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March 26, 2010

Slipping euro and rising debt slap EU nations with double whammy

Filed under: online — Tags: , , — ManInBlack @ 10:42 am

BRUSSELS — The sinking euro and a downgrade of Portugal’s debt put renewed pressure on European leaders Wednesday to come up with a bailout plan for Greece and stem the government debt crisis undermining their shared currency.

But agreement remained elusive as today’s summit meeting approached. Markets increasingly expect any bailout for Greece to involve the International Monetary Fund — and EU governments are discussing whether they would permit that and add financial help from eurozone nations.

Germany is holding back a deal, reluctant to put taxpayer money on the line for Greece. But failure to help an indebted eurozone country would be an admission that Europe can’t halt the crisis in its currency union.

The latest vote of no confidence in vulnerable eurozone economies came with Fitch Ratings’ downgrade Wednesday of Portugal’s debt faxless cash advance. The credit ratings agency said that Portugal’s prospects for recovery were weaker than others in the eurozone and that it faced problems shrinking its deficit.

The euro hit a 10-month low against the U.S. dollar on Wednesday on the Portuguese downgrades and the uncertainty over Europe’s dithering over Greece — which says it will need eurozone or IMF help if markets keep charging it painfully high costs to borrow.

Greece’s debt crisis has undermined the euro by showing that the rules supporting it have not prevented governments from overspending, hitting public accounts. Athens’ woes are also putting pressure on other eurozone countries with troubled finances, such as Portugal and Spain.

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March 23, 2010

House passes health care reform bill

Filed under: marketing — Tags: , — ManInBlack @ 9:01 am

The House narrowly approved a landmark health care reform bill late Sunday, ending several months of political maneuvering and much debate among Americans.

The bill extends coverage to 32 million Americans and stop insurers from denying coverage for pre-existing conditions. The bill will basically create near-universal coverage for Americans.

But some Republicans say the bill will increase health care costs and risk private health insurance coverage, along with cutting Medicare funding and raise taxes by almost $1 trillion.

President Obama and House Democratic leaders reached a last-minute agreement with abortion opponents to get the final few votes needed to establish near-universal coverage.

The Democrat-led House had more than 216 votes committed late Saturday, but the abortion agreement cemented the reform of the health care system.

A companion Senate bill must be approved, but lawmakers say they have the votes, likely leading to the president’s signature and ending a century-long battle for coverage of most Americans.

“It will control costs, strengthen Medicare and reduce the deficit,” said U.S. Rep. Doris Matsui, a Democrat from Sacramento. “Our plan gives people … more consumer protections, and puts medical decisions back in the hands of patients and their doctors.

“Insurance companies will be prohibited from denying coverage based on pre-existing conditions or from rescinding policies from people once they get sick,” said Matsui, a member of the House Energy and Commerce Rules and Committee payday loan no faxing. “All of these are tools used by insurance companies to segment the market and maximize profits.”

Under the law, most Americans must have insurance, either from their employer or a federally approved individual plan – or face a penalty. Families who earn less than $88,000 per year would be eligible for subsidies, part of the cost for the health care program.

And Medicaid – the federal-state health care program for the poor – would be greatly expended, to families up to 133 percent of the federal poverty level, or about $29,300 for a family of four, according to an Associated Press report. Adults without children also would be covered starting in 2014.

Parents with children can extend health care coverage to age 26.

In 2014, consumers can start shopping for individual coverage that meets the federal requirements.

The bill cuts about $500 billion from payments to hospitals, nursing homes and other health care providers that treat Medicare patients. And the federal government will eliminate $200 billion for Medicare-type coverage by insurance companies.

Health care insurance companies say seniors would face higher premiums for private insurance, leading more to join Medicare

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March 20, 2010

SEC examines acts by companies as 2008 crash neared

Filed under: online — Tags: , , — ManInBlack @ 10:20 am

The head of the Securities and Exchange Commission confirmed Wednesday that the agency was investigating several companies’ actions in the run-up to the financial crisis of 2008.

SEC Chairman Mary Schapiro said "it would be safe to assume" that the agency was looking very closely at the conduct of a number of firms during this time. She did not name the companies.

