 business days. However, purchase of the guaranteed portion could take significantly longer if the 10 Tab package does not include all required information. As part of a SBA loan liquidation, lenders must conduct site visits, properly dispose of collateral, and accurately apply recoveries to SBA loans.16 In addition, lenders should consider centralizing the completion of the 10 Tab package, using the SBA Servicing and Liquidation Actions 7(a) Lender Matrix before liquidation, and documenting all actions during liquidation. Losses Associated with SBA Lending Lenders could incur additional losses on SBA loans if they do not carefully follow appropriate underwriting, servicing, and liquidating processes. If deficiencies are identified with these processes, the SBA determines the impact these deficiencies have on losses. Depending on the severity of the deficiency, the SBA has the option of repairing the guaranty, which occurs when the SBA discounts or reduces the amount of the guaranty. For example, if a lender fails to file a lien on equipment that is a small percentage of total collateral protection, the SBA will deduct the value of the equipment from the unpaid principal amount of the guaranteed portion of the loan it will be purchasing. However, if the deficiency is considered significant, the SBA will deny the guaranty. For example, if the borrower’s small business fails because the fire and the hazard insurance coverage had expired, the SBA will deny purchase. In many cases, the SBA may advise a bank to withdraw a 10 Tab package if a significant deficiency is identified, rather than formally denying the package. Loan Sales Following the origination of an SBA loan, lenders can hold loans to their maturity (hold model) or sell the guaranteed portion of loans to the secondary market (sale model). The hold model provides lenders with a long-term source of interest income. The sale model provides high levels of non-interest income but also requires high levels of loan originations.17 Accounting for Loan Sales Under generally accepted accounting principles, a transfer of the guaranteed portion of an SBA loan must be accounted for in accordance with the FASB ASC Topic 860, Transfers and Servicing (formerly FASB Statement No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” as amended by FASB Statement No. 166, “Accounting for Transfers of Financial Assets”). ASC Topic 860 provides that, in order for a transfer of a portion of an entire financial asset to qualify for sale accounting, the portion first must meet the definition of a “participating interest” and then must meet all of the sales conditions set forth in this topic. Because of a recent policy change by the SBA that applies to the transfer of the guaranteed portion of an SBA loan at a premium, the transferred guaranteed portion and the lender’s retained unguaranteed portion should now normally meet the definition of a “participating interest” on the transfer date. Assuming that is the case and if all of the conditions for sale accounting in ASC Topic 860 are met, the transfer of the guaranteed portion of an SBA loan at a premium as of the date of this article would now qualify as a sale on the transfer date, with immediate recognition of any gain or loss on the sale in earnings. However, if the transferred guaranteed portion of an SBA loan does not meet the definition of a “participating interest,” the transfer of the guaranteed portion must be accounted for as a secured borrowing rather than a sale. This would be the case when a transfer of the guaranteed portion is at par and the transferring lender agrees to pass interest through to the party obtaining the guaranteed portion at less than the contractual interest rate, and the size of the spread between the contract rate and the pass-through rate is viewed as creating an interest-only strip. For further information, refer to the Supplemental Instructions for the Consolidated Reports of Condition and Income (Call Report) for first quarter 2011, which are attached to FIL-19-2011, April 6, 2011, http://www.fdic.gov/news/news/financial/2011/fil11019.html, and the Glossary entry for “Transfers of Financial Assets” in the Call Report Instruction Book. In the secondary market, guaranteed loans are liquid and command a premium. Investors buy these loans because the interest rates are generally high compared to the risk, as the only risk the investor incurs is prepayment risk. Loans with longer terms and higher yields realize higher premiums. The lender retains all servicing rights for sold loans and must follow the servicing requirements in The Rules. The lender receives a monthly minimum servicing fee of one percent on an annualized basis on the unpaid principal amount of the guaranteed portion of the loan that is sold at a premium. For example, for a hypothetical $1,000,000 loan originated with a 75 percent guaranty, the income might be broken down as follows: 1,000,000 x .75 = $750,000 Servicing Fee $750,000 x .01 = $7,500 annually18 $750,000 x .10 = $75,000 The lender would realize $82,500 in the first year and $7,500 each subsequent year until the loan matures.19 Because the benefits of servicing typically are expected to more than adequately compensate the lender for performing servicing, the lender also books an intangible servicing asset and is required to value the servicing asset correctly.20 In many cases, the lender will rely on a consultant or accountant to provide quarterly valuations. The sale model may be more prone to disruption or unexpected developments because of issues with loan restructurings and reliance on the level of originations. The secondary market is less receptive to loan modifications and restructurings because the SBA is required to repurchase the guaranteed portion of a loan after 60 days of non-payment.21 The secondary market would rather see the loan repurchased than concede interest income for an extended period of time as a result of a restructuring involving a reduction in the stated interest rate on the loan. In addition, under the sale model, the amount of premium income a lender receives is based on the number of originations. As a result, to reach origination and premium income goals, lenders may relax underwriting standards or tie employee performance reviews and compensation to the number of originations without adequately considering risk. It is critical that lenders underwrite these loans as if they were planning to hold them and place emphasis on originating prudent loans when developing employee performance and compensation plans. Incentive compensation arrangements, in particular, should balance financial rewards to the employee with the long-term health of the institution.22 It is critical that examiners understand what to look for when reviewing SBA loan portfolios. The next section provides information examiners need to consider when evaluating a lender’s SBA program. Reviewing an SBA Portfolio Experience suggests examiners should consider the following areas when risk focusing a review of a bank’s SBA program: Review the lending policy. If involved in SBA lending, the institution must address this type of lending in its Lending Policy. The Policy could borrow language from or reference The Rules to help ensure all relevant areas are covered. The Policy should include the types of SBA programs in which the bank will engage, any asset limits on specific SBA programs, the normal trade area for SBA lending, and any credit concentration limitations. Review the internal risk-grade process. Evaluate how accurately management identifies and measures risks in SBA loans. To ensure lenders are not grading loans too highly because of the SBA guaranty, an internal loan review system specific to the SBA loan portfolio must be designed and implemented. This system should verify that initial grades are appropriate and any grade changes are made when needed. The risk grading system for SBA loans can be part of a lender’s overall internal loan review system, but should effectively capture the specific risks that SBA loans pose to the institution. Review ongoing training. The Rules are extensive and updated regularly. As a result, lenders should receive comprehensive training before engaging in SBA lending and enroll in ongoing training to remain current on any updates. Training is offered by the SBA, trade associations such as the National Association of Government Guaranteed Lenders (NAGGL),23 consultants, and attorneys. Review the SBA audit report. The SBA performs on-site audits for all lenders with $10 million or more in outstanding SBA loans. These audits are performed at least every two years and address portfolio performance, SBA management and operations, credit administration, and compliance. If a lender cannot provide a copy of the audit report, the examiner should contact the lender’s SBA District Office. Review the quarterly Lender Portal report. The SBA tracks various portfolio performance ratios, such as past-due, liquidation, and delinquency rates. Based on portfolio performance, the SBA assigns a Lender Risk Rating of “1” to “5” (“1” representing optimal performance). Lenders rated “1” are considered strong in every respect, a “2” rating is considered good, lenders rated “3” are considered average, a “4” rating is considered below average, and lenders rated “5” are considered well below average. All lenders have access to their Lender Portal report, but must first register on the SBA Web site at http://www.sba.gov/content/lender-portal-login. If a lender cannot provide a copy of the Lender Portal report, the examiner should contact the lender’s SBA District Office. Review the number of repairs, denials, and withdrawals of guarantees for the lender.This information should be available from the lender. Review for any industry credit concentrations. Examiners should perform more