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Post by sandi66 on Dec 1, 2010 6:05:14 GMT -5
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Post by sandi66 on Dec 1, 2010 16:31:38 GMT -5
Fed names recipients of $3.3 trillion in aid during crisis By Craig Torres and Scott Lanman (c) 2010 Bloomberg News Wednesday, December 1, 2010; 12:09 PM The Federal Reserve, under orders from Congress, today named the counterparties of about 21,000 transactions from $3.3 trillion in aid provided to stem the worst financial panic since the Great Depression. The Fed posted the data on its website to comply with a provision in July's Dodd-Frank law overhauling financial regulation. The information, which also includes the amounts of transactions and interest rates charged, spans six loan programs as well as currency swaps with other central banks, purchases of mortgage-backed securities and the rescues of Bear Stearns Cos. and American International Group Inc. "The Federal Reserve followed sound risk-management practices in administering all of these programs, incurred no credit losses on programs that have been wound down and expects to incur no credit losses" on those that remain, the central bank said in a statement in Washington. Even so, the release may heighten political scrutiny of the central bank already at its most intense in three decades. The Fed's Nov. 3 decision to add $600 billion of monetary stimulus has sparked a backlash from top Republicans in Congress, who said in a Nov. 17 letter to Chairman Ben S. Bernanke that the action risks inflation and asset-price bubbles. "These disclosures come at a politically inopportune moment for the Fed," Sarah Binder, a senior fellow at the Brookings Institution in Washington whose research focuses on Congress's relationship with the Fed, said before the release. "Just when Chairman Bernanke is trying to defend the Fed from Republican critics of its asset purchases, the Fed's wounds from the financial crisis are reopened." The data detail the breadth of central bank support that reached beyond banks to companies such as General Electric Co. Lawmakers demanded disclosure, over the Fed's initial objections, as U.S. central bankers pushed beyond their traditional role of backstopping banks. The Fed bought short- term IOUs from corporations, risky assets from Bear Stearns, and more than $1 trillion in U.S. housing debt. Companies' participation in the programs "reflected the severe market disruptions during the financial crisis and generally did not reflect participants' financial weakness," the Fed said today in its statement. The emergency programs included the Term Asset-Backed Securities Loan Facility, which has supported billions of dollars in credit to small businesses, credit card borrowers, and students, and the Term Auction Facility, which helped banks get cheaper funding. Bernanke pushed the boundaries of the Fed's powers, using section 13(3) of the Federal Reserve Act, which allowed the central bank to aid non-banks under "unusual and exigent circumstances." In some facilities, the Fed engaged in non- recourse lending, meaning it loaned against collateral alone and took a greater risk of loss. "By moving into the world of non-recourse loans, they started to accept risk exposures that the private sector was no longer capable of maintaining," said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey. "That effectively turned the Fed into an asset warehouse." Congress excluded one Fed lending program from disclosure, the discount window, which is the subject of a 2008 lawsuit filed by Bloomberg LP, parent of Bloomberg News, against the central bank. A group of banks is appealing to the Supreme Court over lower-court decisions ordering the Fed to identify loan recipients. The program peaked at $110.7 billion in October 2008. "We see this not as the end of a process but really a significant step forward in opening the veil of secrecy that exists in one of the most powerful agencies in government," Senator Bernard Sanders, the Vermont Independent who wrote the provision on Fed disclosure, said to reporters Nov. 17. Sanders said he was motivated to use legislation to force the Fed to reveal borrowers after Bernanke rebuffed his request to identify the firms. "Given the size of these commitments, it is incomprehensible that the American people have not received specific details about them," Sanders said in a letter to Bernanke on Feb. 4, 2009. "The Federal Reserve does not release specific information regarding the borrowings of individual institutions from our lending facilities," Bernanke said in a reply to Sanders. "The approach is completely consistent with the long-standing practice of central banks." Vincent Reinhart, a former Fed official, disagreed with Bernanke's argument in the letter. The central bank assumed a greater burden of disclosure by taking on a fiscal policy role, such as acquiring $30 billion of assets to ease JPMorgan Chase & Co.'s purchase of Bear Stearns in 2008, said Reinhart, who headed the Fed's Division of Monetary Affairs. "There is no national principle about hiding fiscal policy decisions," said Reinhart, now a resident scholar at the American Enterprise Institute in Washington. "At a time of stress, the Federal Reserve was willing to provide subsidies to a critically important area of the economy -- the financial system," Reinhart said. "But the public should know how much the Federal Reserve provided and to who." A year after his 2009 correspondence with Sanders, Bernanke said in House Financial Services Committee testimony the Fed would agree to reveal the names of borrowers of emergency facilities with a "sufficiently long" lag. Once again, he said that the confidentiality of the discount window "must be maintained." Today's information relates to aid from Dec. 1, 2007, through July 21, 2010, when President Barack Obama signed Dodd- Frank into law. The act also requires the Fed, after a two-year delay, to identify firms that, following the law's passage, borrow through its discount window and participate in its purchases or sales of assets such as mortgage-backed securities and Treasuries. The Dodd-Frank legislation has also limited the Fed's emergency lending powers from now on to programs with broad- based eligibility, curtailing bailouts of individual institutions. "You have to balance the different considerations," said Roberto Perli, managing director at International Strategy & Investment Group in Washington and a former Fed Board staff member. "They crossed a line, but what would have been the alternative? You can't have a huge run on money funds. The situation was very delicate. The alternative would have been a lot worse." www.washingtonpost.com/wp-dyn/content/article/2010/12/01/AR2010120103418.htmlty nalmann |
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Post by sandi66 on Dec 2, 2010 6:35:38 GMT -5
A call to hedge funds and their customers to naked short sell JPM’s stock to zero December 2nd, 2010 by maxkeiser The world is doing its part in accumulating silver and taking physical delivery. Shortages of silver on the wholesale level are developing. The only recourse for JP Morgan – is to dilute shareholders by more than 10 X’s the current market capitalization. HEDGE FUND MANAGERS – DO YOUR PART – START SHORTING JP MORGAN STOCK IN PROPORTION TO THE RATE AT WHICH PHYSICAL SILVER IS BEING WITHDRAWN FROM THE MARKET – USE ‘NAKED SHORTS’ IF YOU ARE WILLING AND ABLE – YOU ARE FAILING YOUR FIDUCIARY RESPONSIBILITY IF YOU FAIL TO MAXIMIZE GAINS TODAY USING THIS STRATEGY – AND OPENING YOURSELF UP TO COMPLAINTS FROM CUSTOMERS. CUSTOMERS OF HEDGE FUNDS. CALL YOUR HEDGE FUND MANAGERS TODAY AND TELL THEM YOU WANT THEM TO NAKED SHORT SELL AS MUCH JP MORGAN STOCK AS POSSIBLE WITH THE INTENTION OF DRIVING THE STOCK PRICE TO ZERO. maxkeiser.com/2010/12/02/a-call-to-hedge-funds-and-other-interested-parties-to-naked-short-sell-jpms-stock-to-zero/ |
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Post by sandi66 on Dec 2, 2010 7:01:16 GMT -5
Nathaniel Rothschild Plays Strongest Suit With Coal Mining Deal By Jesse Riseborough and Simon Casey - Dec 1, 2010 12:17 PM ET One of the most successful trades at Atticus Capital LP, where Nathaniel Rothschild was co-chairman, was an investment in U.S. mining company Phelps Dodge Corp. The future 5th Baron Rothschild says he now plans to build one of the world’s largest coal producers. A member of the Rothschild lineage that helped bankroll Britain’s war against Napoleonic France, he’s leading a $3 billion takeover that will create the biggest exporter of coal to China. Rothschild is leveraging his name, more than a decade of hedge-fund experience and a network that reads like a Who’s Who of commodities. He’s friends with Ivan Glasenberg, head of the biggest commodity trader Glencore International AG; advises Russian aluminum billionaire Oleg Deripaska; and is on the board of Peter Munk’s Barrick Gold Corp., the largest gold miner. “There’s no global coal company today,” Rothschild, 39, says in an interview. “There’s not a Barrick Gold in coal. That’s where the opportunity is.” Rothschild -- who likes to be called Nat -- had been searching for a natural-resources acquisition since Vallar Plc, the investment company he founded, raised 707 million pounds ($1.1 billion) in an initial public offering in London in July. The transaction announced Nov. 16 will combine Vallar, 25 percent of Indonesian coal producer PT Bumi Resources and 75 percent of PT Berau Coal Energy. “My plate is pretty full,” says Rothschild. “The only slight kind of stress is on my travel schedule and my social life, which is non-existent.” Atticus Career Rothschild has “the nerve to call up anyone and what’s interesting is he’s taken seriously,” says Michael Rawlinson, a banker who met Rothschild in New York in the 1990s and is now head of resources at Liberum Capital Ltd. in London. “Ivan Glasenberg or Oleg Deripaska, they’ve come from nothing,” he says, “they are not impressed by posh blokes.” Before setting up Vallar, Rothschild worked at hedge-fund firm Atticus Capital LP in New York, which generated almost $7 billion for investors. Most of the Atticus funds were wound up last year after founder Timothy Barakett decided to spend more time with his family. Rothschild says his work at Atticus “immersed” him in commodities, which became his “strongest suit.” He also got to know some of the industry’s most influential people. “He has an unparalleled range of contacts,” says Munk, Barrick’s founder and chairman. “Certainly being a Rothschild does help, but opening a door, if you’re an idiot, it’s a single event. He has shown a talent.” Eton, Oxford Rothschild, whose main residence is in Klosters, Switzerland, is the only son of U.K. financier Lord Jacob Rothschild, the 4th Baron Rothschild, a former banker and modern art collector. He attended Eton, the English private school that counts 19 British prime ministers as former pupils, and is dating Princess Florence von Preussen, the great-great-granddaughter of the last German Emperor Kaiser Wilhelm II, according to the U.K.’s Daily Mail. After studying history at Oxford University, Rothschild joined Lazard Ltd., having been introduced to the world of finance during trips with his father to New York to meet the business elite. “I was exposed at a very, very early age to a lot of these big Wall Street tycoons,” he says. Dinner With Deripaska On one visit, father and son met Eric Gleacher, whose investment bank Gleacher & Co. was two floors below the Rothschild family office on Madison Avenue. Gleacher offered Rothschild a job as an analyst, and it was there that he met Harvard Business School graduate Barakett. Rothschild joined him the following year as Atticus’s second employee. The hedge fund, named after Atticus Finch in Harper Lee’s novel To Kill a Mockingbird, was an activist shareholder, pressing copper producer Phelps Dodge to return cash to shareholders and find a buyer. Freeport-McMoRan Copper & Gold Inc.’s 2007 acquisition of Phelps returned a $520 million gain, Rothschild says. While at Atticus, Rothschild established his relationship with Deripaska. They first met in Paris in 2002 at a meeting where “the average age was considerably older than our average ages,” he says. “We ended up going out and having dinner.” Rothschild chairs the board of EN+ Group Ltd., the holding company through which Deripaska controls assets including Moscow-based United Co. Rusal, the largest aluminum maker. Los Angeles Meeting Since the Vallar IPO, he says he’s looked at potential deals with OAO Polyus Gold, Russia’s largest producer of the precious metal, and Moscow-based iron-ore miner OAO Metalloinvest. It was in Los Angeles in October that he met for the first time with Nirwan Bakrie, one of the Bakrie family, which controls Bumi, Indonesia’s largest coal producer. The three-way merger will create a “resources champion” in Indonesia, according to Vallar. The country is the world’s biggest exporter of power-station coal. “Indonesia is a sleeping giant,” Rothschild says. “One scratches one’s head to think why isn’t there a mining champion out there already and hopefully we are in the process of showcasing one in the years ahead.” The new company, Bumi Plc, will trade in London using Vallar’s listing there, and plans to almost double coal production from mines in Indonesia to 140 million metric tons a year by 2013. “To be able to do an IPO without having any assets, he has to be somebody,” Indra Bakrie, who will be Bumi Plc’s chairman, says of Rothschild. “I wish I could do that.” www.bloomberg.com/news/2010-12-01/nat-rothschild-plays-his-strongest-suit-with-3-billion-commodities-deal.html |
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Post by sandi66 on Dec 2, 2010 9:19:47 GMT -5