Schapiro spoke in testimony to a House Appropriations subcommittee weighing the agency’s request for about $1.3 billion for the budget year starting Oct. 1, a 12 percent increase from the current year.

Lawmakers want to know if the sort of accounting gimmick recently uncovered that was used by the collapsed investment firm Lehman Brothers to mask billions in debt was widely deployed on Wall Street.

The SEC’s review of the Lehman Brothers disaster "has taken us down a path where we’re looking broadly," Schapiro said after her testimony.

The implosion of Lehman Brothers Holdings Inc. into the biggest bankruptcy in U.S. history in September 2008 precipitated the financial meltdown that plunged the economy into the most severe recession since the 1930s.

After saddling itself with tens of billions in troubled assets that couldn’t easily be sold, Lehman masked $50 billion in debt and its perilous financial condition by using the so-called Repo 105 accounting gimmick, an examiner appointed by the bankruptcy court found in an extensive report issued last week personal loans for people with bad credit.

Questions are being raised about the supervision of Lehman by the SEC and the Federal Reserve in the months before its collapse.

"The culture of the agency is changing. It doesn’t happen overnight," Schapiro told the lawmakers. "We’re working very hard at the SEC … to rebuild the agency’s credibility."

In the meltdown’s wake, the SEC and the Justice Department launched wide-ranging investigations of companies across the financial services industry, believed to include American International Group Inc. and mortgage giants Fannie Mae and Freddie Mac as well as Lehman. A year and a half after the financial crisis struck, charges haven’t yet come in most of the investigations.

The autopsy of Lehman issued last week by bankruptcy examiner Anton Valukas could serve as a valuable road map for the two agencies in their investigations, experts say.

Schapiro said Wednesday that the report raised "some very interesting points" and would be "helpful."

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March 17, 2010

People on the Move: March 15

Filed under: technology — Tags: , , — ManInBlack @ 3:17 am

The weekly roundup of senior-level executive appointments in the Washington area. For more People on the Move, check out the Washington Business Journal’s print edition each week. Send announcements to washingtonbusinessleads@bizjournals.com.


Accounting

Baker Tilly Virchow Krause LLP in Vienna (formerly Beers and Cutler) announced these new hires as partners in the government contractor advisory services practice: Bill Keating, John Van Meter, Brent Calhoon and Tom Tagle. All four joined from Navigant Consulting where they were practice leaders in the government contractor consulting group. Previously, Keating and Van Meter led KPMG LLP’s government contractor advisory services practice, and Tagle and Calhoon were with Arthur Andersen’s government contracts group.

Mike Eagan has joined RyanSharkey LLP in Reston as a tax partner.

Architecture

Lessard Group Inc. in Vienna promoted Julie Baskerville to director of automotive projects. Baskerville has 21 years of experience designing multi-family residential buildings, offices, retail space, automobile dealerships and automotive support facilities. Her experience in automotive design inlcludes new construction, renovations and planning auto parks. She has served as the project manager for consulting services to Mercedes-Benz USA. In addition, Baskerville has worked on projects for Honda, Toyota, Nissan and Ford. She also worked on the interior design of two luxury residential towers for Donald Trump.


Associations & Nonprofits

Stacy Flowers has been appointed director of community economic development at the Community Action Partnership in D.C. She is responsible for implementing a three-year grant, the “National Community Economic Development Exemplary Practices Initiative,” which the partnership received from the Department of Health and Human Services’ Office of Community Services. With 15 years experience in the private sector, Flowers has held senior-level positions in project management, finance and marketing. She has also developed training curricula and directed startups in the technology, retail and recycling fields. During her corporate tenure, Flowers has gained extensive experience working directly with local government offices throughout North America.

Before joining the Community Action Partnership, Flowers held various positions with Schlumberger, Neptune Technology Group, a division of Roper Industries Inc., and Spurlock Trading. She has also led and facilitated volunteer efforts with Habitat for Humanity, United Way, Make-a-Wish, and the American Cancer Society.