in-depth reviews of portfolios with high industry concentrations. Bank management should monitor credit concentrations by North American Industry Classification System (NAICS) codes, and this information should be made available to the examiner. Industries have different SBA failure rates and repurchase rates. For example, from October 1, 2000 to September 30, 2009, SBA loans to the veterinary services industry had the lowest combined failure and repurchase rates while the shellfish fishing industry ranked highest among the larger industries (see Chart 2 and Chart 3).24 Review for general concentrations. In general, concentrations of credit add a dimension of risk that should be monitored, measured, and controlled by management. Common risk factors such as borrower affiliation, industry, and geographic location should be considered when assessing portfolio risk and establishing concentration limits. Excessive or unmonitored exposures would require heightened scrutiny during the examination process. Review the Loan Authorization of a credit. Evaluate how well management has documented the authorization requirements and determine if supporting documentation for disbursements satisfies the Loan Authorization. Weak practices in this area should be noted in examination findings. SBA-guaranteed loans present opportunities for banks to expand their lending to small businesses. However, lending to small businesses, even with an SBA guaranty, is not without risk. Small disruptions in cash flow can significantly affect the viability of the business and, therefore, the performance of the loan. Small businesses that require SBA loan guarantees carry additional risk due to other weaknesses that may disqualify them from conventional lending, such as insufficient collateral and longer amortizations. Lenders must take particular care to understand the technical and detailed requirements for SBA underwriting, servicing, and liquidation processes. In addition, loan risk grades should be determined without regard to the protection afforded by the SBA guaranty. Lenders should appropriately identify the risks in SBA loans and not assign unrealistic risk grades inconsistent with those assigned to non-SBA loans. The guaranty does not provide additional support for weaker cash flow loans, improve risk grades, or make risky loans viable. Examiners’ review of SBA portfolios is intended to help ensure prompt identification of shortcomings or weaknesses in an institution’s SBA lending program. Together, examiners and lenders can work to correct and strengthen existing policies and procedures. Ryan C. Senegal Supervisory Examiner Bryan P. Stevens Mr. Stevens was formerly a Loan Review Specialist with the FDIC. 1 Interagency Statement on Meeting the Credit Needs of Creditworthy Small Business Borrowers (FIL-5-2010, February 12, 2010, http://www.fdic.gov/news/news/financial/2010/fil10005.html) and Interagency Statement on Meeting the Needs of Creditworthy Borrowers (FIL-128-2008, November 12, 2008, http://www.fdic.gov/news/news/financial/2008/fil08128.html). 2 However, when the guaranteed portion of an SBA loan is transferred to an investor in the secondary market, the SBA’s guaranty becomes unconditional as it applies to the investor. 3 These requirements are outlined in Standard Operating Procedures (SOPs), official notices, and procedural guides for each program (referred to in this article collectively as “The Rules”). SOPs cover policies and procedures for all guaranteed lending program and include SOP 50 10 (Credit/Underwriting), SOP 50 50 (Servicing), and SOP 50 51 (Liquidation). Notices provide information or update policy and procedures. The Rules are very detailed, and lenders should check regularly for updates. The Rules are subject to change, and a guaranty is subject to The Rules outstanding at origination. If The Rules have been updated since origination, examiners should refer to The Rules outstanding at origination. 4 Terms are subject to change. For current terms, refer to the SBA Program Matrix at http://www.sba.gov/sites/default/files/files/Loan%20Chart%20HQ%202011.pdf. 5 See footnote 4. 6 Lenders should scrutinize cash-flow projections and should not accept projections without analyzing the feasibility of the underlying assumptions. 7 Verifying the statement of personal history includes checking for prior tax liens, felony convictions, or defaults on any government debt, such as a student loan. Although the SBA will work with borrowers with limited collateral, it generally requires all available collateral be pledged to the loan. Disbursements include no funds to pay for purposes other than approved. 8 A lender must file UCC -1 financing statement to perfect the lender’s security interest in borrower assets. This document is in effect for five years unless a continuation statement is filed. 9 Colson Services Corp. provides loan payment accounting and servicing to the SBA. For more information, go to http://www.colsonservices.com/main/index.shtml. 10 If an impaired small-business loan is collateral dependent, impairment should be measured based on the fair value of the collateral. 11 The Matrix can be found at http://www.sba.gov/about-sba-services/7482/3636. 12 Bureau of Labor Statistics data show that only 49 percent of establishments survive at least 5 years; 34 percent survive at least 10 years; and 26 percent survive 15 years or more. U.S. Small Business Administration, “Frequently Asked Questions,” http://www.sba.gov/sites/default/files/files/sbfaq.pdf. 13 In these cases, the lender is required to inventory the collateral and conduct site visits every 90 days. 14 In addition to collateral shortfall, this includes 120 days of accrued interest and collections costs, such as reasonable attorney and appraisal fees. 15 The 10 Tab package was developed by the SBA and contains mandatory documentation for all guaranty purchases. If a borrower files for bankruptcy protection, the lender may file a 10 Tab package before liquidating all collateral. If a business fails within 18 months of the origination of the loan, the SBA requires that the lender submit all underwriting, servicing, and liquidation documentation. 16 In some cases, lenders will fund other non-SBA guaranteed loans and attempt to apply recoveries to these loans before the SBA loan with senior lien position. 17 For the purposes of this discussion of loan sales, transfers of guaranteed portions of SBA loans are presumed to be at a price in excess of par (i.e. at a premium) and to qualify for sale accounting as of the transfer date. 18 This assumes that the loan does not amortize and principal remains constant. In most cases, the unpaid principal amount would decline as the loan is repaid, so even in the first year the servicing fee would be less than $7,500. 19 See footnote 16. 20 A servicing asset is initially measured at fair value. Each class of servicing assets should be subsequently measured using either the amortization method (with quarterly assessments of impairment based on fair value) or the fair value measurement method. For further information, see FASB ASC Topic 860 and the Glossary entry for “Servicing Assets and Liabilities” in the Call Report instruction book. 21 Lenders retain responsibility for reimbursing the SBA for any repairs or denials on the loans repurchased. 22 Interagency Guidance on Sound Incentive Compensation Policies (FDIC Press Release 138-2010, June 21, 2010, http://www.fdic.gov/news/news/press/2010/pr10138.html). 23 NAGGL is the most prominent trade association for SBA lenders. For more information on this trade group’s activities, go to http://www.naggl.org. 24 Information from the 2010 NAICS Coleman Report. Larger industries have disbursed loan volumes that exceed the average during the period. For more information, go to http://www.colemanpublishing.com. Last Updated 06/21/2011 [email protected] Skip Footer back to content

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ICI Responds to Hearing on Excessive Speculation By Stephanie Ortbals-Tibbs ICI issued the following statement in response to today’s hearing, “Excessive Speculation and Compliance with the Dodd-Frank Act,” before the Senate’s Permanent Subcommittee on Investigations. Investors depend on mutual funds and exchange-traded funds (ETFs) as a low-cost, highly regulated tool for building diversified portfolios to achieve their most important financial goals. Funds that offer their investors some degree of commodities exposure do so in accordance with the existing rules of the SEC and CFTC, and with the specific permission of the IRS. Unfortunately, today’s hearing overlooked virtually all of this. ICI and its members will continue to work with Congress and regulators to ensure that all fund regulation remains strong, sensible, and focused on protecting fund shareholders. For more from ICI on funds, commodities, and investor protections, see the following links: ICI Viewpoints: Wall Street Journal Falls Short with Story on Funds’ Commodity Investments (April 26, 2011) ICI testimony: “Implementing Dodd-Frank: A Review of the CFTC’s Rulemaking Process” (April 13, 2011) ICI Viewpoints: ICI Letter Details Benefits of Having Diversified Funds Investing in the Futures and Swaps Markets (January 12, 2011) ICI resource center: Financial Services Regulatory Reform. ICI resource center: ETFs 2011 Investment Company Fact Book: Learn more about limits on leverage and other investor protections in the appendix “How U.S.-Registered Investment Companies Operate and the Core Principles Underlying Their Regulation.” Stephanie Ortbals-Tibbs is a Director for Media Relations at ICI. © 2016 Investment Company Institute. All rights reserved. Information may be abridged and therefore incomplete. Communications from the Institute do not constitute, and should not be considered a substitute for, legal advice.

