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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.”

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WGY, 810 AM has added conservative talk show host Glenn Beck to its morning lineup.

Beck will make his debut on the Albany, N.Y. news/talk station on March 1, broadcasting live from 9am-Noon. He will replace Al Roney in the WGY lineup.

“Glenn has one of the hottest shows in all of radio right now and we simply could not pass up the opportunity to add him to our on-air team,” said Chuck Custer, director of news and programming for WGY. “With Don Weeks, Glenn Beck, Rush Limbaugh and Sean Hannity, you have arguably the biggest names and best talent in the radio business make quick cash. It’s truly a world class lineup.”

Beck had been airing locally on WROW, 590 AM until Feb. 8, when that station dropped its news/talk format in favor of a nostalgia music format.

WGY did not return a phone seeking comment.

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Government regulators said Tuesday they have demanded documents from Toyota to determine if the automaker conducted its recent recalls in a timely manner.

The National Highway Traffic Safety Administration said it has ordered Toyota to provide documents showing when and how it learned of the defects affecting approximately 6 million vehicles in the United States.

Federal regulations require all automakers to notify NHTSA within five days of determining that a safety defect exists and promptly conduct a recall, the agency said.

"Safety recalls are very serious matters and automakers are required to quickly report defects," said U.S. Transportation Secretary Ray LaHood.

The move comes amid a spike in customer complaints lodged against Toyota in the NHTSA database, including some that allege fatal crashes were caused by sudden acceleration in Toyota cars since Jan. 27.

The probe will examine how Toyota learned of the defects. For example, regulators want to know if Toyota discovered the problems through consumer complaints or factory testing.

The investigation will also focus on whether the company found the problems before the vehicles in question were produced or after they had already been built.

In addition, regulators will check whether Toyota has covered all affected models in its recent recalls to make sure the automaker didn’t miss any problems.

NHTSA said it has demanded documents from Toyota on customer complaints, production data, dates of meetings and other pertinent details.

Toyota will have 30 days to provide the documents pertaining to the timeliness of the recalls and 60 days to submit information related to the adequacy of its ongoing recall efforts, according to a Department of Transportation official.

Cindy Knight, a Toyota spokeswoman, said the company is reviewing NHTSA’s request and will provide all the information they have requested.

"Toyota takes its responsibility to advance vehicle safety seriously and to alert government officials of any safety issue in a timely manner," she said.

Toyota has recalled more than 8.1 million vehicles worldwide for problems related to sudden acceleration and unresponsive brake pedals, among other things. The company has apologized for the safety lapses and pledged to repair the recalled vehicles quickly.

The recalls under investigation include two related to the entrapment of gas pedals by floor mats. Those recalls were announced last fall and expanded early this year. The third, announced in January, involved sticking gas pedals.

If the investigation determines that Toyota violated its statutory obligations, NHTSA said the manufacturer could be liable for a fine of up to $16.4 million.

That’s the maximum penalty under a 2000 law that established stiffer civil, and even criminal, penalties for automakers that fail to promptly report safety defects to federal regulators in a timely way.

The Transportation Recall Enhancement, Accountability and Documentation Act, or TRED, was passed in response to dozens of deadly Ford Explorer rollover crashes caused by faulty Firestone tires. No fines were ever levied in that case.

The biggest fine that’s ever been levied was just $1 million taken from General Motors in 2004 for failing to deal promptly with a windshield wiper issue, an amount that was negotiated down from the $3 million NHTSA originally asked for. 

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Richard Jerram of Macquarie Group Ltd. will become the company’s head of Asian economics and leave his position as top Japan analyst, a move that reflects China’s rise and a shift toward regional rather than country- based coverage.

The Tokyo-based economist will start publishing reports on the region on Feb. 8, Jerram said by phone today. The company hasn’t named anyone to replace him as Japan economist, he said.

“We’re not differentiating between Japan and the rest of the region,” said the 46-year-old Englishman. “The ties at the company level, the sector level and the economic level are increasingly making these distinctions artificial.”

Jerram, known for criticizing the Bank of Japan’s deflation-fighting credentials, came to the country in 1987 during the economic bubble that saw the Nikkei 225 Stock Average peak at almost four time’s today’s level. In the two decades that followed the 1990 crash, the economy fell into four recessions and grew at an average pace of 1.5 percent.