Business Executives for National Security, a nonprofit organization that uses successful business models from the private sector to help strengthen the nation’s security, has named Laura Willoughby regional director for the Washington area. She will develop BENS programs on national security topics, including panels and informational sessions. Willoughby joins BENS after a decade of executive and nonprofit experience in the Washington-Baltimore business community, most recently as director of marketing communications at iJET Intelligent Risk Systems, an Annapolis-based provider of global intelligence and business resiliency services. She previously was executive director of the Chesapeake Regional Technology Council.

Goodwill of Greater Washington promoted Michael Frohm to executive vice president. He will be responsible for leading the organization when the CEO is absent. Frohm will continue to oversee the Human Resources division at Goodwill of Greater Washington in addition to his new duties.

The Alzheimer’s Association’s National Capital Area Chapter named Nan. G. Moring chief development and communications Officer. Moring has more than 16 years of management, fundraising and communications experience. Most recently she was the chief public support officer for the American Red Cross of the National Capital Area. Moring also has held senior management positions with Habitat for Humanity, the United Negro College Fund and the Air Force.

Tracy Pakulniewicz joined the Cystic Fibrosis Foundation in Bethesa as national director of special projects. She was a former aide to President Bill Clinton, Hollywood executive and public relations consultant.


Banking & Finance

HarVest Bank of Maryland in Gaithersburg appointed seven new employees, including:

Jeff Harris joins as vice president, controller. He brings more than 28 years of experience in bank accounting, operations, financial and regulatory reporting and large-scale project management. He previously held executive roles at MCI, Freddie Mac and most recently Suburban Federal Savings Bank where he was vice president of finance and accounting.

Michael Benedict joins as vice president relationship manager in the loan operations department. He brings broad experience with the past seven years spent at Sandy Spring Bank in Montgomery and Frederick counties.

Josie Porterfield joins as vice president of loan operations. She comes from Provident Bank as a result of its merger with M&T Bank. She brings more than 27 years of banking experience.

Daniel Selzer is the newest addition to the business development team. He comes with five years of banking experience from CitiFinancial and Mariner Finance.

Monique Stanley joins as senior accountant. She brings more than six years of banking experience, most recently from her accounting role at The Columbia Bank.

Rachelle Pepa joined the loan operations department as loan assistant. She has experience including various branch and loan operations/documentation roles with Sandy Spring, Mercantile Potomac and Colombo Bank.

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March 14, 2010

3 airlines offer antitrust concession

Filed under: term — Tags: , , — ManInBlack @ 9:57 pm

British Airways, American Airlines and Iberia have offered to give away takeoff and landing slots at London and New York airports to soothe European Union antitrust worries, EU regulators said Wednesday.

The European Commission said it would ask other airlines whether freeing up slots at London Heathrow, London Gatwick and New York’s John F. Kennedy airports would be enough to create more competition and entice rivals to start new routes from those airports to New York, Boston, Dallas and Miami.

EU spokeswoman Amelia Torres said the offer could see rivals start two extra daily flights each from London to New York and from London to Boston and one more daily service from London to Dallas and from London to Miami my credit score.

If rivals are supportive, regulators said they would move to make the three airlines’ offer legally binding and drop an antitrust case that could have racked up millions of euros (dollars) in fines.

One rival, Virgin Atlantic, said the airlines’ offer was "woefully inadequate in counteracting the anti-competitive harm of a combined BA/AA," claiming that it would hurt consumers by raising prices and destroying competition.

Source

March 11, 2010

Japan Exports Surge, Fueling Current-Account Surplus

Filed under: marketing — Tags: , , — ManInBlack @ 11:39 am

Japan posted a current-account surplus in January as exports climbed for a second month, an indication overseas demand is sustaining the nation’s recovery.

The gap was 899.8 billion yen ($9.9 billion) compared with a deficit a year earlier, the Ministry of Finance said in Tokyo today. The median estimate of 26 economists surveyed by Bloomberg News was for a 783.9 billion yen surplus.

The report highlights the role overseas shipments have continued to play in propping up the world’s second-largest economy. Further export gains in coming months will prompt businesses to boost spending on plant and equipment, helping support the rebound, according to economist Akiyoshi Takumori.

“This confirms that the economy is recovering, led by solid overseas demand,” said Takumori, chief economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “Although the level is still low, the recovery will fuel production and make companies more comfortable with increasing investment.”