Fed May Be ‘Central Bank of the World’ After UBS, Barclays Aid December 02, 2010, 12:03 AM EST By Bradley Keoun and Hugh Son Dec. 2 (Bloomberg) -- Federal Reserve data showing UBS AG and Barclays Plc ranked among the top users of $3.3 trillion from emergency programs is stoking debate on whether U.S. regulators bear responsibility for aiding other nations’ banks. UBS was the biggest borrower under the Commercial Paper Funding Facility, with $74.5 billion overall, more than twice as much as Citigroup Inc., the top U.S. bank recipient, according to the data released yesterday. London-based Barclays Plc took the biggest single amount under another program that made overnight loans, when it got $47.9 billion on Sept. 18, 2008. “We’re talking about huge sums of money going to bail out large foreign banks,” said Senator Bernard Sanders, the Vermont independent who wrote the provision in the Dodd-Frank Act that required the Fed disclosures. “Has the Federal Reserve become the central bank of the world? I think that is a question that needs to be examined.” The first detailed accounting of U.S. efforts to spare European banks may add to scrutiny of the central bank, already at its most intense in three decades. The Fed, which released data on 21,000 transactions, said in a statement that its 11 emergency programs helped stabilize markets and support economic recovery. The Fed said there have been no credit losses on rescue programs that have been closed. The growth of the U.S. mortgage-backed securities market and the dollar’s status as the world’s reserve currency enticed overseas banks such as Zurich-based UBS to buy assets in the country before 2008. They paid for the holdings with U.S. dollars, and when funding seized up, the Federal Reserve refused to take the risk that European firms would unload the assets and further depress markets for housing-related investments. ‘Much Worse’ “Things would have been worse if they hadn’t lent to foreigners,” said Perry Mehrling, senior fellow at the Morin Center for Banking and Financial Law at Boston University and author of “The New Lombard Street: How the Fed became the Dealer of Last Resort.” “We’re finally getting to understand the role of the Fed in the world.” Fed spreadsheets showed the central bank became the world’s lender of last resort as dollars flowed to European banks as well as Bank of America Corp. and Wells Fargo & Co, among top borrowers from the Term Auction Facility at $45 billion each. Goldman Sachs Group Inc., which posted record profit last year, borrowed more than $24 billion from another program. Milwaukee-based Harley-Davidson Inc. and Fairfield, Connecticut- based General Electric Co. sold commercial paper, a form of short-term debt, to the Fed under a program that lent as much as $348.2 billion at its peak. Sanders, the Vermont senator, said yesterday he plans to investigate whether banks profited by borrowing from the Fed and investing the funds in Treasuries, benefiting from the difference in interest rates. ‘Bailout Protection Act’ U.S. Representative Mike Pence, an Indiana Republican, said he planned to introduce a “European Bailout Protection Act” to restrict the flow of International Monetary Fund loans to European countries. He said he was responding to reports that U.S. officials might bolster a European fund designed to deal with this year’s debt crisis, which has spread from Greece to Ireland. Edwin Truman, a former Fed official who is a senior fellow at the Peterson Institute for International Economics in Washington, said any push to confine the Fed’s role to U.S. banks would create a “massive exercise in financial protectionism.” “It would lead to retaliation, so U.S. banks in London or Tokyo would expect the same kind of treatment,” Truman said. William Poole, senior economic adviser to Merk Investments LLC and a former Federal Reserve Bank of St. Louis president, said he was surprised by the extent of non-U.S. bank borrowing. Commercial Paper “I was under the impression that each country bore the responsibility for supervising the banks headquartered in their borders,” Poole said in an interview. The $74.5 billion received by UBS through the CPFF, which bought short-term debt, represents total borrowings by UBS over the life of the program. The total outstanding at any point in time never exceeded about half that sum, said Karina Byrne, a UBS spokeswoman. Byrne said the bank’s tapping the Fed fund “should be seen in the context of our overall desire to maintain flexibility and diversification in our funding sources.” The loan to a Barclays unit came from the Primary Dealer Credit Facility, created to make sure U.S. securities firms and foreign firms’ U.S. affiliates had cash to satisfy clients’ financing demands. Barclays took the loan the week in September 2008 that it acquired the U.S. operations of Lehman Brothers Holdings Inc. Mark Lane, a spokesman for Barclays, declined to comment. ‘A Big Operation’ Paris-based Natixis borrowed $27 billion under the commercial paper program. “We’ve got a big operation in the U.S.A.,” Victoria Eideliman, a spokeswoman for the bank said. “It was, for us, natural that we participate in this program like all the banks. When we participated, the liquidity situation was very tense.” The $182.3 billion rescue of American International Group Inc. spared European banks that traded with the New York-based insurer from having to raise as much as $16 billion in capital, according to a June report from the Congressional Oversight Panel, which reviews bailout spending. Fed Chairman Ben S. Bernanke addressed questions in a 2009 Congressional hearing about why non-U.S. banks benefited from the AIG rescue. ‘The Obligation’ “I would point out that the Europeans have also saved a number of major financial institutions, and the issue of whether those institutions owed American companies money has not come up,” Bernanke said. “So I think that there is a sense that we all have the obligation to address the problems of companies in our own jurisdictions.” Three of the top seven borrowers under the CPFF program were private firms. New York-based Hudson Castle received $53.3 billion in aggregate, BSN Holdings took $42.8 billion, and Liberty Hampshire Co., a unit of Guggenheim Partners LLC, drew $41.4 billion, Fed data show. Hudson’s website says it develops “customized debt products.” A person who answered its phone said no one was available to comment. A Guggenheim spokesman didn’t return phone calls. BSN Capital Partners Ltd., which was associated with BSN Holdings according to a 2006 Standard & Poor’s note, was founded by John Burgess, a former Deutsche Bank AG managing director. Burgess declined to comment. --With assistance from Andrew Frye, Donal Griffin, Christine Harper, Michael Moore, Jody Shenn, James Sterngold, Yalman Onaran and Natalie Doss in New York and Alison Fitzgerald, Scott Lanman and Joshua Zumbrun in Washington and Simon Clark in London. Editors: Dan Kraut, John Voskuhl www.businessweek.com/news/2010-12-02/fed-may-be-central-bank-of-the-world-after-ubs-barclays-aid.html |
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Post by sandi66 on Dec 3, 2010 6:14:14 GMT -5
Delaying Tax Vote Could Crash Stock Market December 2, 2010 Failure by Congress to extend the Bush tax cuts, especially locking in the 15 percent capital gains tax rate, will spark a stock market sell off starting December 15 as investors move to lock in gains at a lower rate than the 20 percent it would jump to next year, warn analysts. [See who gets the most money from the financial industry.] While it is unclear how bad the sell off could be, it could wipe out the year's gains, they warn. "Capital gains tax rate will increase from 15 to 20 percent if the tax cuts are not extended. The last time the capital gains tax rate increased--on Jan. 1, 1987 from 20 to 28 percent--investors realized their gains at the lower tax rate," said Daniel Clifton at a Washington partner at Strategas Research Partners. "We would expect a similar effect this time around as investors see the tax rate going up and choose to realize their gains and incur the 15 percent tax." [See a gallery of political caricatures.] In a memo to clients, Clifton says that the date most clients are focused on is December 15th for a deal in Congress before beginning to sell. One reason: Many stock options expire that day and investors have to act. The later Congress acts, he tells Whispers, "the more pressure that will build on the stock market." Worse, talk that Congress will simply pass retroactive fixes to the tax system won't help, since investors will take the sure thing and sell rather than rely on Capitol Hill. "Fixing the issue next year will not negate these negative impacts," said Clifton. [See a slide show of 10 not so recession proof industries.] Ditto for a retroactive fix to the alternative minimum tax, he writes in the client memo. "The talk of retroactively fixing the tax cuts ignores the fact that the AMT patch cannot be retroactively fixed and is the largest component of the tax increase. Hence, in March and April, 27 million taxpayers will be facing an additional $70 billion in tax payments. The hit to consumer spending would be particularly significant," he writes. www.usnews.com/mobile/blogs/washington-whispers/2010/12/2/delaying-tax-vote-could-crash-stock-market.html |
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Post by sandi66 on Dec 3, 2010 6:41:00 GMT -5
Dick Cheney faces bribery charges in Nigeria over LNG plant scandal Tajikistan News.Net Friday 3rd December, 2010 (ANI) Nigeria's anti-corruption agency would reportedly charge US Vice-President Dick Cheney for his alleged involvement in a bribery scandal involving Halliburton, the company he once headed. Cheney was Halliburton's Chief Executive before becoming Vice-President to George W Bush in 2001. The BBC quoted a spokesman for the anti-corruption agency, Femi Babafemi, as saying that the charges could be brought against Cheney next week. He also said that the charges were "not unconnected to his role as the chief executive of Halliburton". The bribe scandal concerned the construction of a liquefied natural gas (LNG) plant in southern Nigeria. KBR last year pleaded guilty to paying 180 million dollars (115 million pounds) in bribes to Nigerian officials before 2007, when it was a subsidiary of Halliburton. The firm agreed to pay 579 million dollars (372 million pounds) in fines related to the case in the US. KBR and Halliburton have now split, and Halliburton says it is not connected with the case against KBR. It also denied involvement in the allegations, and added that a raid on its office last week by Economic and Financial Crimes Commission officials was "an affront against justice", the report said. However Nigeria, along with France and Switzerland, has conducted its own investigations into the case, it added. Cheney's lawyer, Terence O'Donnell, said allegations that his client was involved in the scandal were "entirely baseless," adding that US investigators had "found no suggestion of any impropriety by Dick Cheney in his role of CEO of Halliburton". "Any suggestion of misconduct on his part, made now, years later, is entirely baseless," he added. (ANI) www.tajikistannews.net/story/715155/ht/Dick-Cheney-faces-bribery-charges-in-Nigeria-over-LNG-plant-scandal |
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Post by sandi66 on Dec 3, 2010 6:42:54 GMT -5
Nation and World Bloomberg News Posted: Friday, Dec. 03, 2010 CELEBRATION, Fla. Nigeria to file charges against Dick Cheney Nigerian authorities said they plan to file charges against former Vice President Dick Cheney over a bribery case involving a former unit of the oil-services company he once headed, Halliburton. Cheney and officials from five foreign companies, including Halliburton, face charges over a $180 million bribery scandal arising from the construction of a $6 billion liquefied natural gas plant, said Godwin Obla, prosecuting counsel at Nigeria's Economic and Financial Crimes Commission. Halliburton, the world's second-largest oilfield-services provider, said it hasn't seen any amended charges by Nigerian authorities. "Halliburton's oil-field services operations in Nigeria have never in any way been part of the LNG project and none of the Halliburton employees have ever had any connection to or participation in that project," Tara Mullee Agard, a spokeswoman for the Houston-based company, said in an e-mail. Halliburton and its former subsidiary KBR agreed to pay $579 million in February 2009 to U.S. authorities for violations of the Foreign Corrupt Practices Act through bribe payments in Nigeria that stretched from 1994 to 2004. Disney town rocked by first homicide Celebration, Disney's master-planned, picture-perfect central Florida community, has never reported a homicide in its 14-year existence - until this week. Residents of the town five miles south of Walt Disney World woke up Tuesday to the sight of yellow crime-scene tape wrapped around a condo near the Christmas-decorated downtown. A 58-year-old neighbor who lived alone with his Chihuahua had been slain over the long Thanksgiving weekend, police said. The community's famous friendliness is what brought investigators to Matteo Giovanditto's body: Neighbors hadn't seen him for days, so they filed a missing person's report, then went into his condo a day later and found him. "This is very rare and unusual for a crime of this magnitude to occur in this community," said Twis Lizasuain, a sheriff's spokeswoman. Disney relinquished control of Celebration several years ago; the town is now maintained like any other in Osceola County. But it still retains theme park-like flourishes: a colorful kiosk sells tickets to a little train that ferries children and adults around town and, on a recent sunny day, Bing Crosby's "White Christmas" could be heard playing all over downtown. Associated Press Suicide at center of publicist mystery A man wanted in the slaying of a Hollywood publicist killed himself in the lobby of a dreary Los Angeles hotel as police closed in to question him. The death deepened the mystery into the slaying of Ronni Chasen, who was shot in her luxury Mercedes as she drove home from the premier of an Oscar contender last month. Police have been investigating whether it was a hit or some other type of attack. Witnesses said the man appeared to shoot himself in the head Wednesday, splattering blood across the lobby of a residential hotel where people rented rooms by the month. Beverly Hills police Chief David Snowden said the man "was a person of interest only" in Chasen's death in Beverly Hills. Police spokesman Tony Lee emphasized at a news conference that the murder investigation was not over. Associated Press Takes a licking, keeps on clipping ANCHORAGE, Alaska Talk about a close shave. An SUV crashed into an Anchorage barber shop, narrowly missing shop owner Heng Song and his two customers. But Song wasn't about to let the horrifying moment get in the way of a good haircut. He was momentarily stunned, yes, when the vehicle burst through a door and window Wednesday afternoon as he was clipping a customer's hair. "Half a haircut and kaboom!" is how the 53-year-old described it Thursday, after the shop had been cleared of debris and the gaping hole was boarded with plywood. Song laughed Thursday as surveillance footage showed him soon return to the chair and continue the haircut, while in the background bystanders began to gather. There's no way he would let a loyal customer go home with a botched job, Song said. Associated Press www.charlotteobserver.com/2010/12/03/1883221/nation-and-world.html |