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OverviewOur ProfileCorporate ResponsibilityInvestor RelationsPress Room Press ReleasesMedia Contacts Press Room Print METLIFE AND NORGES BANK INVESTMENT MANAGEMENT BUY ONE BEACON STREET TOWER IN BOSTON JOINT VENTURE ADDS FOURTH PROPERTY TO ITS GROWING PORTFOLIO NEW YORK, July 28, 2014 - MetLife, Inc. (NYSE: MET) and Norges Bank Investment Management today announced that they have bought the One Beacon Street office building in Boston for approximately $561 million. This is the second property investment in Boston and the fourth overall for the joint venture, which now has a real estate portfolio with a gross value of approximately $2.4 billion. MetLife and Norges Bank Investment Management bought the 34-story office tower from a joint venture of Beacon Capital Partners and insurer Allianz. MetLife will own 52.5 percent of One Beacon Street and be the managing member, while Norges Bank Investment Management will own the remaining 47.5 percent. Located in Boston's financial district, One Beacon Street is LEED Platinum certified and offers more than one million square feet of office space. Built in 1973, One Beacon Street is currently about 85 percent leased, with current tenants including the Massachusetts Housing Finance Agency, the University of Massachusetts, the University of Massachusetts Building Authority, Standard Life Investments (USA) Limited and JPMorgan Chase Bank, National Association. "One Beacon Street in Boston adds a high-quality asset in a core market to our joint portfolio with Norges Bank Investment Management," said Robert Merck, senior managing director and global head of real estate investments for MetLife. "Our partnership with the world's largest sovereign wealth fund is built on a strategy of providing first-rate asset management and of investing for the long-term to bring strong returns to our stakeholders." The three other properties in the joint venture's portfolio are: One Financial Center in Boston; District Center (formerly the Thurman Arnold Building) at 555 12th Street, NW, in Washington, D.C.; and 425 Market Street in San Francisco. About MetLife MetLife, Inc. (NYSE: MET), through its subsidiaries and affiliates ("MetLife"), is one of the largest life insurance companies in the world. Founded in 1868, MetLife is a global provider of life insurance, annuities, employee benefits and asset management. Serving approximately 100 million customers, MetLife has operations in nearly 50 countries and holds leading market positions in Japan, Latin America, Asia, Europe and the Middle East. For more information, visit www.metlife.com. About Norges Bank Investment Management Norges Bank Investment Management safeguards and builds financial wealth for future generations as the manager of the Norwegian Government Pension Fund Global. The Fund is invested globally in equity, fixed-income and real estate markets. The Fund managed approximately $890 billion as of the end of July 2014. Fred Pieretti (347) 265-8515 [email protected] First Quarter 2016 Financial Update CFO John Hele Provides First Quarter 2016 Financial Update Watch Now! Speeches, Testimony and Q&A SIFI Designation Customer and Intermediary Q&A MetLife CEO Steve Kandarian in a major address on systemic risk says the federal government should focus on regulating risky activities not institutions. Read Kandarian's Keynote MetLife Americas President William J. Wheeler testifies before Congress on systemic risk. Read transcript from May 2012 Related Links 2012 Calculators & Tools | Life Insurance | Investor Relations | Press Room | Site Map | Legal Notices | Privacy Policy |

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http://www.reason.org/news/show/why-the-stimulus-plan-wont-wor Why the Stimulus Plan Won't WorkAnd several ideas that might Veronique de Rugy President Barack Obama insists that the massive $800 billion stimulus package is necessary to avoid "catastrophe." Indeed, during his first primetime news conference, Obama said bigger was better, and pointed to Japan's failed stimulus packages as a reason to go really big. "We saw this happen in Japan in the 1990s, where they did not act boldly and swiftly enough," Obama stated. "And, as a consequence, they suffered what was called the lost decade, where essentially, for the entire '90s, they did not see any significant economic growth." Obama is right to cite the example of Japan. That nation's collapsed housing and stock markets in the 1990s are very relevant to today's recession. Between 1992 and 1999, Japan passed eight stimulus packages, totaling roughly $840 billion in today's dollars. During that time, the debt-to-Gross Domestic Product (GDP) ratio skyrocketed, the country was rocked by massive corruption scandals, and the economy never recovered. All Japan had to show for it was a mountain of debt and some public works projects that look suspiciously like bridges to nowhere. Will the goods and services in the Democrats' stimulus plan—be they concrete for new highway projects or groceries for hungry families—pump up flagging demand and boost stalled economic activity? If so, it will be the first time in recorded history. Take the New Deal. According to the economists Christina Romer, chair of Mr. Obama's Council of Economic Advisers, and David Romer, New Deal spending did not pull the economy out of recession. In a 1992 Journal of Economic History paper, the Romers examined the role that aggregate demand stimulus played in ending the Great Depression. They concluded: "A simple calculation indicates that nearly all of the observed recovery of the U.S. economy prior to 1942 was due to monetary expansion. Huge gold inflows in the mid- and late-1930s swelled the U.S. money stock and appear to have stimulated the economy by lowering real interest rates and encouraging investment spending and purchases of durable goods." Even the massive spending during World War II, long touted for pulling America out of the Depression, didn't necessarily help. In a 2006 paper for the National Bureau of Economic Research, economists Joseph Cullen and Price V. Fisher asked whether the local economies that were the biggest beneficiaries of federal spending on military mobilization during World War II experienced more rapid growth in consumer economic activity than others. Their finding: Military spending had virtually no effect on consumption. Another economist, Robert Higgs, offered an even more thoroughgoing critique in an excellent 1992 Journal of Economic History paper. After challenging the conventional portrayal of economic performance during the 1940s, Higgs concluded that "the war itself did not get the economy out of the Depression. The economy produced neither a 'carnival of consumption' nor an investment boom, however successfully it overwhelmed the nation's enemies with bombs, shells, and bullets." Breaking windows in France and Germany didn't bring prosperity in America. In his 2008 book Macroeconomics: A Modern Approach, Harvard economist Robert Barro shows that $1 of government spending in wartime produces less than $1 in GDP—80 cents, to be exact. Stanford economist Bob Hall and Sand Hill Econometrics chief Susan Woodward, neither particularly pro-market, argued recently that each dollar of government spending during World War II and the Korean War produced about $1 of GDP. In other words, the economy is not stimulated by war spending. Most taxpayers are familiar with the two most recent failed stimulus experiments. The Bush administration passed the Tax Relief Act of 2001 and the Economic Stimulus Act of 2008, two similar tax rebate packages with similar effects on the economy. Which is to say, not much. In 2008, the major component was sending $100 billion in cash to Americans so they would have more to spend and thus jump-start the economy. It failed. People spent little, if anything, of the temporary rebate, and consumption did not recover. The theory of economic stimuli suffers from several serious problems. First, it assumes people are stupid. Tax rebates, for example, presume that if people get money to increase their consumption, businesses will expand their production and hire more workers. Not true. Even if producers notice an upward blip in sales after the rebate checks go out, they will know it's only temporary. Companies won't hire more employees or build new factories in response to a temporary increase in sales. Those who do will go out of business. Second, the thinking behind stimulus legislation assumes that the government is better at spending $800 billion than the private sector. When President Obama says, "We'll invest in what works," he means, "unlike you bozos." The president's faith in Washington is