Today’s data adds to signs of sustained expansion in the first quarter. Factory production rose at the fastest pace since May and the unemployment rate fell to a 10-month low in January. The Finance Ministry said last week capital spending also fell 18.5 percent in the three months ended Dec. 31. While that was the 11th straight decline, it was also the smallest drop in a year.

The current-account gap increased by 1.032 trillion yen from a year earlier, the second highest jump since comparable data were made available in 1986, the government said. Exports rose 40.6 percent in January from a year earlier, also the biggest advance since 1986, and imports advanced 7.1 percent.

China Shipments

Shipments to China rose at the fastest pace since 1985 in January, while exports to the U.S. advanced for the first time in more than two years, customs-cleared trade data showed last month. Today’s figures don’t include regional breakdowns.

The export rebound has been driven in part by favorable year-on-year comparisons. Shipments had plunged last year in the wake of a global credit crunch caused by the collapse of Lehman Brothers Holdings Inc. Japan posted its first current-account deficit in 13 years in January 2009 as a result.

Overseas shipments of Nissan Motor Co. cars rose 29.6 percent in January, while Mitsubishi Motor Corp. shipped more than double the amount of vehicles compared with the same month a year ago, according to the Japan Automobile Manufacturers Association.

Economy Expanded

The Cabinet Office will say the economy expanded at a revised 4 percent annualized pace last quarter, according to the median estimate of 27 economists surveyed by Bloomberg News. Preliminary figures showed 4.6 percent growth. The report is due on March 11 at 8:50 a.m. in Tokyo.

“Right now the economy is being pulled by exports and inventory adjustments,” Naoki Iizuka, a senior economist at Mizuho Securities Co. in Tokyo, said before the report was released. “Once we enter the second quarter, manufacturers’ capital spending will be a new contributor to the economy’s growth.”

A separate report today showed bank lending fell for a third consecutive month in February, sliding 1.6 percent from a year earlier, as companies cut spending.

On a seasonally adjusted basis, the current-account surplus widened to 1.71 trillion yen in January. Exports rose 8.8 percent from December, and imports climbed 2.3 percent.

The income surplus, the difference between money earned abroad and payments made to foreign investors in Japan, narrowed 8.1 percent to 911 billion yen in January from a year earlier, the ministry said.

The current account tracks the flow of goods, services and investment income between Japan and its trading partners. It includes trade not shown in the customs-cleared balance.

Source

March 5, 2010

Geithner Adviser Sachs Plans to Resign as Banking Crisis Wanes

Filed under: term — Tags: , , — ManInBlack @ 8:28 pm

Lee Sachs, a counselor to Treasury Secretary Timothy F. Geithner, plans to step down this year as the banking crisis wanes and the Obama administration winds down its emergency programs.

As an adviser on domestic finance, Sachs helped conduct stress tests on the biggest banks and reshape the $700 billion bailout. He also helped manage trillions of dollars in additional government borrowing and advised Geithner on the market implications of issues from the Greek budget crisis to housing finance.

Sachs says he’s leaving now that markets have stabilized and Geithner has had time to set up a permanent team. “I came back down here to help the president and secretary to design and execute their response to the financial crisis,” he said in an interview. “The financial system is in a much stronger position today than it was a year ago.”

His departure comes as the crisis-response team he established becomes a permanent part of the Treasury Department. A former senior managing director at Bear Stearns Cos., the New York-based investment bank bought by JPMorgan Chase & Co. in 2008, Sachs will be one of the most senior of Geithner’s advisers to step down.

“I am likely going to head back to the private sector at some point in the next couple of months,” said Sachs, 46. He says he’ll take some time off before deciding on his next move, to recover from “running 100 miles-an-hour around the clock to stabilize the financial system” alongside regulators and White House officials.

Sperling May Follow

Another Geithner counselor, Gene Sperling, may also be leaving the Treasury soon. Sperling is under consideration for the post of deputy director of the Office of Management and Budget, according to a person familiar with the matter.

Geithner, 48, yesterday credited Sachs with showing “great judgment and skill in helping the president navigate the greatest financial crisis since the Great Depression.”