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Post by sandi66 on Dec 3, 2010 7:00:00 GMT -5
Fed Created Conflicts in Improvising Financial System Rescue By Bob Ivry, Christine Richard and Christopher Condon - Dec 3, 2010 12:01 AM ET Deborah A. Cunningham, the manager of $261 billion at Federated Investors Inc., was squeezed into the bathroom of her family’s recreational vehicle, trying to help save the $3.6 trillion money market industry. Cunningham was on the phone with Federal Reserve officials in Boston, New York and Washington. Outside, in the Pennsylvania State University stadium parking lot in State College, football fans were preparing for a game against Temple University. “It was the only place I could hear,” Cunningham said. “People were drinking beer. They kept knocking on the door, saying, ‘I have to go.’” The solution Cunningham helped craft on Sept. 20, 2008, was a bailout for money market funds, which were created as safe investments that could be easily cashed out. The Fed put the facility into effect two days later. At its peak in October 2008, it provided $152 billion to stem a customer run sparked by the Sept. 15 bankruptcy of Lehman Brothers Holdings Inc. This week’s disclosures of data from the Fed’s rescue efforts during the 2007-2008 financial crisis show how the central bank employed companies to help design or run programs they could use to their benefit. Federated tapped the money- market rescue for $8.89 billion, according to Fed data. Pacific Investment Management Co. and BlackRock Inc. weren’t only advisers to the Fed, they were also trading securities they helped value, the Fed data show. No Choice “That’s the way the system works,” said David Castillo, senior managing director at Further Lane Securities in San Francisco. “It’s problematic that they’re customers, but that shouldn’t limit their ability to participate in this process. Quite frankly, we don’t have a choice. They have the expertise.” In compliance with the Dodd-Frank financial overhaul law, the Fed on Dec. 1 identified the institutions that used $3.3 trillion of improvised rescue programs. The 21,000 transactions in 11 initiatives included the money-market plan Cunningham helped devise, known as the AMLF, short for its 10-word formal name, the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility. In its scramble to keep the economy from collapsing, the Fed also created the Commercial Paper Funding Facility, or CPFF, which tried to ensure that banks and industrial companies had the short-term loans they needed to fund everyday operations. General Electric Co., the biggest issuer of commercial paper, met with Treasury and Fed officials in the days before they created the CPFF. ‘Unintended Consequences’ Later, the Fed set up the Term Asset-Backed Securities Loan Facility, or TALF, to keep consumer credit flowing. It hired Pimco, manager of the world’s largest bond fund, and BlackRock, the world’s biggest money manager, to provide analytical help, according to a November 2010 report by the Fed’s Office of Inspector General. “Any situation where the potential exists for a conflict of interest is concerning,” said Kurt Bardella, spokesman for Representative Darrell Issa, the California Republican who will become chairman of the House Oversight and Government Reform Committee next month. “This really brings into focus one of the unintended consequences of institutionalizing the federal government picking winners and losers while those entities are partaking directly and indirectly in what should be exclusive government functions.” Breaking the Buck Cunningham was making calls from her camper’s restroom after the Lehman Brothers bankruptcy filing panicked investors, who pulled $230 billion from money-market accounts. The $62.5 billion Reserve Primary Fund, which held $785 million of loans to Lehman Brothers, became the biggest money-market fund and the first in 14 years to “break the buck,” meaning the value of a share fell below $1 and investors faced losses. Money funds were the main buyers of commercial paper. During the panic, they had to sell off assets to pay investors who demanded their money back. That meant they couldn’t buy the commercial paper that corporations needed to pay for things such as payroll and utility bills. In less than a day, the credit crunch had spread to industrial companies. By Wednesday, Sept. 17, officials at the Fed and the Treasury Department were focused on finding a solution for money funds, says Phill Swagel, who was assistant Treasury secretary for economic policy. Swagel testified to Congress that morning on the deteriorating housing market and returned to the Treasury building around midday, he said. After eating a tuna sandwich, he was on conference calls with Fed officials the rest of the afternoon and late into the night. ‘Not Normal Policy’ Two days later, on Sept. 19, the Treasury announced that for a fee it would insure money market funds against investor losses. “It’s not normal policy to say this asset class is now guaranteed,” said Swagel, a professor at Georgetown University’s McDonough School of Business in Washington, in an interview. “When there’s a run on money market mutual funds, there’s no time to do anything else but say they’re all guaranteed, we’re done.” While the Treasury measure slowed the pace of withdrawals, it didn’t help money-market funds turn assets into cash fast enough to pay investors who wanted out. Putnam Investments LLC closed its $12.3 billion Putnam Prime Money Market Fund on Sept. 17 after investors asked for about a third of the fund’s money. Managers of the Boston-based firm faced the prospect of selling assets in a distressed market, which would cause the fund to break the buck. Federated’s Fund Takeover Cunningham’s Federated, based in Pittsburgh, was prepared to take over the assets of the Putnam fund, issuing investors shares in its $22.1 billion Prime Obligations Fund, she said. To make the takeover work, Federated needed to pay off all the Putnam investors who’d demanded their money, she said. For that, she turned to the Fed. “We had been working with them trying to figure out what might work to add liquidity to the marketplace,” Cunningham said in an interview. The AMLF, the bailout that Cunningham helped design, provided cash for banks to buy asset-backed commercial paper from money market funds. This made it possible for the funds to avoid selling at a discount, and the Fed agreed to take the risk of defaults, guaranteeing a profit for the banks when the loans were repaid. The program enabled Federated to absorb the $12.3 billion in assets of the Putnam fund on Sept. 24, 2008, according to spokeswoman Meghan McAndrew. About half the investors redeemed their shares within a week, she said. That meant the deal brought Federated, the third-biggest U.S. money market company, about $6 billion in assets at no cost. ‘Single Most Successful’ Federated’s Prime Obligations Fund now holds $47 billion of assets, more than double the amount before the transaction. In a deal announced July 16, Federated will pay as much as $38.8 million over five years to acquire $17 billion in money fund assets from SunTrust Banks Inc. “Even if the entire Putnam fund redeemed, we were still confident with this facility behind us that there was liquidity in the marketplace and the ability to withstand that,” Cunningham said. “Putnam investors were immensely aided by this program. It didn’t really help Federated except for some positive press.” All AMLF loans have been repaid, and the facility generated $543 million in interest, according to a Fed report. “The AMLF was the single most successful government intervention during the financial crisis,” said Peter Crane, president of Crane Data LLC, a money-fund research firm in Westborough, Massachusetts, in an interview. “In a crisis when you have esoteric corners of the market involved, you have no choice but to go to the experts, and the experts will be self- interested players.” Commercial Paper While the AMLF helped stabilize money funds, they didn’t start buying commercial paper again. That left issuers without their biggest group of customers and unable to roll over short- term debt as it matured. At 5:45 p.m. on Monday, Sept. 15, GE Chief Executive Officer Jeffrey R. Immelt met for half an hour with Treasury Secretary Henry M. Paulson Jr. in the secretary’s office, according to Paulson’s schedule. An hour and 15 minutes later, Federal Reserve Bank of New York President Timothy F. Geithner convened a staff meeting to focus on “GE issues,” according to his schedule. He and Paulson conferred by phone afterward. On Oct. 1, Geithner’s schedule noted a tentative conference call with Immelt, who was a board member of the New York Fed, a position he still has today. GE spokesman Gary Sheffer said the company doesn’t see a conflict with Immelt’s membership on the New York Fed’s board. He declined to comment on the content of Immelt’s conversations. Reviving Securitization Less than a month later, the Fed created a bailout of the commercial paper market. A special entity called CPFF LLC, funded by the Fed, bought commercial paper from companies, including GE, the biggest issuer in the world. GE tapped the facility 12 times for $16.1 billion, the Fed disclosed this week. Assistance to companies, which also included Toyota Motor Corp. ($4.6 billion), Harley-Davidson Inc. ($2.3 billion) and Verizon Communications Inc. ($1.5 billion), topped out at $348.2 billion on Jan. 21, 2009, according to the Fed. The program had no defaults and gained $6.1 billion in interest and fees, the central bank’s Inspector General said in its report. In November 2008, the Fed set out to revive the market for bonds backed by consumer and small business loans. The market froze as an unprecedented number of defaults made assets backed by mortgages impossible to value. Wall Street had fueled lending by bundling mortgages into bonds using an innovation known as securitization. Creation of TALF “We were pretty confident that banks didn’t have the capacity to essentially replace the capacity that was lost in the securitization market,” said William C. Dudley, who headed the New York Fed’s Markets Group at the time and is now the bank’s president, in an interview. “We thought the best way forward would be to try and restart the securitization market, rather than just sit back and rely on the banking sector.” On Nov. 25, 2008, the Fed created the Term Asset-Backed Securities Loan Facility, or TALF, which allowed investors to borrow from the Fed as much as 95 cents of every dollar invested in Fed-approved asset-backed securities. Investors also retained the option of turning the securities over to the Fed if they fell in value. Pimco, BlackRock The New York Fed hired Pimco, based in Newport Beach, California, to value collateral, monitor the credit risk of TALF participants and assess the securities market, according to the Inspector General’s report. BlackRock Solutions, a unit of New York-based BlackRock, said it was brought on to supply analytical help on the securities. Without singling out any contractors, the Inspector General’s office said that farming out certain tasks creates the potential for conflicts of interest. The two firms also participated in TALF as borrowers on behalf of clients, along with other financial companies. Pimco tapped TALF 96 times between April 2009 and March 2010 for a total of $7.26 billion, according to Fed data. Ten funds connected to BlackRock Financial Management Inc., another unit of BlackRock, borrowed a total of $2.8 billion for clients, the Fed disclosed. Ford Deal On the first day of the program, Pimco put up $22 million and borrowed $292 million from the Fed to buy $314 million of bonds backed by Ford Motor Co. auto loans. The fund borrowed from the Fed at the London interbank offered rate plus 100 basis points, or 1 percentage point, and purchased securities yielding Libor plus 250 basis points, or 2.5 percentage points. The return was about 23 percent a year for investing in securities with the highest credit ratings and a Federal Reserve backstop. The Pimco advisory team serving as a TALF collateral monitor for the New York Fed is subject to “strict physical, ethical and technological walls” and has no involvement in any investment strategies or decisions, said Mark Porterfield, a Pimco spokesman. BlackRock also participated in the initial Ford deal, purchasing $275 million of the same securities as Pimco, using $256 million borrowed through TALF, according to the Fed. Since February, when BlackRock Solutions was hired, BlackRock Financial Management borrowed $248 million to invest in a total of 13 commercial mortgage-backed securities deals. There was no impropriety in BlackRock’s actions, said Bobbie Collins, a BlackRock spokeswoman. BlackRock Solutions was a collateral monitor providing analytical services for TALF, while BlackRock Financial Management tapped the program on behalf of clients, she said. The two units are separate businesses with strict information barriers in place, she said. Further Fed Review Firms helping to price hard-to-sell assets could overvalue them to raise the value of their own assets or those of their clients, said Michael Smallberg, an investigator with the Project on Government Oversight, an independent Washington watchdog group. “We never found anyone maliciously trying to take advantage of taxpayers,” Smallberg said. “But we have concerns about how well those firewalls work.” The New York Fed “has carefully managed potential conflicts of interest” in TALF, including separating workers, approving staff, restricting personal investments and conducting on-site audits of the controls, said Deborah Kilroe, a bank spokeswoman. Conflict Review The Inspector General’s report, five months after TALF closed to new investment, said “a third-party vendor” under contract with the New York Fed’s legal group was “performing a conflict-of-interest review and testing compliance with contract provisions.” Neither Pimco nor BlackRock has been accused of wrongdoing. The firms didn’t establish policies or approve or reject collateral, according to the Fed. “It seems clear that the biggest beneficiaries were the insiders,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington. “We have a huge pinata here. The question is whether we had insiders deciding who would get the candy or was everyone in the same boat? Think of the people who get upset about the government giving a homeowner some help. Now multiply the sums by about 100 million. We should care.” www.bloomberg.com/news/2010-12-03/fed-created-conflicts-in-improvising-3-3-trillion-financial-system-rescue.html |
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Post by sandi66 on Dec 3, 2010 7:06:50 GMT -5
JPMorgan, Deutsche Bank Battle for Rich as Rules Change By Warren Giles - Dec 2, 2010 6:01 PM ET JPMorgan Chase & Co., Deutsche Bank AG and Citigroup Inc. are hiring bankers who cater to millionaire clients as more stringent capital rules reduce returns from investment banking. JPMorgan, the biggest U.S. bank by market value, plans to increase its wealth management staff in Europe, the Middle East and Africa by as much as 20 percent a year until 2013. Frankfurt-based Deutsche Bank is bulking up its Asia business after buying Sal. Oppenheim Group, Germany’s biggest independent private bank, nine months ago, said spokesman Klaus Winker. Leaders for the Group of 20 nations approved plans last month at a meeting in Seoul to more than double capital requirements for banks after the industry posted losses of more than $1.3 trillion from 2007 through 2009. The change provides renewed impetus for banks to focus on less risky and less capital-intensive units such as overseeing assets for wealthy clients, said Cedric Tille, a professor at the Graduate Institute in Geneva. “It’s a natural reaction for banks to go more and more toward fee-based advisory activities in response to capital requirements,” said Tille, a former economist at the Federal Reserve Bank of New York. “If they make a mistake, it’s only the clients who get upset.” Citigroup and Goldman Sachs Group Inc., both based in New York, also are building up their so-called wealth management divisions as Basel III rules are set to curb the risk-taking that led to a seizure of credit markets in 2008. Wealth Management Uptick Citigroup, which received a $45 billion taxpayer bailout in 2008 after losses on subprime mortgages and collateralized debt obligations, plans to double wealth management advisers in North America to about 260. Goldman Sachs Chief Executive Officer Lloyd Blankfein said Nov. 16 that “it’s important to get bigger” in private wealth management. “We’ve seen a massive uptick in the number of banks seeking to participate as global wealth managers,” John Cryan, chief financial officer of UBS AG, Switzerland’s biggest bank, told bankers in London on Sept. 30. The new Basel proposals will reduce the profitability of operations such as underwriting bond sales, lending to hedge funds and proprietary trading, said Professor Christoph Lechner of the Institute of Management at the University of St. Gallen in Switzerland. The lower-margin wealth management business will help plug part of the gap left by investment banking, he said. ‘Less Risky’ “Private banking offers a more stable cash flow over the economic cycle and requires less capital,” Lechner said. “But it’s tricky because investment banking is incredibly lucrative when the markets are running nicely, in a way that private banking can never be.” As capital requirements increase, the companies’ return on equity -- a measure of profitability -- will decline. UBS’s investment banking unit reported a return on equity of 10.5 percent in the first nine months of the year, compared with 24 percent for the wealth management division. Barclays Capital, the securities unit of London-based Barclays Plc, would have lost money over the last decade under Basel III capital rules that force banks to set aside more capital to cover their riskiest units, UBS analysts said in a Nov. 15 note to clients. Barclays plans to reduce the proportion of pretax profit generated by its investment bank to 33 percent, down from two-thirds in the first half of this year. ‘Other Peoples’ Money’ While private banks need capital to cover loans to wealthy customers, client assets are considered low-risk because they are “other peoples’ money,” said Bob Fawl, managing partner at Boston-based Basis Point Group LLC, an industry consulting firm. “The risk is supposedly born by someone else and the bank acts as an agent.” Wealth management generates stable revenue that complements the less predictable fees earned from investment banking, said Francois Reyl, CEO of Reyl & Cie., a Geneva-based bank with about 4 billion Swiss francs ($4 billion) under management. “If you’re going to build a one-stop shop with high profits and risky behavior, then you need a private banking engine for the recurring income and its stickiness,” Reyl said. While wealthy customers withdrew a net 251.6 billion francs from Zurich-based UBS in the 27 months through June, the unit’s only pretax loss was 166 million francs in the fourth quarter of 2008. Most of UBS’s more than $57 billion of writedowns and losses during the credit crisis -- second only to Royal Bank of Scotland Group Plc among European lenders -- came from its investment bank. ‘More Competitive’ The fragmentation of the global wealth market, which according to London-based Scorpio Partnership has about $16.5 trillion under management, means there is room for specialized bankers, said Benoit Dumont, chairman of JPMorgan’s Geneva-based Swiss unit. JPMorgan aims to double client assets in Switzerland over the next five years by focusing on wealthy families. “The market is becoming more competitive, but no one dominates so there’s something for everyone,” said Dumont, who is targeting customers with at least $25 million to invest. “The good news for this business is there’s a new millionaire created every minute.” The number of households worldwide with at least $1 million of investable assets, excluding primary residences, rose to 10 million in 2009 from 8.6 million a year earlier, according to a report in June by Merrill Lynch and Capgemini. ‘Human Qualities’ While private banking is less capital intensive, there are “cultural” differences that make it difficult for larger banks headed by investment bankers to enter the market, said Jacques de Saussure, senior managing partner at Pictet & Cie., Geneva’s biggest wealth manager. “The key factors are human qualities and the ability to invest for the long term,” said de Saussure. “You can’t buy human relationships.” Still, clients are more concerned than ever by capital strength ratios when considering who to bank with, said Jean- Pierre Cuoni, chairman of EFG International AG, which managed 87.5 billion francs on behalf of clients at the end of June. “All of a sudden it has become an issue,” said Cuoni. “It’s a bit of a competitive edge if you can say today, we have 19 percent while the other guy has only 13 percent.” www.bloomberg.com/news/2010-12-02/jpmorgan-deutsche-bank-battle-for-rich-as-capital-rules-change.html |
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Post by sandi66 on Dec 3, 2010 7:08:44 GMT -5
WikiLeaks Moves Its Website to Switzerland After Domain Service Is Cut Off By Matthew Campbell - Dec 3, 2010 5:53 AM ET WikiLeaks.org, the online whistle- blower that released about 250,000 U.S. diplomatic cables, moved the website to Switzerland after its U.S. domain-name translation provider withdrew service. WikiLeaks began directing viewers to WikiLeaks.ch rather than WikiLeaks.org this morning, it said on a Twitter feed. EveryDNS.net, which translates online addresses to “Internet protocol” numbers to provide access, terminated WikiLeaks’s service at 10 p.m. New York time, according to its website. While fully removing information on the Web is “almost impossible,” repeated attacks can reduce its reach, said Stephen Wolthusen, a researcher in the Information Security Group at Royal Holloway, University of London. “What you want to present is a real website,” he said. “These entry points can be, essentially, forced off the net. It becomes much less user friendly for the average person.” The EveryDNS shutdown, which WikiLeaks confirmed, occurred because electronic attacks on the site threatened the stability of access to other websites, EveryDNS said. Since it released the cables on Nov. 28, WikiLeaks has been the subject of so- called denial of service attacks, where hackers attempt to overwhelm a website with repeated requests for data. “Any downtime of the wikileaks.org website has resulted from its failure to use another hosted DNS service provider,” EveryDNS said. The Swiss Piracy Party, a political group that supports copyright and patent law changes, owns the domain name WikiLeaks.ch, which reroutes to WikiLeaks.org content, spokesman Denis Simonet said. Simonet said he was unsure if WikiLeaks had also moved to Swiss servers. Active Investigation The U.S., France, the U.K. and other countries have condemned the cable releases, which they say could endanger the lives of field personnel and hurt relations with allies. Amazon.com Inc., the Seattle-based online retailer that also hosts websites on its servers, dropped the leak site earlier this week from its system. In a blog post, Amazon said WikiLeaks could be “putting innocent people in jeopardy” by posting confidential documents, and was violating terms of service by posting material it doesn’t own. The U.S. is pursuing an “active, ongoing criminal investigation” of the site and its founder, Australian-born Julian Assange, 39. Other websites have had denial of service attacks. In July last year, attacks in South Korea caused the shutdown of sites including those of the presidential Blue House and the foreign and defense ministries. The South Korean government later blamed North Korea for the electronic assault, which infected an estimated 20,000 computers. www.bloomberg.com/news/2010-12-03/wikileaks-site-inaccessible-after-being-cut-off-by-internet-domain-service.html |
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Post by sandi66 on Dec 3, 2010 7:20:10 GMT -5
Fed's Delay on Release of Transcripts Will Be Reviewed by Issa By Scott Lanman - Dec 3, 2010 12:00 AM ET The prospective head of the U.S. House Oversight Committee said he will consider whether the five-year lag time for the release of transcripts of Federal Reserve meetings should be shortened. “If the Fed’s full transcripts can be released sooner, they should be,” said Representative Darrell Issa, a California Republican who’s set to chair the panel in January, in an interview. “If they’re going to have some definable negative effect on their deliberations or ability to do their job and on markets, then we have to be cautious.” Issa’s proposal comes amid rising criticism of the central bank by Republicans, who won control of the House in November elections. John Boehner, the presumptive House speaker, and three other Republican leaders have criticized the Fed’s plan, announced a day after the election, to buy $600 billion of assets to boost the economy, saying it risked weakening the dollar and fueling asset bubbles. Shortening the time before transcripts are disclosed is the first specific Fed issue Issa has indicated he will examine after pledging to intensify scrutiny of the central bank. The Fed in 1995 began its policy of releasing verbatim discussions with the time lag under pressure from Henry Gonzalez, the Democratic chairman of the House Banking Committee in the early 1990s. Issa, now the senior Republican on the oversight panel, said yesterday that he had discussed the issue in a private meeting with Kansas City Fed President Thomas Hoenig, who was in Washington for a separate meeting with House Republicans. ‘Slightly Shorter Time’ “He didn’t see it as inherently wrong” to shorten the delay, Issa said. “But he obviously thought that the next day was too soon, five years he was comfortable with and that we would work on whether there was a slightly shorter time.” Diane Raley, a spokeswoman for Hoenig, said Issa’s characterization of Hoenig’s position is accurate. The five-year delay “eliminates any opportunity to say their decision may have been wrong,” Issa said. He