charming, but politics rather than sound economics guide government spending. Politicians rely on lobbyists from unions, corporations, pressure groups, and state and local governments when they decide how to spend other people's money. By contrast, entrepreneurs' decisions to spend their own cash are guided by monetary profit and loss. That's likely to work better and certain to produce more innovation. But the biggest problem is that the government can't inject money into the economy without first taking money out of the economy. Where does the government get that money? It can either borrow it or collect it from taxes. There is no aggregate increase in demand. Government borrowing and spending doesn't boost national income or standard of living; it merely redistributes it. The pie is sliced differently, but it's not any bigger. Stimulus packages—and present or future tax increases that fund government spending—end up burdening the economy. Such was the case in the 1930s, during World War II, and in 1990s Japan. Thankfully, the 2001 and 2008 tax rebates, while ineffective as stimuli, didn't make things worse. If politicians actually want to do something cost-effective to solve our economic woes, here's some advice: Stay away from spending increases and tax rebates. Instead, focus on real incentives to stimulate work and investment, such as cutting everyone's marginal tax rates, slashing payroll taxes for employees and employers, and ending the corporate income tax. Veronique de Rugy is a columnist at Reason magazine and an economist at the Mercatus Center at George Mason University. This column first appeared at Reason.com. Veronique de Rugy is Senior Research Fellow Print This

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P.O. Box 930 Everett, WA 98206 Retailers report higher December sales SHARE: By Mae AndersonAssociated Press Published: Thursday, January 3, 2013, 1:08 p.m. << Prev A shopper carries a bag at the Dolphin Mall in Miami in late December. A last-minute surge in spending helped many major U.S. retailers report better-than-expected sales in December, a relief for stores that make up to 40 percent of annual revenue during the holiday period. NEW YORK -- A last-minute surge in spending saved the holiday shopping season.Major retailers including Costco, Gap and Nordstrom on Thursday reported better-than-expected revenue in December. That comes as a relief for stores, which can make up to 40 percent of their annual revenue in the last two months of the year.Americans spent cautiously early in the season as the Northeast recovered from Superstorm Sandy. Then they held back because of fears that the U.S. economy would fall off the "fiscal cliff," triggering massive budget cuts and tax increases that would have amounted to less money in their pockets. But shoppers spent more freely in the final shopping days of the year.Twenty retailers reported that revenue at stores open at least a year -- an indicator of a store's health -- rose an average of 4.5 percent in December compared with the same month a year ago, according to the International Council of Shopping Centers. That's on the high end of the expected range of 4 percent to 4.5 percent. Only a small group of stores that represent about 13 percent of the $2.4 trillion U.S. retail industry report monthly revenue, but the data offers a snapshot of consumer spending."I wouldn't be doing cartwheels that it was a particularly great or strong holiday season, but it could have been worse given the headwinds," said Ken Perkins, president of RetailMetrics, a research firm. "The government and Mother Nature were not as cooperative as retailers would have liked. But it was definitely not as bad as feared."December's results provide a brighter picture than reports last month that proclaimed that the holiday shopping season was shaping up to be the worst since 2008 when the U.S. was in a deep recession.To be sure, the season had multiple fits and starts, with healthy spending during certain periods followed by stretches of tepid sales. Overall, revenue for the combined months of November and December rose 3.1 percent, roughly on par with the 3 percent rise that the ICSC had predicted.Sales were weak at the beginning of November in the wake of Superstorm Sandy and the distraction of the U.S. presidential campaign, followed by a surge later in the month during the four-day Thanksgiving weekend. Spending fell off after that until a rush before and after Christmas when some stores began offering bigger discounts.Nordstrom, for instance, had a particularly strong December, with revenue at stores open at least a year up 8.6 percent, more than double the 3.4 percent analysts expected. The Seattle-based department store operator said revenue was particularly strong in the last week of the season."That last-minute shopping, coupled with post-Christmas bargain hunting and early gift-card redemption, helped propel sales at the end of the month," said Michael P. Niemira, ICSC's chief economist.Kelly Tenedini, 35, decided to pick up some "filler" gifts for her mom and her sister on the Sunday before Christmas at the Target in the Edgewood Retail District in Atlanta. Tenedini, who spent about $400 during the season, bought a sweater for her mom and gloves for her mother and sister that day.Tenedini, who works in marketing, said the biggest deal she found was for herself: $50 off a pot and pan set on Target.com.Manuel Gonzalez, 52, from Manhattan borough of New York City, spent about $150 on the Saturday before Christmas when he went to The Garden State Plaza in Paramus, N.J. He scooped up bargains, including 75 percent off Sketcher sneakers at Macy's.For the season, he was planning to spend about $400 to $500 for gifts for his three boys, ages 5, 8 and 22 -- the same amount he spent a year ago.Gonzales, who works at a bank, said he's glad he waited until later in the season to shop: "I am budgeting."While the last-minute promotions may have drawn shoppers like Tenedini and Gonzalez, they also ate into stores' profits.For instance, Kohl's said its December revenue at stores open at least a year increased 3.4 percent, beating Wall Street predictions. But the retailer said that the growth came from heavy discounts, and it cut its profit outlook for the current quarter and full year."Sales came late in the holiday shopping season and, as a result, were at deeper discounts than planned," said CEO Kevin Mansell. "We are taking the necessary markdowns in the fourth quarter to manage our inventory as we transition into the Spring season."------ Story tags » • Clothing • Department stores • Electronic Commerce • Retail

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Home » News » Emerging Market ETF Investing: Beyond The BRIC Emerging Market ETF Investing: Beyond The BRIC by Eric Dutram on September 22, 2010 | ETFs Mentioned: EGPT • EIDO • EZA • GXG • IDX • TUR • VNM As the term ‘BRIC’ has entered the average American’s lexicon over the past two decades, many investors have seen the promise and peril of exposure to these rising superpowers. As more have invested and globalization has occurred, the correlation between these markets and industrialized nations has risen substantially; the once untapped markets see billions of dollars flow into and out of their markets based on the risk appetites of developed market investors. While this phenomenon has given many portfolios much needed international exposure, some investors are wary of focusing emerging markets exposure on a handful of international economies that have benefited tremendously from a surge in foreign capital. While almost everyone has heard of the BRIC, other acronyms have entered the world of finance in the past few months. Recently, the Economist came up with a new term to describe six markets that are flying under investors’ radars but may present compelling investment opportunities. This bloc is known as ‘CIVETS’ and includes Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa. Together these nations represent a chance for investors to buy into often overlooked emerging markets that all have young and growing populations, diversified economies, and–for the most part–have inflation under control thanks to low debt levels and balanced trade accounts [read Beyond The BRIC: Ten Country-Specific Emerging Markets ETFs]. Not surprisingly, all six are easy to invest in using ETFs; all have funds tracking their individual economies and many find their way into a variety of emerging market or regional funds as well. Below, we profile the ways to access these markets in order to give investors seeking more diversified emerging market exposure a closer look at these up-and-coming economies [also see The Definitive Guide To BRIC