“The thing which becomes tiresome after a while is the reluctance to address problems that have fairly orthodox solutions,” the economist said. “Why would you have a policy framework that pretty much guarantees the occurrence of deflation?”

Price Declines

Even as the economy struggled to escape a cycle of declining prices that drove wages down more than 10 percent in the past decade, the Bank of Japan said price stability was anything between “about between zero and 2 percent.” That language invited the perception the bank tolerated zero growth in prices, Jerram has said.

The central bank in December revised its “understanding of stable prices,” saying stability was anything “in the positive range at or below 2 percent.” The shift came after Deputy Prime Minister Naoto Kan voiced concern the recovery was under threat from deflation.

Kan has continued his pleas for the Bank of Japan to fight price declines since he added the finance portfolio to his responsibilities in January. Bank of Japan Governor Masaaki Shirakawa this week responded by saying there’s no “magic” solution for defeating deflation.

“The government’s given them a bit of a push, but not getting much back,” Jerram said of the bank’s move. “They’re still saying a lot of stuff in terms of ‘there’s nothing more we can do.’”

London School of Economics

After a stint in England, where he got a doctorate from the London School of Economics, Jerram returned to Japan, where he worked for eight years as chief economist at ING Securities before the business was bought in 2004 by Macquarie, Australia’s biggest investment bank.

Macquarie agreed yesterday to buy the equity trading and research operations of Sal. Oppenheim Jr. & Cie. KGaA to expand its business in Europe. The Sydney-based bank is also adding to its Asia research staff, particularly in China and India, Jerram said.

“Asia has been far ahead on the global recovery cycle and its going to face some interesting challenges,” Jerram said. “Quite a lot of these countries, in contrast to previous times when they lagged behind the policy cycle in the U.S., are going to have to lead this time.”

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St. John’s Mercy Foundation recently appointed George Roman chairman of its board of directors. Roman is vice president of government operations and regional executive for Boeing’s St. Louis-based defense unit.

He takes the place of former foundation board Chairman Tom Gunn.

Roman is also a member of the board for hospital parent St. John’s Mercy Health Care.

St. John’s Mercy Foundation is a non-profit that supports St. John’s Mercy Medical Center, the second-largest hospital in St. Louis and a member of St. John’s Mercy Health Care and the Sisters of Mercy Health System. Denny DeNarvaez is chief executive of St. John’s.

St. John’s Mercy Health Care also operates St. John’s Mercy Hospital in Washington, Mo., St. John’s Mercy Medical Group, St. John’s Mercy Health Services and St. John’s Mercy Affiliated Physicians.

Chicago-based Boeing Co.’s (NYSE: BA) defense unit, Boeing Defense, Space & Security, is the second-largest employer in St. Louis with $32.4 billion in revenue in 2008 and 16,000 local workers.

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I was born in 1938 in Germany, but I was very fortunate. My father was the managing director of a Swiss machinery company, and during the war I spent time in Switzerland.

After the war I became active in efforts to bring French and German youth together. In 1969, after two Ph.D.s and a year at Harvard’s Kennedy School, I started writing a book about American management.

I said that in order to achieve long-term growth and prosperity, management must serve all stakeholders. The idea of the first Davos symposium was to create a platform that would allow stakeholders to exchange concerns and knowledge.

How I got started

Bet big. [In order to fund Davos] in 1970 I took a 50,000 Swiss franc ($11,434) loan from a German industrialist. The condition was either to pay him back or join his company, so I was nervous.

We sent out invitations with response cards. Every morning the mail came, and I didn’t want to spend time opening it so I put it under a very strong desk lamp where I could immediately see the response. Some 440 people came from 31 countries to the first meeting in 1971, including John Kenneth Galbraith.

The success of the conference let me repay the debt and gave me a surplus, which I used to create the European Management Forum (now the WEF) as a not-for-profit foundation.

Expand your vision but control the brand. In the beginning [Davos] was a two-week course focused on Europe and management. In the 1970s the oil crisis triggered a more global approach. There are now 2,500 participants.

Some years ago we invited Hollywood celebrities who were involved in the issues we were addressing, believing that they might contribute. The media focused on them. This provided the wrong impression. We have not invited them since; we are afraid the brand would be hijacked.