cited interest-rate cuts in 2002 and 2003 that some critics say fueled a U.S. housing bubble that led to the financial crisis that began in 2007. “If you assume that those kind of timelines are correct, then it begs the question of, ‘Is there enough transparency soon enough?’” Issa said. Fed Chairman Ben S. Bernanke has said the central bank’s monetary policy wasn’t responsible for causing the housing bubble. Meeting Minutes Michelle Smith, a spokeswoman for the Fed in Washington, declined to comment. The central bank releases minutes of meetings, which take place eight times a year, about three weeks afterward. The minutes summarize meetings without giving verbatim quotes or identifying policy makers who make remarks. The prospect of increased transparency follows this week’s release by the Fed, under orders from Congress, of documents naming recipients of $3.3 trillion of central bank aid during the financial crisis, along with details including the amounts of loans, interest rates and dates. Issa said he wasn’t prepared to comment on that issue. Federal Reserve officials are considering steps of their own to increase transparency, possibly including regular press conferences by Bernanke. He is the only head of a major central bank who doesn’t give media briefings to explain actions and projections. Over the past two years, Issa’s committee has disclosed internal Fed e-mails that he says showed cover-ups of bailout payments to creditors of American International Group Inc. and details of Bank of America Corp.’s takeover of Merrill Lynch & Co. Fed officials have said they didn’t try to limit public disclosures on Bank of America and that AIG information that was required to be released was disclosed by the company. Hearings Possible Representative Jim Jordan, the Ohio Republican who is likely to chair a subcommittee under Issa, will “have a lot of impact” on the Fed transparency effort, Issa said. The panel may hold hearings and conduct studies of the issue before considering any potential legislation, he said. “I always prefer if good suggestions were taken and they prevent legislation or if enabling legislation is agreed to in a process,” Issa said. Republicans are taking chairmanships of House committees in January after winning control of the chamber in the November midterm elections. www.bloomberg.com/news/2010-12-02/fed-s-delay-on-releasing-monetary-policy-transcripts-to-be-probed-by-issa.html |
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Post by sandi66 on Dec 3, 2010 7:32:54 GMT -5
Monetary Policy: Fed Critic Ron Paul's Power Play The Fed critic and gold bug could chair the House panel on monetary policy December 2, 2010, 5:00PM EST Retiring New Hampshire Senator Judd Gregg, one of the Federal Reserve's most stalwart Republican supporters, showed up for a meeting at the central bank in November bearing a surprising gift: a box of End the Fed books. As he handed out the 2009 best seller by Representative Ron Paul, a longtime Fed critic, Gregg told the gathering it would be worth reading to see what the other side is plotting. It may have taken 34 years, but Ron Paul has arrived, and he doesn't plan to squander the moment. His agenda includes landing the chairmanship of the House Financial Services Committee panel that oversees monetary policy—a job that will give him the power to push legislation reining in the central bank and to haul Fed governors up to Capitol Hill for hearings. The prospect has Wall Street, Fed officials, and even Republican House leaders worried that Paul's agenda could roil the markets and make a mockery of the U.S. financial system. This is a man, after all, who entered politics because President Richard Nixon bucked the gold standard in 1971, and now wants to make gold and silver legal tender. He is pressing for an audit of the Fort Knox bullion depository and, earlier this year, grilled Fed Chairman Ben Bernanke about the central bank's alleged funding of Watergate and Saddam Hussein's nuclear program. Bernanke called the charges "absolutely bizarre." Although his book ploy was couched in humor, Gregg laid plain a new Washington reality: Moderate, probusiness lawmakers like him, who consistently protected the central bank's independence and ability to set monetary policy, are mostly gone. In their place are politicians who view the Fed with suspicion, or worse. Their unofficial leader is Paul, the 75-year-old Texan whose quixotic 2008 Presidential run on the twin themes of ending the federal income tax and abolishing the Fed vaulted him to prominence with the nascent Tea Party. Some of those admirers are among the 75-plus new Republicans about to join Congress. For the first time since he was elected to the House in 1976, Paul's followers are formidable. They include his son Rand, an incoming senator from Kentucky who routinely bashed the Fed on the campaign trail and is now angling for a seat on the Senate Banking Committee where he, too, could train his sights on the central bank. Calls to Rand Paul's staff seeking comment were not returned. Officials at several major banks have privately raised concerns with Republican leaders that, by allowing Paul to become a chairman, his radical views would gain legitimacy, according to three bank lobbyists. Others are watching with great interest. "Congressman Paul has his own very strong views on things, and you've got to respect that," says Steve Verdier, a lobbyist for the Independent Community Bankers of America, which represents smaller lenders and has fought efforts to weaken the central bank. "I think there is a strong consensus in the country to maintain the independence of the Fed," he adds. If he gets the subcommittee gavel, Paul says he plans a thorough review of Fed policy. Fear of inflation is what motivates him the most. Next to the doorway in his Washington office are six framed German bank notes dating from the 1920s hyperinflation era. The notes are sequentially dated "to show how quickly the zeroes were added onto the bills" as inflation skyrocketed, Paul says. The notes are arranged around a quote by one of Paul's favorite Austrian School economists, the late Hans F. Sennholz, who Paul once met and calls "a tremendous influence on me." Paul is a devotee of the Austrian School, which teaches that manipulating money supply and interest rates are responsible for history's boom-and-bust cycles. "The Fed creates all of the bubbles and they create the inevitable bursting of all of the bubbles," says Paul. He believes his oversight role is long overdue. "There has been a politically cozy relationship between Congress and the Federal Reserve," he says. That includes past efforts to keep him from heading the subcommittee. "Republican leadership, with the Fed's influence, has been working to keep me away from this for a long time. That's not going to happen this time." His prediction may be premature. Five GOP leadership aides, speaking anonymously because a decision isn't final, say incoming House Speaker John Boehner has discussed ways to prevent Paul from becoming chairman or to keep him on a tight leash if he does. If Boehner, who will help determine who gets to chair subcommittees as early as Dec. 8, rejects Paul, he may have to contend with thousands of grassroots supporters and dozens of younger lawmakers who see Paul as a hero. Boehner, through a spokesman, declined to comment. "A lot of the older members probably think Ron is a little bit out of step," says Representative Bill Posey, a Florida Republican and unabashed Paul fan. "The depth of his knowledge on monetary policy, his understanding of it all, is second to none." Posey nominated Paul's famed audit-the-Fed bill for a "best legislation" award by House Republican freshmen this year. The bill, calling for a government audit of Fed operations, including its monetary policy decisions, won unanimously. Even though a watered-down version was included in the financial regulation law enacted in July, Paul wants to give the audit measure another shot and is counting on a new, high-profile perch to do so. "Traditionally, this subcommittee has been very insignificant," Paul says. "I'm absolutely going to change that." www.businessweek.com/magazine/content/10_50/b4207035613107.htm?campaign_id=investing_related |
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Post by sandi66 on Dec 3, 2010 11:56:26 GMT -5
Today's Market: 'Equity Research Matters' Revisited Posted on 12/03/10 at 8:52am (Comment on this article at www.financialwire.net/2010/12/03/shichtman-interview/) - Exclusive Interview - December 3, 2010 (FinancialWire) (http://www.financialwire.net/) (Investrend Forums Syndicate) -- Editorial note: It has been a long, painful road, easily dating back to the days of the Enron scandal, Overstock's (NASDAQ: OSTK [FREE Stock Trend Analysis]) early fight against naked short selling, as well as the manipulation of CMKM Diamonds. Eventually, on July 15, 2008, SEC chairman Christopher Cox invoked a one-month ban against naked short selling in 19 battered financial stocks, including Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Citigroup (NYSE: C), Lehman Brothers (OTC: LEHMQ), Credit Suisse (NYSE: CS), Merrill Lynch (DOA, as in dead on arrival), Bank of America (NYSE: BAC [FREE Stock Trend Analysis]), J.P. Morgan Chase (NYSE: JPM [FREE Stock Trend Analysis]), Fannie Mae (NYSE: FNM), and Freddie Mac (NYSE: FRE). And of course the sting is still being felt by many from the bailout of some of the aforementioned banks as well as U.S. industry giants such as Chrysler, General Motors and Ford (NYSE: F). Now, hopefully, we're embarking upon a better-informed and perhaps even slightly enlightened age of investing. To that end, we recently sat down with seasoned business attorney Marshal Shichtman to discuss the changing landscape of the stock market and its publicly-traded companies. Here is Part One: FW: In terms of markets and the economy, a great deal has happened in the last couple of years... MS: Yes. Much has changed, but the principals remain the same. FW: What hasn't changed? MS: The need to put out information has not changed, but the level and scrutiny of the information has changed, especially when in the context of investors and regulators. Investors are looking for a higher level of reliability of information to base their risk assessment, and essentially regulators are looking at the same thing, although their risk definition is a bit different. FW: How so? MS: Risk is defined by known reliable information. The more information is out there, and the more reliable that information is, the clearer a picture can be drawn. Not to mention the issuers communicating their message better. FW: What should lesser-capitalized companies do about that? MS: Having an independent assessment by a credentialed analyst, a CFA, puts a lot of questions to bed. Even if the end result is non-flattering, it still positively distinguishes issuers by having independent reliable information out there. . FW: How have things changed for lesser-capitalized companies? MS: Most are now going into full reporting mode. FW: Where do analyst reports come into play for a company that's in full reporting mode?. What's the value in it? MS: The immediate value is that the increased workload on the issuer to have research out there is nominal, it comes at a nominal cost, and most investors put a lot more weight in CFA reports than standard disclosure. FW: What about the bigger-picture value? MS: It may be about existing, in the long-run, period. From a more expanded perspective, research coverage not only carries weight with every reader, it also gives the company a stronger position in dealing with everyone. FW: In what way? MS: It gives investors a reason to take a company seriously. In sub-prime markets, the goal is to get eyeballs on your company. But all that time and effort is wasted if you don't have substantive information to retain investors' interest once they've seen you. Why would issuers go through the time, effort, and resources to get eyeballs on their company, if there is nothing substantive for investors to look at once they're there? FW: What about information coming from the company, or from third party investor relations firms? MS: These days, investors are preprogrammed to take all of it with a grain of salt. However, there is a huge difference between company puffery, IR firms' touting, and independent reports issued by a CFA. FW: What kind of effect do you think reports from credentialed analysts have on the market? MS: If the issuer is concerned with raising the average support level of their stock, they need to get institutional buy-in, either from institutions or large-cap individual investors. Institutions and large-cap individual investors look for several criteria before taking long term positions in a security, and one of those things is research; preferably independent research. (to be continued) Mr. Marshal Shichtman has served as council for Investrend Communications in various capacities since 2001. Mr. Shichtman is now collaborating with Investrend to provide a unique independent equity research product, which includes a specialized component particularly focused on assistance in best practices, filing, reporting and good governance. For a preferred introduction to Mr. Shichtman and/or Investrend's specialized program, write to resources@investrend.com with "Shichtman Introduction" in the subject line. Marshal Shichtman is the sole owner of Marshal Shichtman & Associates, P.C. He is a native New Yorker, who received his undergraduate degree from Boston University, his law degree from Touro Law Centre, his MBA in finance from Long Island University, and his LLM (Master of Laws) in International Taxation and Offshore Financial Centers from St. Thomas Law School. He started working in finance in the 1990s as a cold caller in the brokerage houses and worked his way up to Director of Private Placements. He decided for a career change and went to law school. During law school he attended the MBA program at night and worked as a project coordinator for private placements. After law school he briefly was an equity-partner of a brokerage house as the Director of compliance while taking his LLM at night. He then imported wine from the Saint Emilion region of France. After that, Marshal went into his own private practice. Currently, Marshal serves on the Board of Directors of the Nassau County Bar Association and represents several not-for-profit companies pro bono. For more information visit the firm's website (at www.lawmsa.com/). FinancialWire(tm) is a fully independent, proprietary news wire service. FinancialWire(tm) is not a press release service, and receives no compensation from subject entities, companies, equities, or representatives thereof, for its news, opinions or distributions. Further disclosure is posted at the FinancialWire(tm) website (at www.financialwire.net/disclosures.php and www.financialwire.net/2010/04/23/safe-harbor/). Additional resources for investors are also accessible via the FinancialWire(tm) website (at www.financialwire.net/2010/04/23/investor-resources/). Contact FinancialWire(tm) directly via inquiries@financialwire.net. www.benzinga.com/press-releases/10/12/c665669/todays-market-equity-research-matters-revisitedty buster |