ETF Investing]. Colombia’s economy has been surging ahead in recent years thanks to sound pro-business policies that have helped the country to shed its image as a narco-state. Former President Alvaro Uribe has been described as a man who “changed the rules and began to encourage companies to come in and help develop their oil resources,” wrote Frank Holmes, CEO and Chief Investment Officer of U.S. Global Investors. “He has taken those petrodollars created and reinvested them back in the country’s infrastructure and created jobs.” Holmes also noted how this was in sharp contrast to policies in neighboring Venezuela or even oil rich Mexico. The country now ranks high on a global competitiveness survey for business sophistication, market size, and strength of investor protection, helping to make it extremely easy for foreigners to invest in and develop the country. Investors are beginning to take notice of the Colombian economy; the only ETF offering pure play exposure to the country, the Global X/InterBolsa FTSE Colombia 20 ETF (GXG), now has close to $80 million in assets under management thanks to its incredible 2010 performance. GXG has surged ahead by more than 50% so far this year and has gained almost 25% over the past three months. It’s also worth noting that GXG exhibits a very low beta, giving it value as one of the few equity funds that doesn’t maintain a strong correlation with U.S. markets [see The Colombia ETF's Secret Sauce]. For investors seeking an emerging market with a dynamic and balanced economy, Indonesia makes for a sound choice. The country has seen near double digit growth for the last few years, spurring a doubling in average income since 2005. Although the country has seen its average incomes surge higher, it maintains one of the lowest labor costs in the region, ensuring that the nation will continue to be a destination for low-cost factories who will seek to take advantage of Indonesia’s youthful and relatively well-educated population. For investors bullish on Indonesia, there are two excellent options: the iShares MSCI Indonesia Investable Market Index Fund (EIDO) and the Market Vectors Indonesia Index ETF (IDX). While the funds offer investors similar exposure, they are by no means the same; IDX has a much more narrow focus, while EIDO casts a wider net but charges a slightly higher expense ratio. However, investors can’t go wrong with either fund; over the past three months both are up more than 13% [also see Why Indonesia Belongs In The BRIC]. As labor costs continue to rise in China, many factories have moved their operations down to Vietnam in order to help contain manufacturing costs. Surprisingly, Vietnam ranked higher than the U.S. in terms of wage determination flexibility and the relation of worker productivity to pay in a recent competitiveness study, giving companies even more reasons to come to the country to set up manufacturing bases. This has been great news for the Vietnamese population, which has seen growth rates approaching 8.5% over the past decade and lower than average unemployment levels. The country is now a member of the WTO, and as Vietnam further develops its economy growth looks likely to continue well into the future [see Will The Vietnam ETF Get A Boost From Chinese Labor Troubles?]. The main way to play the Vietnamese economy through ETFs is with the Market Vectors Vietnam ETF (VNM). The fund is heavily concentrated into a few sectors with financial (29%), energy (17%), and industrial materials (16%) making up the lion’s share of VNM’s total assets. The fund also focuses in on mid cap securities, which make up almost half of the fund–a rarity for country-specific ETFs which seem to be prone to heavy weightings in mega cap firms. The fund, which charges an expense ratio of 0.76%, has surged higher by nearly 6% over the past two weeks. Although Egypt has a higher than average inflation rate and a similarly high budget deficit, the country finds itself at the crossroads between Europe and much of the Middle East, ensuring that its ports will remain the hub of trade for decades to come. Not surprisingly, the country is also a top destination for tourists in the region and the Egyptian government is looking to expand this corner of the economy further; the robust tourism industry is expected to bring in over $12 billion dollars this year. In terms of industries, the country remains heavily dependent on oil. But output has dwindled in recent years and the country has begun to exploit its vast natural gas fields, which look likely to pick up much of oil’s decline in the coming years. While the country has seen its oil output drop off, its political importance has surged since Egypt is by far the largest member of the Arab League in terms of population and one of the two biggest economies in the bloc. Due to this, the country looks to exercise its sizable influence over the region for years to come–it also doesn’t hurt that the headquarters for the organization is located in Egypt’s capital. Currently there are very few options targeting the Middle East, but investors seeking exposure to Egypt have the Market Vectors Egypt Index ETF (EGPT) available to them. The fund tracks the Market Vectors Egypt Index which provides exposure to publicly traded companies that are domiciled and primarily listed on an exchange in Egypt or that generate at least 50% of their revenues in Egypt. EGPT currently invests in 28 securities with three sectors making up the vast majority of the fund’s total assets; financials (43%), industrial materials (29%), and telecommunications (17%). The fund charges an expense ratio of 94 basis points [read Egypt ETF: A Wonder Of The ETF World]. Turkey appears to be on the cusp of joining the EU and gaining free access to the continent’s 300 million-plus market thanks to the passage of a recent constitutional amendment that helps the country comply with European Union political standards. The nation has also been rapidly developing its infrastructure so that Turkish goods can be easily carried to the large markets of the West. Even if the deal with the EU doesn’t materialize, the country looks to be relatively unfazed due to the massive size of its domestic market, which is currently the 15th largest in the world. Turkey has also started to become a bigger influence in Near East political events, which could help the country to further dominate the region and extend its influence along its southern border. Furthermore the country has the highest GDP per capita (using PPP) out of the six countries in the bloc, suggesting that it may be closer than most in its path towards developed market status [see Turkey's Economy Feeds TUR]. Investors seeking access to the Turkish equity market should consider the iShares MSCI Turkey Investable Market Index Fund (TUR), which tracks the MSCI Turkey Investable Market Index. The fund holds 94 securities in total with a heavy weighting to the financial sector, which comprises nearly half of the fund’s total assets. Additionally, the fund also offers investors access to industrial materials (16%) and telecom sectors (10%) but is light on health care and technology exposure. TUR has been a solid performer so far in 2010, gaining more than 20% since the start of the year. Vast mineral wealth is the key in South Africa, a country which contains nearly 80% of the world’s platinum and is the world’s second largest miner of gold as well. However, the South African economy today is extremely focused on services, suggesting that the country has been able to turn some of its mining cash into profitable investments in other sectors of the economy. The country’s location hasn’t hurt either; as the most developed country in the region, South Africa maintains its position as a trading and transit hub for virtually all investors seeking to move north into Africa or pass by the region into Brazil or India. With a successful hosting of the World Cup earlier this year, many have quickly gained confidence in the promise of this country to continue its development well into this decade. For investors bullish on the largest economy in Africa, the iShares MSCI South Africa Index Fund (EZA) offers an intriguing choice. The fund holds almost 50 securities in total and is overweight in the industrial materials sector, which comprises 34% of EZA’s total assets. Its top individual holdings include mobile phone operator Mtn Group (11%), oil giant Sasol (9.4%), and Standard Bank Group (7.5%). The fund charges an expense ratio of 63 basis points and has gained about 15% so far in 2010 [see Time For An Africa ETF?]. [For more ETF ideas, sign up for our free ETF newsletter or try out a free seven day trial to ETFdb Pro.] Disclosure: Eric is long EZA.