One of Sachs’ legacies will be the Office of Capital Markets and Housing Finance, successor to an informal crisis- response team he helped establish in the Treasury’s domestic finance division. Led by Matthew Kabaker, a former executive at Blackstone Group LP, the unit fulfilled one of Geithner’s goals at the start of the new administration.

“In transition, we recognized that the Treasury Department did not have a staff capability to deal with capital markets and finance-related issues,” Sachs said. “We need this team.”

Fannie, Freddie

The Treasury is moving into a long-term planning phase after 18 months of primarily managing the aftermath of the financial crisis. Priorities this year include pressing for an overhaul of financial regulation and starting to design plans for the future structures of mortgage finance companies Fannie Mae and Freddie Mac to bring to Congress in 2011.

Since taking office, the Obama administration has tried to change the $700 billion Troubled Asset Relief Program from a bank rescue into a financial-stability plan. TARP, enacted in October 2008, expires in October.

Geithner’s department last year set up the Public-Private Investment Program with the goal of removing as much as $1 trillion in troubled assets from bank balance sheets. The program has moved forward on a much smaller scale, committing as much as $30 billion in government money for participating funds.

The Treasury also held several additional rounds of capital injections for small banks. Those programs drew few applicants, as banks feared customers and investors would shun firms that accepted money from the TARP.

Clinton Years

Other regulators say Sachs’ strength has been his ability to understand the government’s role in the crisis, which allowed him to start work immediately after the 2008 presidential election. He was already known on Wall Street and in Washington from his early career, which spanned 13 years at Bear Stearns followed by a tour in the Clinton administration under former secretaries Robert Rubin and Lawrence Summers.

“When he called me in November, right away we were communicating, I knew I could trust him, I knew I was working with somebody who knew what they were talking about,” Federal Reserve Vice Chairman Donald Kohn said in an interview. “He’s really knowledgeable about financial markets and financial institutions. He’s seen that world from both sides.”

Kohn, who will step down in June after a 40-year central bank career, described Sachs as “even-tempered,” with a sense of “quiet authority creditreport.” He says they worked closely together when Sachs served in the Clinton administration and spoke daily, sometimes more often, during the height of the financial crisis.

“I have found him an important ally for the Federal Reserve,” Kohn said. “He was very sensitive to the issue of Federal Reserve independence.”

Capital Injections

One example of Sachs’ influence came when regulators were debating how big banks should repay capital injections they received in 2008 at the height of the crisis. Sachs advised regulators on how quickly banks could be expected to raise private capital, as well as how markets might react.

Sachs forged ties to his current boss during the Clinton administration, when Geithner worked in the Treasury’s international affairs division. With Sachs in domestic finance, the two worked on debt crises in Russia and Asia, while also competing on the tennis court and in triathlons.

Geithner is faster. “I think he called me from home as I was crossing the finish line,” Sachs said of one shared racing experience.

Wall Street Resume

Critics said Sachs’ financial-market experience isn’t an automatic advantage. His ties to Rubin, who hired Sachs in 1998, could be seen as a liability after the country’s biggest banks required bailouts, said William Black, a law professor at the University of Missouri-Kansas City.

“‘Market experience’ from individuals that screwed up the markets is an interesting concept,” said Black, who served as a federal bank regulator during the savings-and-loan crisis of the late 1980s and early 1990s.

The post-crisis stigma attached to Wall Street resumes accompanied Sachs to the Obama administration: Since joining the team in late 2008, he was never nominated for a Treasury position that required Senate confirmation.

Instead, Sachs was one several counselors serving Geithner in the first months of the administration, when the Treasury Department had no Senate-confirmed senior officials other than the secretary. Congress has since confirmed Deputy Secretary Neal Wolin and a number of assistant secretaries, without approving the administration’s picks to lead the Treasury’s international affairs and domestic finance divisions.

Nominations Weighed

As a result, nominees Jeffrey Goldstein and Lael Brainard have been serving alongside Sachs, Jake Siewert and Gene Sperling as counselors, while the Senate weighs their nominations. Goldstein, a former private equity executive, has been tapped as the undersecretary of domestic finance. Brainard, who served as Clinton’s deputy director of the White House National Economic Council, has been nominated as the undersecretary for international affairs.