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Post by sandi66 on Dec 3, 2010 14:51:30 GMT -5
Hedge Fund Hero John Kinnucan Gets Subpoenaed By The FBI Dec. 3, 2010, 11:30 AM John Kinnucan got a subpoena from the FBI just moments ago. He's taking the news well, saying, "I'm not scared." "It'll give me a chance to show my innocence." He received the subpoena just now from the FBI. It's for all his records going back two years. A little background on Kinnucan: He's being called Wall Streets hero for calling the FBI's bluff when he refused to wear a wire and sent an email to everyone on the FBI's "list" to warn them about what the FBI was up to - a wide-spread hedge fund insider trading investigation that's being called a "witch hunt." Since then, he's been the only man willing to talk about what's going on, which is pretty brave considering his involvement in the scandal has already ruined his business, Broadband Research. He doesn't think the FBI really has much on anyone, and he seems to know they don't have anything on him. www.businessinsider.com/john-kinnucan-gets-subpoenaed-by-the-fbi-2010-12#ixzz174wX4MHTty guru |
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Post by sandi66 on Dec 4, 2010 6:46:26 GMT -5
Prehistoric lawsuits historic House passes the long-awaited Claims Settlement Act WASHINGTON, DC — On Tuesday, November 30, from the mouths of many peoples on both sides of the fence, the passage of the Claims Settlement Act of 2010 is said to be "historic". President Obama and the Departments of Justice, Interior and Agriculture applauded the bipartisan House passage of the Claims Settlement Act on Tuesday. The Act, which recently passed the Senate, will provide long-awaited funding for the agreements reached in the Cobell lawsuit, brought by Native Americans over the management of Indian trust accounts and resources; the Pigford II lawsuit, brought by African American farmers; and four separate water rights suits made by Native American tribes. Elouise Cobell, lead plaintiff in the 14-year-old class action lawsuit over the federal government's mismanagement of its Indian Trust, hailed Tuesday's House vote as a landmark milestone on the road to justice for Native People. "This is truly an historic day in Indian Country as well as in America's history," said Ms. Cobell, a member of the Blackfeet Nation. "By Congress placing a seal of approval on this settlement, a monumental step has been taken to remove a stain on our national honor, and create a better future for Indians as our government begins to make some amends for grave past injustices", she said. President Obama has said that he will sign the legislation into law. "These are truly historic settlements that do not only resolve litigation, but also offer a new relationship between many deserving Americans and the federal agencies that play an important role in their lives," said Attorney General Eric Holder. "Bringing this litigation to a close has been a priority for this Administration, and today's vote in Congress is a significant, historic achievement. These cases provide fair deals for the plaintiffs and for the American taxpayers." "Congress' approval of the Cobell settlement and the four Indian water rights settlements is nothing short of historic for Indian nations," Secretary of the Interior Ken Salazar said. "The settlements honorably and responsibly address long-standing injustices and represent a major step forward in President Obama's agenda to empower tribal governments, fulfill our trust responsibilities to tribal members and help tribal leaders build safer, stronger, healthier and more prosperous communities." The Cobell settlement resolves the long running class action litigation over mismanagement of Indian trust funds. It also includes payment for resource mismanagement and funds for consolidation of fractionated lands. The case has been pending since 1996. "The passage of the Cobell Settlement is a significant milestone in the history of American Indian relations with United States government," said Jefferson Keel, President of the National Congress of American Indians (NCAI), the oldest, largest, and most representative American Indian and Alaska Native organization in the country. "Not only does Cobell settle historic injustices through legal means, it starts the U.S. government on a course for meeting its obligations and making reservation lands more productive for future generations. We commend the bipartisan effort from members of the House and Senate who worked tirelessly to pass this legislation." In press releases, following statements on the House floor, both Representative Tom Cole (R-OK) and House Majority Leader Steny H. Hoyer (D-MD), outlined the importance of passing the Cobell Settlement as part of the Claims Resolutions Act of 2010. "This legislation brings a fair and responsible resolution to the Cobell case and is a great bargain for American taxpayers," said Representative Tom Cole (R-OK), Co-Chairman of the Native American Caucus. "The Cobell settlement helps correct a historic wrong and ensures that Native Americans enjoy the full benefit of tribal lands and resources. The bill is fully paid for and will save taxpayers millions in additional costly litigation." "These settlements have been reached in court, and now it is our job to ensure that the federal government lives up to its end of the bargain," said House Majority Leader Steny H. Hoyer (D-MD). "I'm glad that this bill funds the Pigford and Cobell settlements without adding to the deficit; and I'm also glad that this bill can bring to a close an unfortunate chapter in our history." Agriculture Secretary Tom Vilsack issued the following statement on the final passage of the Claims Settlement Act: "President Obama and I made a firm commitment not only to treat all farmers fairly and equally, but to right the wrongs in USDA's past. I applaud those who took this historic step to ensure black farmers who faced discrimination by their government finally receive justice. And I commend those who led this fight in the U.S. Congress and I am thankful for their unwavering determination. "Today's vote will help the Department of Agriculture move beyond this sad chapter in history. The bill that passed the Senate and House includes strong protections against waste, fraud, and abuse to ensure integrity of the claims process. "In the months and years ahead, we will not stop working to move the Department into a new era as a model employer and premier service provider. We also must continue the good work we started to resolve all remaining administrative claims." In a separate release, President Barack Obama said: "I am pleased that [today], the House has joined the Senate in passing the Claims Settlement Act of 2010. This important legislation will fund the agreements reached in the Pigford II lawsuit, brought by African American farmers, and the Cobell lawsuit, brought by Native Americans over the management of Indian trust accounts and resources. I want to thank Attorney General Holder and Secretaries Salazar and Vilsack for all their work to reach this outcome, and I applaud Congress for acting in a bipartisan fashion to bring this painful chapter in our nation's history to a close. "This bill also provides funding for settlements reached in four separate water rights suits brought by Native American tribes, and it represents a significant step forward in addressing the water needs of Indian Country. Yet, while today's vote demonstrates important progress, we must remember that much work remains to be done. And my Administration will continue our efforts to resolve claims of past discrimination made by women and Hispanic farmers and others in a fair and timely manner." In addition to the Cobell Settlement, historic water settlements vital to Indian Country, totaling over $1 billion, were passed as part H.R. 4387. The water settlements involved the Crow Tribe, Taos Pueblo, the White Mountain Apache Tribe, and the Aamodt Settlement including the Pueblos of Nambe, Pojoaque, San Ildefonso and Tesuque. Following Tuesday's action, the Cobell case will return to court for a hearing before D.C. District Court Judge Thomas Hogan in accordance with federal court rules to confirm the fairness of the settlement, determine appropriate attorneys fees and to establish distribution of funds to the class members. "I am saddened that this process, which I began with the filing of our lawsuit in 1996, has taken so long," Cobell said. "Too many account holders, as I have often said, have died awaiting this settlement." www.charkoosta.com/2010/2010_12_02/Claims_Settlement_Act-2010.html |
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Post by sandi66 on Dec 4, 2010 6:49:33 GMT -5
Obama to Sign Historic Settlement to Black Farmers The White House said the president would sign the Claims Resolution Act of 2010 and make remarks at the ceremony next week, but offered no further details. December 3, 2010, 10:23 PM Washington, D.C. (AP) - Decades-old claims from African American farmers and native Americans that the government mistreated and swindled them out of billions of dollars can finally be settled starting Wednesday. President Barack Obama is set to sign the bill authorizing payment of $4.6 billion to settle claims that arose in class-action lawsuits. The White House said the president would sign the Claims Resolution Act of 2010 and make remarks at the ceremony next week, but offered no further details. The House passed the bill on Tuesday. The package would award some $3.4 billion to American Indians for royalties for resources like oil, gas and timber. Another $1.2 billion would go to African American farmers who claim they were unfairly denied federal loans and other assistance. www.wctv.tv/home/headlines/Obama_to_Sign_Historic_Settlement_to_Black_Farmers_111303294.html |
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Post by sandi66 on Dec 5, 2010 5:15:51 GMT -5
noir.bloomberg.com/apps/news?pid=20601087&sid=ax9ImcedZFBM&pos=3 Hedge Funds Drop Most Since May as European Crisis Worsens By Kelly Bit Dec. 4 (Bloomberg) -- Hedge funds declined the most in six months in November as the European debt crisis pushed stock markets lower across the globe. The Bloomberg aggregate hedge fund index fell 1.5 percent, the most since May, when a sudden selloff in stocks known as the “flash crash” prompted investors to cut risk. Long-short equity funds, whose managers can bet on rising and falling stocks, dropped 1.6 percent last month and gained 6.1 percent since the start of the year. Global stocks slumped 2.3 percent in November amid concern Europe’s debt turmoil may engulf Spain and Portugal after a bailout of Ireland failed to persuade investors that the crisis will be contained. Standard & Poor’s said last week it may cut Portugal’s credit rating. Prime Minister Jose Socrates has rejected suggestions the country may need a bailout. Europe is “on the verge of collapse,” James Melcher, founder of New York-based hedge fund Balestra Capital Partners LP, said last week at the Hedge Funds New York conference, organized by Bloomberg Link. “Germany may leave the euro with a couple of stronger countries.” The main Bloomberg hedge fund index is weighted by market capitalization and tracks 2,627 funds, 1,198 of which have so far reported returns for November. The index fell to 116.71 last month, compared with a peak of 130.38 in July 2007. Lagging Behind Stocks The November losses pare returns this year to 3.8 percent on average, compared with a 6.7 percent rally in global stocks, as measured by the MSCI World Index. Stock markets stabilized in the second half, helped by the U.S. Federal Reserve’s decision to buy an additional $600 billion in Treasuries to lower borrowing costs and stimulate the economy. Macro funds, whose managers seek to profit from global themes or trends, failed to profit from the dislocations in Europe, declining 1.1 percent in November. They’re still up 2.1 percent this year. Multistrategy hedge funds fell 1.5 percent last month to bring gains for the year to 1.7 percent. “The European debt crisis and QE2 are both having some unpredictable impacts on asset pricing,” said Adam Sussman, the New York-based director of research at Tabb Group LLC. ‘Difficult Month’ Hedge funds investing in asset-backed securities had the biggest November loss of any strategy, falling 5.2 percent, for a year-to-date return of 15 percent. Hedge funds that aim to capitalize on the price inefficiencies of fixed-income securities gained the most of any strategy, increasing 0.2 percent last month and 11 percent since the start of the year. Funds seeking to profit from mergers and acquisitions decreased 2.3 percent in November and 0.2 percent this year. “November was a difficult month for hedge funds,” said Don Steinbrugge, managing partner of Agecroft Partners LLC, a Richmond, Virginia-based consulting firm that advises hedge funds and investors. To contact the reporter on this story: Kelly Bit in New York at kbit@bloomberg.net To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net Last Updated: December 4, 2010 13:54 EST ty joye