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A fine balance U.S. laws regulating equity investments were put on the books back in the Great Depression era. While the original goal of protecting investors remains an important one, some of these regulations have failed to keep up with the times. In an increasingly rare demonstration of bipartisan cooperation, Congress passed the Jumpstart Our Business Startups Act or JOBS Act in March 2012. The law, which President Barack Obama signed in April 2012, pulled together a number of legislative proposals designed to ramp up funding of small businesses. This week, one of the key JOBS Act provisions took effect. The rule lifts the decades-old ban on public advertisements for private placement deals. Now private firms can market their placements broadly-not just through advertising, but also on platforms such as company websites and social media. As reporter Thomas Adams describes in this week's issue, the new rule is a boon to companies like Rochester-based Broadstone Real Estate, which manages commercial and residential properties in 27 states. It will enhance Broadstone's ability to raise equity capital while also reducing the cost. Some skeptics have argued that by loosening such investment-related regulations the JOBS Act will open the door to abuse. But key protections remain. For example, while private firms now will be able to market private placement deals to the general public, they still will not be able to accept money from anyone other than accredited investors-those with net worth exceeding $1 million (excluding the value of a primary residence) or annual income exceeding $200,000 for an individual or $300,000 for a couple. Other JOBS Act provisions already in effect also have helped Broadstone-for example, the rule change allowing firms to have more than 500 shareholders and remain private. The part of the JOBS Act that arguably has attracted the most attention-one that clears the way for investment crowdfunding-is still on the sidelines, awaiting rules from the Securities and Exchange Commission. Some backers have grown impatient with the pace of the JOBS Act rollout, but it makes sense to take the time to do it right. Maintaining adequate safeguards while encouraging investment activity can be tricky. So far, the JOBS Act seems to have the balance about right. 9/27/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email [email protected].

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Is Greece the 'Detroit of Europe?' | Feb 08, 2012 | 11:30 AM EST Tweet Stock quotes in this article: gm I attended a lecture by Alan Brown, the Chief Investment Officer at Schroders, Tuesday at the U.K.'s oldest think tank, The Economic Research Council. The topic was the "Collision of economics and politics in the eurozone." I thought I had heard everything there was to hear about the euro crisis. But Brown's analysis made me think of the eurozone crisis in a fundamentally different way. According to Brown, the problem with Europe is that the euro makes it seem like it is a single market and economy. But it's not. The apt analogy he used was that the eurozone was like building a house starting with the roof (currency union) and trying to put in the walls (fiscal union) afterward. But if you look at EU countries as the individual economies they are, the entire eurozone crisis is just a good, old-fashioned balance of payments problem. Germany and the rest of Northern Europe are running a balance of payments surplus with Southern Europe. And Southern Europe has a balance of payments deficit with Northern Europe. In fact, German banks are owed more than 500 billion euros by their Southern European trading partners. To better understand this as a thought experiment, I translated the current European crisis into U.S. terms. Think of Washington, DC as Germany and Detroit as Greece. Like Greece, Detroit became hopelessly uncompetitive. It produced automobiles that no one wanted to buy. Union workers were overpaid. And despite its glorious past -- Detroit was the fastest-growing city in the world in 1900 -- the city fell into steep decline. The problem wasn't with the automobile industry, per se. Plenty of greenfield manufacturers were making cars productively in the southern U.S. in the same U.S.-dollar-denominated economy. But they were competitive because they paid lower wages, weren't burdened by high legacy costs and produced the Toyotas and BMWs people wanted to buy. So, how did the Washington respond to Detroit's crisis? Washington essentially bailed two of Detroit's iconic car manufacturers, GM (GM) and Chrysler. In addition, a vast array of government welfare programs transferred funds from "wealthy" Washington to "poor" Detroit. Although some free market types kicked and screamed and opposed the bailouts, two things made this politically possible First, the bailout and transfer of wealth from Washington to Detroit went to American companies, thereby saving American jobs. The other government transfers also benefited American citizens down on their luck. And because the U.S is genuinely a single economy, the massive wealth transfers keeping Detroit afloat are largely invisible. Germans would view a similar transfer of their hard-earned wealth to the ne'er-do-well Greeks very differently. Second, Washington never required Detroit to implement austerity measures to help pay back its debt. And the idea that the Washington would cut Detroit government employees wages and benefits, just because they were from Detroit is unthinkable. If it did, downtown Detroit would be having the same kinds of riots in the streets as Greece. Let's turn back to Europe. Greece suffers from the same lack of competitiveness that Detroit does. Since the introduction of the euro, Greek labor cost have risen 35% while in Germany they rose only 10%. And like Detroit, Greece doesn't have a lot to offer a lot that the rest of the world wants to buy. So, what is to be done? First, you can try to build walls to the house. That's the German solution and what Europe is trying to do with last week's fiscal pact. But that only makes Greece stand in the corner with a dunce cap. It does not put any more money into Greece's pocket. Brown pointed out that the Germans have been spending 4% of their GDP rebuilding East Germany for the past 20 years. Maybe Germans could view fiscal contributions to Greece and Southern Europe the same way, much like Washington transfers wealth to Detroit, albeit essentially invisibly. But that would be like asking the ant (Germany) to bail out the grasshopper (Greece), as opposed to another ant (East Germany) down on his luck. That didn't happen in the fable. And it's unlikely to happen in real life. If Europe were genuinely one economy like the U.S., the transfer of wealth from one part of the economy to another could take place without inflaming nationalistic passions. Second, you could get rid of the roof. That is, return Greece to the drachma. Sure it would be difficult at first. But once Greece exits, it could return to growth in its own terms. By way of example, after the U.K. exited the European Exchange Rate Mechanism (ERM) 20 years ago, the pound sterling devalued by 25% and the UK enjoyed 15 years of uninterrupted growth. The second option is clearly the better -- and ultimately more likely -- solution. It's just taking the EU a long time to get there. More From Nicholas Vardy Five Reasons I'm Nervous About the Rise There's a Red Flag in Global Stocks How to Play Red-Hot Emerging Markets Like Greece, Detroit became hopelessly uncompetitive. But Germany can't emulate Washington. Tags: europe | debt | politics

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While the pickings are slim, there are still investment opportunities around the globe that offers relative safety while generating attractive real returns. Today, I will be presenting the MTR Corporation, listed in Hong Kong under ticker 0066.HK, and here in the US on the OTC as OTCPK:MTRJY. A mass transport operator, it also engages in property leasing and development, as well as consulting and operator of overseas franchises. The company, founded as the Mass Transit Railway Corporation, operates the only subway system in the city of Hong Kong since its inception as a government statutory corporate in 1975. Through privatization in the early 2000's followed by aggressive overseas growth, the company is now a global leader in developing public transportation networks that places it as one of the few privately-owned mass transport systems globally that generates a profit without government successions. Focusing on their operation in Hong Kong, where currently they generate around 90% of revenues from the city, the company operates in 3 different segments: 1) - Passenger Transportation The company operates both an underground subway network in the urbanized parts of Hong Kong and a light rail network in the outskirts and New Territories. Over 120 million passengers ride on MTR's transports in a city of roughly 7 million, proving it to be an integral part of HK's society. 2) - Commercial Property Rentals and Station Site Property Development MTR leases commercial space in all of their subway stations. These retails space generates some of the highest rents in the city, with the constant stream of foot traffic their stations generate daily. MTR also partners with real estate developers to build shopping centers and residential projects on land atop of their stations and tracks, keeping these properties for rent. This division generates a substantial part of MTR's revenues and they are one of Hong Kong's biggest landlords. 