The lack of Senate-confirmed Treasury officials came as the White House fended off criticism from lawmakers including Senator Maria Cantwell, a Democrat from Washington state who has repeatedly faulted Obama administration proposals as being too soft on the financial industry without doing enough to close regulatory loopholes.

In the Clinton administration, market experience was viewed as an asset and not a handicap. Gary Gensler, chairman of the Commodity Futures Trading Commission and Clinton-era Treasury official, said he remembers being “delighted that somebody of Lee Sachs’ caliber and values was willing to join the team.”

Mariner Investment

After Clinton left office, Sachs was a partner at New York- based Mariner Investment Group, which owned a stake in at least one company that specialized in collateralized debt obligations — a type of investment that fueled the crisis.

Before joining President Barack Obama’s transition team after the 2008 election, Sachs earned more than $3 million in salary and partnership income at Mariner in 2008, according to his financial-disclosure forms.

In the 1980s and 1990s, Sachs rose to head of global capital markets and the board of directors at Bear Stearns after graduating from Ohio’s Denison College. Sachs is married to Whitney Sachs, a former attorney, and they have two 14-year-old daughters.

“You can work for the secretary of the Treasury of the United States,” said Michael Berman, president of the Duberstein Group, a Sachs family friend who helped him link up with Rubin’s Treasury. “But when it comes right down to it, the twins are in charge.”

Source

March 1, 2010

N.Z. Economy Loses Momentum, Brings June Rate Rise Into Favor

Filed under: online — Tags: — ManInBlack @ 10:41 pm

New Zealand’s economy lost some momentum as retail spending and the property market slowed in the first months of 2010, according to the Treasury Department.

Leading indicators suggest January retail sales may decline and the housing market has slipped, the department said in a report posted on its Web site. The monthly update doesn’t contained new forecasts.

Reserve Bank Governor Alan Bollard last month said he is looking for evidence that the economic recovery has become self sustaining before he will start to raise interest rates from record lows. The Treasury said forward-looking indicators such as immigration and business confidence remain upbeat, matching the view of economists who expect Bollard will raise the official cash rate in June.

“The potential for a strong acceleration in gross domestic product is suggesting the Reserve Bank should keep to its stated tightening track” of a rate increase around the middle of 2010, said Craig Ebert, senior economist at Bank of New Zealand Ltd. in Wellington.

Nine of 12 economists surveyed by Bloomberg News expect Bollard will raise the official cash rate from 2.5 percent in June. Two forecast an April increase and one tips July. None expect any change in policy at the next review on March 11.

Indicators of retail spending suggest sales volumes declined in January, the Treasury said. Consumer confidence fell in February, according to an index compiled by ANZ National Bank Ltd. and Roy Morgan Research.

House Sales

The number of house sales plunged 16 percent in January, the department said, citing its analysis of Real Estate Institute figures. The market is likely to remain steady in face of rising home-loan interest rates, it said payday loans.

Extra new listings of properties for sale could depress prices, said Ebert. Listings rose 24 percent in February from a year earlier, Web site realestate.co.nz said today.

Business confidence rose to a 10-year high last month, according to a second ANZ Bank survey published on Feb. 25. The economy could expand 4 percent this year, based on the survey’s responses, the Wellington-based bank said.

“The results were consistent with the economy continuing to expand over 2010,” the Treasury said today.

Buoying the economy, immigration is rising and New Zealand’s currency has fallen 3.8 percent against the U.S. dollar in the past three months. Exports including milk powder, cheese and meat make up 30 percent of the economy.

Commodity Prices

“The lower exchange rate in recent months is providing more confidence for exporters,” the Treasury said.

Commodity export prices have surged 7.9 percent in New Zealand dollars from January, according to an ANZ Bank index published today. Prices for six of nine commodities monitored by the bank rose in February.

Annual immigration growth was the strongest in more than five years, according to a government report today.

The number of permanent migrant arrivals exceeded departures by 22,588 in the 12 months ended Jan. 31, up from 21,253 in the 12 months through December. That’s the highest since May 2004.

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