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Post by sandi66 on Dec 5, 2010 20:43:24 GMT -5
The Komisar Scoop has posted a new item, 'CNBC Power Lunch: I blame Congress for prisoners' fraudulent tax refunds' Dec 4, 2010 - I was invited to CNBC's Power Lunch Thursday to talk about a report by the IRS Inspector General that prisoners had received $112 million in tax refunds they shouldn't have gotten. I surprised the interviewers by turning the question to tax cheating by those outside prison walls. You may view the latest post at thekomisarscoop.com/2010/12/cnbc-power-lunch-i-blame-congress-for-prisoners-fraudulent-tax-refunds/************* CNBC Power Lunch: I blame Congress for prisoners’ fraudulent tax refunds » By Lucy Komisar Dec 4, 2010 - I was invited to CNBC’s Power Lunch to talk about a report by the IRS Inspector General that prisoners had received $112 million in tax refunds they shouldn’t have gotten. I surprised the interviewers by turning the question to tax cheating by those outside prison walls. Many prisoners legitimately file tax returns and seek refunds because they worked during the tax year before they went to prison. But the report showed that 88% of prisoner’s returns were not specially screened, and one in five of those had no wage information from employers. That W-2 summary of annual wages is filed by employers, who pay part of the Social Security pension tax, and is also filed by employees with their tax returns. Self-employed people, such as company owners as well as independent doctors, lawyers and stock market investors, don’t have their incomes reported to Social Security by third parties nor do they have to file such forms. The IRS Inspector General says it paid out a total $112 million in fraudulent refunds to prison inmates. Other federal programs caught and stopped $18 million fraudulent refunds. So, CNBC on Thursday asked me for my thoughts. I laid the blame at the door of Congress, which blocks most information sharing, including from prisoners, in order to maintain the wall that protects rich individual and corporate fraudsters. Here is the video. Here’s what I said: A lot of the problem should be put in the door of Congress. One of the reasons the IRS has not been able to find out about prisoners filing tax returns and check on them is because they are not getting the information from the federal and state prison systems. Another reason why they can’t get all the fraudsters they should get is because of roadblocks the Congress has put in the way. For example not allowing the IRS to get information about employees and their wages and employers that is sent by Social Security to Health and [Human Services]…to the agencies that deal with this. IRS Inspector General J. Russell George, who shared the camera on the program, said, “That’s exactly right, there needs to be more sharing of information on a more expedited basis from HHS, from Social Security Administration along with state and local prison authorities.” Q: But Lucy, what are the odds of that happening?… Is there a political will to make those changes? Lucy: The real problem is that Congress in its legislation deliberately puts up barriers to catching fraudsters because it wants to help people cheat on their taxes. It thinks taxes are too high especially for the wealthy and for corporations. And it wants to help them avoid taxes. Q: Is it related to secrecy? And we don’t want the IRS to as deep a reach as they could because we’ve seen IRS be abusive in the past. Lucy: I think a lot of those charges of abuses turned out to be not true. If there was a way to separate out the prisoners from corporations and wealthy people, perhaps Congress would be in favor of having some exchange of information. The real problem is they like the fraud [by the rich and corporations, of course.] Here are links to the IRS Inspector General’s summary and report. Here’s the summary: www.ustreas.gov/tigta/press/press_tigta-2010-76.htmAnd the full report: www.ustreas.gov/tigta/auditreports/2010reports/201040129fr.pdfMore detail: According to the IRS IG report, 253,929 (88 percent) of the 287,918 returns filed by prisoners as of March 24, 2010 were not selected for screening. Of those, 48,887 who claimed refunds totaling more than $130 million had no wage information reported to the IRS by employers. That means one in five of those not screened had no wage information from employers. This is not a new problem. There was a similar audit and similar findings in a 2005 during the Bush administration. So, Congress passed a law in 2008 that requires regular updates on prison-based tax fraud. The IRS has a data mining system that gives points for certain suspicious elements in a tax return. If a prisoner worked part of the year before being incarcerated, he would have to file a tax return and may have a legitimate refund claim. Then why aren’t prisoners heading the data mining list? For one, state and federal prisons are not allowed to report the status of inmates to the IRS, so there’s no way to do a cross check. I’m assuming the cheating inmates don’t put down prison as their residence in the forms! The IRS in June called on Congress to give it greater access to prisoner information. Moreover, the prisoner story, which makes the public angry, highlights a problem which is much more serious in money terms: fraudulent returns claimed by the general population. For the 2010 filing season, the IRS identified nearly a quarter of a million (249,185) fraudulent tax returns and prevented the issuance of $1.48 billion in fraudulent refunds claimed by the general public. This is a 50 percent increase over the number of fraudulent tax returns identified during the 2009 Filing Season. Doesn’t Congress care about that? Congressional action till now has aimed at tying the IRS’s hands – mostly because Congressmen are under pressure, largely from business and wealthy supporters, not to give the IRS strong tools against fraud. Congress cut the IRS budget, resulting in cutbacks in staff investigators. And federal tax law establishes who has access to IRS informatio As a result, the IRS doesn’t have the access it needs to wage and withholding information. Under the law, the Social Security Administration provides information on employees to the Department of Health and Human Services: names, Social Security numbers, wages, employer names and addresses. But it allows the IRS access only in cases where a person is claiming earned income tax credit. That is a payment given to the working poor. It’s fine to check up on them. The IRS has been trying to get legislation to expand its access to HHS data. That would also save the money it spends on verifying claims that its data mining process throws up as suspicious. The IRS found for 2008, for example, that nearly 2/3 of the 150,000 claims it investigated had valid employment data. A data sharing system might have eliminated the need for those investigations. So, the ball is in Congress’s court. It needs to require prisons to report their inmates’ names and Social Security numbers to the IRS so there is immediate checking of their claims. And it should allow the IRS to get employee and wage information from the Department of Health and Human Services to check those against refund claims. (Automatic information exchange from offshore banks used by the very rich is another more tantalizing issue.) Will the U.S. establish tax information sharing to stop tax cheats inside the prisons and ignore those outside? That’s very likely in the current climate. thekomisarscoop.com/2010/12/cnbc-power-lunch-i-blame-congress-for-prisoners-fraudulent-tax-refunds/ |
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Post by sandi66 on Dec 5, 2010 21:09:49 GMT -5
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Post by sandi66 on Dec 6, 2010 8:09:03 GMT -5
Politicians need to learn some discipline December 6, 2010 Never let your comfort overcome your convictions. The seemingly never ending parade of government intrusion into our lives is both amazing in its arrogance and frustrating in its stupidity. Now "it" is deemed that we ignorant people need larger print on packages of cigarettes to say that smoking causes cancer rather than the honest statement that smoking can cause cancer. I smoked for 42 years before quitting in August of 1989, my wife's grandfather smoked until he was in his 90s, and I could go on and on about other people I know that can state the same fact. I have no problem with the current statement on tobacco products, but the actual fact is that if smoking caused cancer then all smokers would have cancer. Just tell the truth. This same "it" that was all in a dither about banks and mortgage companies not fully reading foreclosure papers had no problem passing laws that "it" never read, "duh." This same "it" has almost destroyed our educational system with its many laws and regulations that have banned discipline in our schools and to a great degree in our homes. From April to June of 1954 I was trained by the United States Marine Corps at Parris Island, S.C., and they were strong believers in swift and certain physical discipline. The group of politicians in Washington, D.C., are the most undisciplined group in our country and hopefully this last election will change some of that. The restrictions contained in our Constitution were not put there accidentally by our forefathers. They knew firsthand the dangers of big, monolithic government as it was practiced by kings and queens, thus they fled to America and created a new government with minimum intrusion in our lives. In most cases today, the problem is too much government rather than too little. Jim Harper www.hattiesburgamerican.com/article/20101206/OPINION03/12060310 |
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Post by sandi66 on Dec 6, 2010 8:16:19 GMT -5
American Taxpayers from Foreign Bailouts Ask Treasury Department to ensure compliance with provision in Dodd-Frank Bill Publish Date: 2010-12-06 Dec 06,2010 - (Washington, D.C.) – U.S. Sens. David Vitter and John Cornyn sent a letter to Department of the Treasury Secretary Tim Geithner asking the administration for assurances that it will protect American taxpayers from funding foreign bailouts. “It’s bad enough that taxpayers have to foot the bill for the mistakes of the big banks and the big automakers, but asking them to bail out irresponsible foreign governments is outrageous,” said Vitter. “Our country already owes trillions of dollars in debt. We simply can’t afford to take on other countries’ debt in addition to our own.” “American taxpayers have seen more bailouts than they can stomach, and the last thing they should have to worry about are their hard-earned tax dollars being used to rescue a foreign government,” said Cornyn. A provision in the Dodd-Frank Wall Street Act, based on an amendment sponsored by Vitter and Cornyn, shields taxpayer dollars from being used by the IMF to bailout nations who have made irresponsible spending decisions. It requires the Obama administration to evaluate any proposed bailout of a foreign nation where that nation’s public debt exceeds its annual Gross Domestic Product (GDP), and then to certify to Congress whether the bailout loan will be repaid. If the administration cannot certify that the bailout loan will be repaid, it will be required to oppose the bailout and vote against it at the IMF. The text of the letter follows: December 2, 2010 Secretary Timothy F. Geithner U.S. Department of the Treasury 1500 Pennsylvania Ave. NW Washington D.C. 20220 Dear Secretary Geithner, We are writing about recent press reports that indicate the Administration is ready to support, among other things, the extension of the European Financial Stability Facility via an extra commitment of money from the International Monetary Fund (IMF). In addition, the European Union and the IMF recently announced an €85 billion bailout for Ireland to shore up its banking sector and meet its debt obligations. This move has intensified speculation that other high-debt European countries will also need IMF assistance in the near future. Although the United States currently has severe debt problems of its own, as the largest financial contributor to the IMF, American taxpayers will likely provide a major share of any IMF financial support. As you know, the Dodd-Frank Wall Street Act (P.L. 111-203) includes a provision that is based on an amendment we offered during the Senate’s consideration of the Act. The amendment was intended to safeguard taxpayers’ money from being used by the IMF to bail out foreign countries who have made irresponsible spending decisions. The Senate passed the amendment by a vote of 94-0. This provision, included in Section 1501 of P.L. 111-203, requires the Treasury Secretary to direct the United States Executive Director of the International Monetary Fund to evaluate any proposed IMF loan to a country if the amount of the public debt of the country exceeds the gross domestic product of the country and the country is not eligible for assistance from the International Development Association. The Secretary must then determine whether or not the loan will be repaid and certify that determination to Congress. Furthermore, if the Executive Director determines that an IMF loan will not be repaid, the Treasury Secretary is required to direct the Executive Director to vote in opposition to the proposed loan. It is our expectation that the Administration and the Treasury Department will follow Section 1501 of P.L. 111-203. On this end, we would appreciate assurances from you that the Department will fully comply with Section 1501. In addition, we would like to know what actions you are taking to make sure that any taxpayer money used by the IMF will be repaid back in full. Americans deserve to know that their hard-earned money is protected from bailing out foreign countries who are likely to default on their financial obligations. Thank you and we look forward to your timely response. If you have any questions, please contact Senator Cornyn’s staff at 202-224-2934 or Senator Vitter’s staff at 202-224-4623. Sincerely, JOHN CORNYN U.S. Senator DAVID VITTER U.S. Senator politicalnews.me/?id=7041&pg=2&keys=Senator-David-Vitter-ForeignBailouts |