3) - International Development With its reputation as a strong operator, the company has been soliciting projects overseas in Mainland China, the UK, and Australia over the past decade. Numerous cities are looking to duplicate the business model MTR are able to develop in their home city of Hong Kong of a self-sustainable transport system and thus the company has been able to establish themselves as the go-to consultant and operator. The company has brilliantly managed their assets for the past 4 decades in Hong Kong. Known for their clean stations and trains, and a 99.9% on time record, the company is an example in efficiency. With the growth of the city, MTR has been capturing a steady passenger volume growth of roughly 5% annually. Despite this constant pressure of traffic growth, the company managed to maintain a near-pristine safety record with no serious crashes or other incidents. The company's past as a division of the Hong Kong Government still lingers today, with the HK Financial Secretary Incorporated still owning 76% of MTR Corp. The company has managed to generate a consistent operating profit since post-privatization in 2000 without much government support. In the early 2000's, MTR's profitability slumped as it exited government ownership, where the company quickly lost much of the government subsidies as it entered private ownership, and as a double whammy, it suffered from a drop in passenger volumes from the SARS outbreak of 2003, which did not recover until the mid-2000's. Despite these challenges the company still managed to post an operating profit through property development and leasing. Management has developed a sound, resilient, and repeatable business model that can be implemented globally at other franchises. Through the latter half of the 2000's, the company rode the boom of the rise of the Chinese economy, and with it, Hong Kong real estate prices, creating its current rental property portfolio. INVESTMENT THESIS MTR Corp offers investors 2 key thesis: As a Property Developer Property sales and leasing currently account for around 55% of MTR's annual profits. This is a drop from almost 75% property related from the early 2000's, as management in my opinion has effectively branched away from their traditional built-to-sell model to a more built-to-rent revenue stream. Over the past 3 years, the city has seen a real estate boom unseen since the late 90's that peaked prior to the Asian Financial Crisis. Prices in the city almost doubled from 2008 to 2013 according to Centaline, a leading local property brokerage firm. However, if you looked at MTR's stock price, you would not know this as the stock has traded mostly flat since recovering from the depth of the 2008 financial crisis. Hong Kong's currency, the HK Dollar, is pegged to the US Dollar since the 80's. Thus, with the Fed's endless Quantitative Easing, the city has enjoyed relatively ample liquidity that has fueled the recent real estate boom. Talks of a tightening Fed have sprouted fears in Hong Kong of a potential real estate crash of around 30%. However, if we put things into perspective, property sales only accounted for 3.2 billion HKD (400 million USD) of operating profits for 2012, on 16.6 billion HKD (2.15 billion USD) of total profits. This 20% profit contribution is much lower than the low 30% ratio property sales had on the company during the late 2000's. This is the segment that is most likely going to be affected in a real estate slowdown and we feel the company is well diversified in its core transport business, as well as its rental portfolio, to mitigate any volatility real estate sales have on earnings. One key competitive edge MTR has over other property developers is its ability to significantly improve the value of its real estate acquired or granted by the government. With the opening of each new lines, the company can effectively feed foot traffic into the areas newly served. Thus, the value add proposition of MTR's property portfolio is often hidden from the mark-to-market balance sheet. As a Public Utility MTR's transport division serves as a critical lifeline to the city of Hong Kong and a large portion of the population relies on their services in their daily lives. Like Coke and Johnson and Johnson, it's intricately connected to the fibers of society and thus intrinsically has a hugely wide moat built into its business model. As shown in the early 2000's despite a public health crisis in SARS, the company still managed to maintain profitability, a testament to its durability. While it does suffer from some public pressure on pricing, also in part due to heavy government ownership, the company does seem to have enough public goodwill to raise fares on a regular basis throughout the past decade. Revenues in the public transport segment have shown steady growth of around 8% annually, in line with population growth in the city with a slight positive skew. We see this population growth trend to likely continue as Hong Kong still maintains its role as a world class city, driving revenue growth organically. From a capital perspective, the city still maintains its status as a safe haven for investors in the region, especially from Mainland China, to invest or park their money in a locale that offers a western style legal system. The Corporation also has leveraged its world class reputation to begin developing franchises outside of Hong Kong. The company has won operating rights in major cities in the UK and Australia, and also in Mainland China. We believe the company will continue acquiring new franchises, especially under its current American CEO, Jay Walder, who previously served as CEO of the Metropolitan Transport Authority of New York City. Shares of MTR Corp in Hong Kong (0066.HK) recently traded at 30 HKD (3.87 USD), valuing the company at 176 billion HKD (22.7 billion USD). The firm reported earnings of 16.6 billion HKD (2.15 billion USD) last year, and are expected to earn roughly 17.5 billion HKD (2.26 billion USD) for full year 2013. The company also has 146 billion HKD (18.8 billion USD) shareholder equity on its books. This values the company at around 10 P/E, and a 1.2 P/B. Management has been growing book value at roughly 8.5% annually and the trend should likely continue. We also believe projects overseas are starting to generate growth opportunities for the firm and the company should continue to be able to duplicate its current performance for the foreseeable future. We maintain a cautious view on profit growth over the coming 12-24 months as interest rate uncertainty will most likely dampen real estate investors' appetite and cap real estate prices for the near term. MTR does have a new line completing in late 2014 (HK Island: West Island Line), along with another residential project at LOHAS Park. We believe this will maintain momentum in their property development sales to match this year's volumes. We also believe the street has not fully realized the overseas growth potentials. While profits generated by overseas divisions only contributed to ~600 million HKD for 2012, less than 5% of total profits, this has doubled since 2010 when MTR secured its first major project outside of Hong Kong, in Beijing. This growth should continue under CEO Walder, who brings international experience in the US and Australia to the table. At current valuations, the company is fairly cheap as it offers relatively stable growth of high single digits, its natural ability to create value in its real estate, a world class management system, and overseas growth opportunities. However, shares could still pull back to the mid 20 HKD price range if real estate prices in Hong Kong experience dramatic revaluations. We would be extremely aggressive buyers at those levels. The company also sports a pristine balance sheet, with 17 billion HKD (2.2 billion USD) in cash, and 61 billion HKD (7.9 billion USD) in liabilities, 78% under longer-term debt issues. S&P currently rates MTR at AAA and Moody's at Aa1. The company has been known as a stalwart of financial management in the city, which numerous local pensions owning a substantial chunk of the company alongside the government. MTR also paid a 79 cents HKD dividend in 2012, a payout ratio of around 30%, offering yields of 2.6%. The company has maintained payout ratio at similar levels, though we have seen a ramp up since 2010 by a few percentage points, and we see this continuing as they have refinanced and extended a significant portion of their long-term debts at very favorable levels. Despite MTR's low business model risk, unexpected events such as another epidemic, accident, or global economic slowdown may present the greatest threat to its business. Some of these scenarios are difficult to simulate but management has proved themselves to be capable pilots during difficult times shown in the early 2000s. The measurable risks right now facing the company is interest rate and real estate market froth in HK. While the HK government has shown willingness to allow the real estate market to enter a dramatic correction, we believe the city state will ultimately support property prices by relaxing regulations if the situation deteriorated too rapidly or too deeply. MTR also has a business model moat unmatched by any other property developers in the city, and most of which are trading at P/Es equal to or higher than MTR. (City industry forward P/E average is at 13.5 vs MTR at 11). We also believe interest rate should not go significantly higher until global economy shows a stronger pulse. Recovery has been slow and HK by defacto is a proxy product of US monetary policy. Thus we think the downside risk to the property market is probably unlikely to revisit 2008 lows many are calling for with the 30% readjustments. MTR Corporation offers a world class management and business model unparalleled in the industry. While the company's trains do not move as fast as Tesla's or perhaps even your roadster Fords, the company's cheap valuations and stable growth profile should offer investors a steady return with predictable outcomes. We recommend purchasing stocks outright in Hong Kong with a 1-year price target of 38 HKD, roughly 25% higher from current levels, on Forward PE multiple expansion to match rival developers like Sun Hung Kai (0016.HK) and Cheung Kong (0001.HK). For those who do not have access to overseas trading, the OTC shares of MTRJY are also worth exploring. Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in OTC:MTRJF over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have 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, Services, Trucking, Editors' Picks, Hong KongProblem 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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And here's the second. In this case, again it's clear that something triggered the chart line to do the equivalent of a moonshot. We'll return to those charts momentarily. First, however, a confession. As much as I read, and despite interacting with very smart people on a daily basis, until just recently I have missed something about our economy that, on reflection, should have been as obvious as the computer screen I spend far too many hours staring at. Allow me to emphasize the point in somewhat stronger terms. That I could have overlooked this particular aspect of the US economy and the overarching consequences that follow from it for all these years should, if I were a lawyer, cause me to be disbarred. If I were a doctor, the medical practice board would be entirely within their rights to revoke my license. If I were a politician, my benefactors would be entirely justified in cutting off my bribes donations. If I were a… well, you get the idea. Interestingly, as smack-up-the-side-of-the-head obvious as this feature of the economy is, and has been for years, virtually everyone else has failed to spot it as well. So, what is this mystery? Succinctly, it is that, like Europe (where, during my recent trip there, the spark of awareness was lit), the economy of the United States is - and has been for decades - increasingly under the control of central planners at the expense of the free market. As proof of that contention, we return to the two charts above. Here again is the first, but with the contextual reference points in place. As you can see, the chart tracks the purchasing power of the US dollar since 1914, the year that the government, through its stooges at the Fed, took command of monetary policy. Laughably, the stated mission of these central planners was to preserve the value of the dollar. Predictably, exactly the opposite resulted. And here's the second chart, also with the reference points in place. As you can so clearly see, after severing the last connection with the gold standard in 1971, after which point the central planners took command of fiscal policy, we have seen an exponential growth in government debt. (Of course, the numbers on the national debt are grossly understated as it doesn't account for the tens of trillions of dollars of unfunded and unpayable obligations tied to Social Security, Medicare, and so forth.) The point is that the economic model that allowed the United States to rise out of abject poverty at its inception to become the most powerful economy the world has ever seen has been tossed aside in favor of a model that has proven time and again to be fundamentally flawed and always doomed to fail. That the central-planning model, here and around the world, has been advanced by a fiat global reserve currency is undeniable. However, as the two charts clearly show, the consequences of having central planners controlling monetary and fiscal policy have created a ticking time bomb set to explode. A few additional comments are warranted. The first has to do with who the central planners actually are. And the best way to understand that is by considering who they are not. Who they are not is successful entrepreneurs. Stating what should also be obvious, were they successful entrepreneurs, they would be otherwise engaged in creating jobs and building wealth for themselves and their co-workers. Instead, the central planners almost always hail from the halls of academia, their stock and trade consisting entirely of a college degree and a façade of really knowing what they talk about. As a friend likes to say, "The biggest problems in this world are not caused by a lack of knowledge, but by people who pretend to know when they don't." Over the years I have met and even gotten to know people who have gravitated toward jobs involved with setting government policies. And to a person, they have never held a real job outside of academia, or if they did, they failed at it. Yet they are unhesitant in telling everyone who will listen in tones most professorial how the world should work and why enlightened government policies - not the free market - are the only answer. These people have taken over our country and, in fact, the world. The current mess we are in should not be a surprise to anyone. All anyone has to do is look at the history of the Soviet Union or communist China, pre-economic liberalization, to see how the story of command economies ends. How it always ends. So, where do things go from here? Earlier today I dropped an email to our editors, which I will quote from here as it deals with what I see as the fate of the global economy over the next six months or so. "It's all about the debt. "The sovereigns owe a lot of money that they can't repay. As they try to roll over their existing debts and have to borrow more, the lenders - if any can be found - will want higher and eventually unaffordable interest rates. When the lenders dry up, the only solution will be for the central bankers to monetize, but the world will be watching closely, so this will likely trigger a death spiral in the fiat currencies. "There are intractable problems on a fundamental, systemic basis that cannot be resolved in an orderly fashion. The day is coming when the lending locks up again, after which point everything starts to fall apart. "So, no, I don't think it's a muddle by outcome, but a systemic crash... hopefully big enough to cause a rethink about the entire current setup with funny money and central economic planning. "But that would take a very big crash." Now, I know that a lot of dear subscribers, having accepted our arguments for including tangible assets as a core portfolio holding for many years now, have struggled during the latest retracement and consolidation period in the precious metals and associated stocks. But if you step back and look at the big picture as it is constantly revealed in the headlines and regular releases of poor economic data, I think the conclusions we came to back before the crisis hit, that the Fed (and all the central bankers) are stuck between a rock and a hard place, remain the correct conclusions. There is no simple or easy way out of this situation as the central planners are forced into a haphazard and highly destructive retreat. And the consequences won't just be economic or political… the mini-riots in Anaheim this past week are just a straw in the wind. So, how does one cope in a command economy headed, like all its predecessors, into the trash bin of history - in this case, on a global scale? First and foremost, diversify. Everything contains risk, so spreading it around to mitigate the chances of getting hit especially hard from any one investment sector makes a lot of sense. Personally, I use a spreadsheet program to analyze my holdings from a number of different angles, including percentage dedicated to natural resources; percentage in non-US-dollar-denominated assets; percentage outside of the United States; percentage with any one financial institution; percentage in dividend earning stocks; percentage liquid vs. illiquid; percentage in common equities; percentage in cash and so forth. The idea is that if any one area becomes overweight or underweight, I look to make adjustments. In addition, I set certain goals - for example, the percentage of our net worth we want outside of the United States - and manage to that number. In short, pay close attention to where your assets are allocated and don't go overboard in any one sector. Secondly, skew toward things tangible. Over the next few years, we are going to see massive dislocations as the fiat currency system cracks apart, starting with the euro and then, after a final rush into the "safe harbor" of the US dollar, spreading to the dollar itself. As much as possible, own things with a tangible value. Precious metals are fine, but don't go overboard as that makes you susceptible to a change in government regulations that could literally be invoked overnight. Consider property and even income-producing property (in low-tax jurisdictions). But, again, don't go overboard because real estate is always a fixed target, which means the government can tax it or even confiscate it, and you won't be able to do much about it. Owning currencies of countries with large resources is a proxy for owning something tangible, though an imperfect proxy. Be careful. It will only get more challenging to build net worth going forward. Whether it be higher taxes on capital gains (a certainty at some point) or the cancellation of tax breaks, or more demands on business owners from legislation such as Obamacare, generating - and more to the point, keeping - net worth will not be easy. Therefore, rule number one has to be to avoid risking big chunks of money. Sit tight, and be right. Per my comments above, I remain convinced that our research base case - of a global economic crisis that will get much worse before it gets better, and that the central planners have few options left to them other than monetary debasement - is correct. For those of you who already have allocations to the tangibles and to the gold stocks (which are massively undervalued at this point), sit tight and you will come out right. Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.About this article:ExpandTagged: Macro View, Economy, 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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