Secrets of my success

Break the rules. I wanted to spend only one year studying business, so I went to Harvard’s Kennedy School and cross-registered for courses in the business school.

One day I was invited by dean George Baker to have tea; he wanted to meet the person who circumvented the rules. We developed a close relationship, and I invited him to be the chairman of the first Davos meeting. This helped guarantee its success

Maintain exclusivity. We have a strict philosophy: If someone retires, he is no longer invited. We want to make sure everyone who comes is really an active decision-maker.

Keep it simple. You can manage today’s complex world best by keeping your life as simple as possible. I do sports every day and have been happily married for nearly 40 years. People feel I’m the biggest networker, but I don’t go unnecessarily to parties. If I have to, I go for five to 10 minutes to show respect.

Klaus Schwab’s guide to Davos

Schedule your days, but leave time for chance meetings. They’re the most interesting. Don’t miss the opening session, for overall context. And if you go to only one party, go to the one on the last night co-hosted by the Forum and a government. This is the one party I always attend; this year it’s with South Africa, in its international kickoff to the 2010 World Cup. 

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Investors scored big Sunday when the New York Jets lost to the Indianapolis Colts — at least according to the Super Bowl stock indicator.

Here’s how it works. If a team that had its roots in the National Football League wins, the Dow Jones industrial average should go up. If a team from the upstart American Football League wins, stocks should go down.

The AFL merged with the NFL soon after Super Bowl III, when the AFL Jets upset the then-NFL Baltimore Colts.

In the 43 years the Super Bowl has been played, the indicator has been correct 81% of the time. That includes last year’s game, when the win by the Pittsburgh Steelers correctly predicted the rebound in stocks before many investing professionals were willing to go out on that limb.

The two NFC teams playing this Sunday — the Minnesota Vikings and the New Orleans Saints — both have NFL roots. So the stock market had to dodge only a Jets win.

Of course basing investment decisions on the outcome of a game makes as much sense as playing football without a helmet. But according to a study by George Kester, a business professor at Washington & Lee University in Lexington, Va., an investment strategy driven by Super Bowl results has done quite well.

If you’d moved into Treasury bonds following wins by former AFL teams, and back into stocks following victories by teams from the old NFL, you would have performed more than twice as well as buying-and-holding an S&P 500 index fund over the same period payday loans guaranteed no fax.

Kester said while he doesn’t believe the indicator is a wise way to make investment decisions, the better return on the Super Bowl-driven fund was "a result that would be the envy of many portfolio managers."

Of course, the Super Bowl indicator has been wrong eight times, often spectacularly so.

The New York Giants’ upset win in 2008 over the New England Patriots was supposed to bring about a bull run for stocks. Instead the Dow crashed 33.8% that year as the credit markets and banking sector imploded.

Similarly, the back-to-back wins by the Denver Broncos, formerly of the AFL, in 1998 and 1999 did little to slow the rising bubble in tech stocks. The market didn’t cool off until 2000 — after the St. Louis Rams, a team with its origin in the NFL, won the Super Bowl.

So only the most superstitious of investors should really have been cheering against Gang Green. The Super Bowl indicator is fun to talk about, but not something to be taken too seriously. 

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Irish house prices may fall for a fourth year in 2010 as the deepest recession in the country’s modern history persists, a survey of economists shows.

Home prices will shrink 9 percent, according to the median of six estimates in a Bloomberg News survey. Prices have already fallen 27 percent from their peak in early 2007, based on a monthly index by Dublin-based Irish Life & Permanent Plc.

Ireland’s economy shrank about 7.5 percent last year, almost twice the euro-region average, as a real-estate slump spread into the rest of the economy. That pushed up unemployment and forced the government to bail-out lenders led by Allied Irish Banks Plc and Bank of Ireland Plc. Gross domestic product may shrink 0.8 percent in 2010, marking a third annual contraction, the survey showed.

“The economy is contracting, there’s still housing oversupply there,” said Dermot O’Leary, chief economist at Goodbody Stockbrokers in Dublin. “It’s hard to say we’ve reached a floor.”

Ireland’s recovery will lag behind the revival of many of its euro-area neighbors as companies from Aer Lingus Group Plc to Danske Bank A/S cut jobs, restraining consumer demand. The jobless rate may increase to 13 percent this year from 11.8 percent in 2009, the survey showed.

“It’s going to be a tough one,” Mark Bourke, chief executive officer of Dublin-based IFG Group Plc, said in Dublin yesterday. “There’s very little to indicate there will be a major recovery.”

Budget Gap

In addition to the economic slump, Finance Minister Brian Lenihan is facing a widening budget deficit and is cutting the wages of government workers and welfare payments business card. The actions won’t be enough to reduce the gap this year, according to the survey. Economists see the deficit averaging 11.6 percent of GDP in 2010, little changed from 2009’s 11.7 percent.

Ireland’s fiscal problems are partly related to the government’s reliance on property-related tax revenue during the boom that has since dried up. The European Commission has given Ireland until 2014 to reduce the budget gap to a limit of 3 percent of output.

“I’m confident. We as a country are far better in adversity,” Smurfit Kappa Group Plc Chief Executive Officer Gary McGann said at a Dec. 15 press briefing in Dublin. “We screw it up in the good times.”

There may be some pick-up in economic growth the second half of this year, in tandem with a continuing recovery in overseas demand, economists said, echoing forecasts from the government. The global economy is gathering strength after central banks around the world trimmed borrowing costs close to zero and injected billions of dollars in stimulus measures.

Confidence in the world economy held near a record high in December and the MSCI World Index has surged 71 percent since reaching a 2009 low on March 9. Ireland’s benchmark ISEQ index has gained 60 percent in the same period.

“Export growth is likely to return in a significant way in 2010,” said Rossa White, chief economist at Dublin-based stockbroker Davy. “Second, consumer spending will bottom early in the year and expand slightly as the year progresses.”

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Biotech stocks took a turn for the worse in 2009 as the major players dealt with regulatory, manufacturing and political issues as well as a deep recession, but their fortunes could turn in the new year if they get added patent protection.

They were the exception in what was otherwise a bullish year for health care stocks, which benefited as investors sought defensive plays in a turbulent market.

Biotech stocks were the laggards of the Standard & Poor’s 500 Health Care index, on track to post a nearly 8 percent loss for the year, while the rest of the health care sector has logged gains of up to 66 percent, according to FactSet.

The decline in bellwethers such as Amgen and Genzyme was a key factor in weighing down the overall sector. On a broader scale, concerns included a backlog of drug approvals at the Food and Drug Administration, a decline in buyout activity, and fears over health care reform.

While the S&P 500 index is on track to gain about 25 percent in 2009, its large biotech components are down about 7.8 percent. The Nasdaq Biotechnology Index, with a broader array of biotech companies, rose 17 percent, but that pales in comparison with the broader Nasdaq composite, which is set to gain about 45 percent.

Pharmaceutical companies, which saw a flurry of buyout and merger activity, are among the strongest performers with a 25 percent boost, a reversal from a lackluster 2008. But the lines between pharmaceutical and biotech companies are diminishing through a range of buyout and development deals. Traditional pharmaceuticals are made by synthesizing chemicals, while biotech-based drugs are made using living cells.

Meanwhile, hospital operators and insurers are on track to rally 62 percent, despite the recession, on hopes that health care reform in Washington could result in more insured patients and revenue in the future.

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Gary Rodrigues, the former longtime Hawaii director of the United Public Workers Local 646, has paid the labor union $378,103 in restitution as part of a court order resulting from his 2002 embezzlement conviction, the U.S. Attorney’s office said Monday.

A federal jury convicted Rodrigues and his daughter, Robin Haunani Rodrigues Sabatini, of embezzling money from the union and taking kickbacks in connection with an employee welfare benefit plan in November 2002.

Both were also found guilty of mail fraud, health-care fraud, money laundering and conspiracy.

In 2003, Rodrigues was sentenced to more than five years in prison and Sabatini was sentenced to nearly four years but both remained free on bail while they appealed their convictions guaranteed payday loan.

Their appeals were denied by the 9th Circuit Court of Appeals in San Francisco in 2007. They tried to appeal to the U.S. Supreme Court but the appeals were declined in 2008.

Rodrigues is serving his sentence in a federal prison in Taft, Calif. and his daughter is imprisoned at a federal facility in Dublin, Calif.

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