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Post by sandi66 on Dec 6, 2010 8:56:28 GMT -5
Alan Greenspan - reflections on the movie "The Flaw" Overview The title of the film is taken from a confession by Alan Greenspan, the former Chairman of the Federal Reserve, to a Congressional Committee in October 2008. Greenspan acknowledged to the committee that after 40 years of using his financial and behavioural models he was concerned that he had discovered that they contained a flaw. The premise of the film is that this flaw (error/omission) was partially responsible for the Financial Crisis (FC). The title of the film is also its hook-line. There is an inference in its title that the film itself would reveal to the audience exactly what Greenspan’s flaw was and link this to the damage caused by the FC. If these issues were intentions behind the film then they could have been more clearly conveyed. The film rather than being an expose on Greenspan’s flaw was for the main illustrations of the impact and a discussion about the FC. An intention of the film seems to be the education/enlightenment of the audience. The film is a dramatised documentary built around a series of interviews with ‘ordinary’ Americans who had been severely impacted by the FC. These interviews are interspersed with interviews with some of America’s economic experts and also flashbacks of various historical mainly news footage. In many ways the film is collage of perspectives about the FC. The film although promoted as a cinematic film is more akin to a television documentary. Film Specific Points The film did not include any footage of Greenspan explaining his model(s) flaw. The audience were left to infer this central pillar of the film for themselves. In his October 2008 presentation to the Congressional Committee, Greenspan explained that he had previously assumed that financial firms “would not imprudently borrow or lend to protect their shareholders”. Greenspan had assumed that the negative impact of bankers’ self seeking behaviour on the wider economy would be minimal. This he explained was his flaw. Sadly Greenspan's clarification was not included in the film. It should be noted that faced with mounting evidence that his models had not predicted the FC Greenspan had little option but to publicly admit to some degrtee of personal failing. He did not refer to his own personal failings directly but rather he pointed to an understandable although regrettable fault in his models. The film did not highlight that he faced this personal dilemma and the option he chose to coness it. It seems that the title of the film infers that if Greenspan’s flaw had not occurred then his decisions as Head of the Fed would have been different and somehow the FC might have been averted. Otherwise, why would they film makers have chosen the title that they did? Given that this inference, this premise, was probably unrealistic, was the film destined to disappoint it audience before it began? Films normally tell stories. This film did included footage-snippets obtained from ‘here, there and everywhere’, but arguably failed to weave them effectively into a compelling yet complex story. The film did not clearly describe the big picture of why the FC arose. Most films, even documentaries, are generally about human beings struggling against identifiable ‘opposition’ with the intention of achieving personal goals. This film had ‘interviewees’ and ‘experts’ not ‘characters’ in the sense they are normally portrayed in films. The interviewees in particular were portrayed as being passive not ‘fighters’, caught up in personal tragedies that they barely understood and couldn’t materially influence. These people, having chosen to be part of the great housing boom, were portrayed as being reduced as little more than hapless victims of its decline. Presented this way we, the audience, had little reason to empathize with them. The optician came across as financially ignorant having little understanding of her options. The economic correspondent was astounding for his ability to separate his technical knowledge (required to be a financial journalist) from his foolish decision to overpay for his house. If these key people had been shown fighting back, even against impossible odds, we would have seen as real people, related to them and cared. Other omissions from the film included the lack of any possible solutions to the FC and no attempt to hypothesise where it might all lead. This lack of insight by the films makers is regrettable. The film sought the financial community’s failings with torch light intensity. Having found some of them it let them be. In this respect the film makers were almost as ‘passive and hapless’ as their interviewees. If the film’s maker had applied their collective vision and insights more proactively then the film it would have been a more positive experience for the audience. www.stockopedia.co.uk/content/alan-greenspan-reflections-on-the-movie-the-flaw-51148/ty nalmann |
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Post by sandi66 on Dec 6, 2010 10:37:27 GMT -5
Travelex Offers America's First Chip & Pin Enabled Prepaid Foreign Currency Card Travelex's Chip & PIN Cash PassportTM to Provide Reloadable Foreign Currency NEW YORK, NEW YORK--(Marketwire - Dec. 6, 2010) - Today, Travelex, the world's largest non-bank foreign exchange currency provider, introduced America's first prepaid foreign "currency cards" available in Euros and British Pounds that utilizes chip & PIN technology. Travelex's new chip & PIN Cash Passport™ MasterCard revolutionizes the way Americans carry foreign currency abroad, providing technological compatibility with overseas merchants that have migrated towards chip-based transactions. The new Travelex card requires a Personal Identification Number (PIN) to complete chip-based transactions, offering a safe and convenient alternative to cash, ATM or credit cards. Additionally, the card is PIN and signature protected and is not connected to the cardholders' bank account, thereby minimizing the risk of identity theft in the event the card is lost or stolen. The card will also still include a traditional magnetic stripe, for those merchants not yet using chip & PIN technology. "There is a growing demand from the American traveler for technology compatible with what merchants are utilizing abroad," said Jon Dario, president of Travelex Currency Services Inc. "Much of the global market has already moved away from magnetic-stripe cards. Travelex's new chip & PIN cards offered in Euro and British Pound Sterling will provide the same level of technical compatibility for U.S. travelers that many other international travelers currently enjoy." Chip & PIN technology is universally used throughout major European markets such as the United Kingdom, France and has recently become the standard in Canada. The chip & PIN system has already proved to reduce fraud in many European countries. Travelex's chip & PIN Cash Passport™ allows leisure travelers to pre-load travel money onto a reloadable card for convenient use in millions of ATMs, shops and restaurants worldwide where MasterCard is accepted. Cash Passport can be loaded and reloaded with a choice of two currencies: Euro and British Pound Sterling. In addition, the Cash Passport comes with 24/7 Global Emergency Assistance and can be replaced within 24 hours if lost or stolen. For more information on Travelex or to locate a Travelex retail store to purchase the new Travelex chip & PIN Cash Passport, visit www.us.travelex.com. About Travelex: Travelex is the world leader in the foreign currency exchange business, with more stores, more airport relationships, and more annual transactions than any competitor. Travelex has more than 700 retail stores across 30 countries at key airport, seaport, rail and tourist locations. Travelex is also one of the world's leading providers of outsourced travel money to banks, credit unions and travel agents. Among the company's innovative services is Cash Passport™, which allows users to pre-load their travel budget onto a convenient card for safe and convenient use in millions of ATMs, shops, and restaurants worldwide. Cash Passport is PIN and signature protected and is not connected to the user's bank account, thereby minimizing the risk of identity theft due to the loss or theft of a Cash Passport. The Euro and British Pound Cash Passports is issued by West Suburban Bank®, pursuant to license by MasterCard International. For more information, please contact Lou Hammond & Associates Michelle Horn / Terence Gallagher (212) 891-0267 / (212) 891-0211 michelleh@lhammond.com / terryg@lhammond.com or Travelex Maria Brusilovsky (347) 453-9041 maria.brusilovsky@travelex.com www.marketwire.com/press-release/Travelex-Offers-Americas-First-Chip-Pin-Enabled-Prepaid-Foreign-Currency-Card-1364378.htm |
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Post by sandi66 on Dec 6, 2010 14:08:19 GMT -5
Payroll-Tax Holiday Gains Some Traction Article Comments more in Politics & Policy DECEMBER 6, 2010, 1:57 P.M. ET By MARTIN VAUGHAN WASHINGTON—Congressional Republicans are reluctant to back an extension of President Barack Obama's stimulus tax cut for middle-class families, one of the largest issues yet to be resolved in compromise tax talks. The so-called Making Work Pay tax cut delivered a $400-per-adult tax credit to households in 2009 and 2010. Republicans dislike it because it carries the taint of the unpopular 2009 stimulus act, and because it was available to people whether or not they paid any federal income tax, according to GOP aides. But allowing the tax cut to expire, as provided in current law, would mean many people would see take-home pay decline in January—as much as $67 a month for married couples. One idea that could gain traction, according to some close to discussions, is replacing Mr. Obama's tax credit for workers with a temporary payroll-tax holiday. From the Republican standpoint, such a tax holiday would have the advantage of being pegged to how much workers actually pay in payroll taxes. Some Democrats have also been sympathetic to the idea, because lower- and middle-income workers would get to keep a larger percentage of their earnings than the highest earners. It is unclear how long such a tax holiday would be in place. A recent proposal from a task force on reducing the deficit headed by former Sen. Pete Domenici (R., N.M.) and former White House budget director Alice Rivlin, advocated a one-year payroll tax holiday in 2011 for firms and employees. Social Security taxes are 12.4% of an individual's income up to $108,600, with half borne by the worker and half by the employer. Extending Mr. Obama's stimulus worker tax credit for one year would result in lost tax revenues of $61 billion, according to the congressional Joint Committee on Taxation. Chuck Marr, director of tax policy at the left-leaning Center on Budget and Policy Priorities, said Democrats' shouldn't agree to jettison Mr. Obama's middle-class tax cut. "They've bowed completely to Republicans on the top rates, they have to keep some priorities," he said. Leaders of both parties have said the two sides are nearing agreement on a temporary extension of all the tax cuts signed into law by President George W. Bush, which are slated to expire at the end of the year. The most likely scenario would keep marginal income tax rates at current levels and freeze the capital gains and dividend tax rate at 15% until 2013. An extension of expired unemployment benefits is also expected to be part of the deal. online.wsj.com/article/SB10001424052748704156304576003610315011984.html |
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Post by sandi66 on Dec 6, 2010 14:29:58 GMT -5
DoJ launches assault on mini-Madoffs Posted by FT Alphaville on Dec 06 18:11. Question — was Operation Broken Trust: a) An unusually self-referential piece of nomenclature from US government officials; b) Likely to have sent traders at certain hedge funds somewhat white-faced when whispers of a big DoJ announcement hit newswires on Monday; c) An $8.3bn drop in the ocean; d) A decent hit on the world’s mini-Madoffs; or e) All of the above? You decide. Excerpt of remarks from Attorney General Eric Holder at the Department of Justice on Monday morning: We are here to announce the results of Operation Broken Trust, a three-and-a-half-month targeting of investment fraud schemes throughout the country – and a critical step forward in law enforcement’s work to protect American investors, to ensure the strength of our markets, and to prevent financial fraud schemes. While there is nothing new about conducting nationwide operations and sweeps – this one is different in that it brought together a broad array of criminal and civil enforcement tools, at both the federal and state level, to attack investment fraud schemes collectively. Operation Broken Trust is the first national operation in history to target the many different types of investment fraud schemes that prey directly on the investing public. This historic effort has been coordinated, executed, and led by members of the Financial Fraud Enforcement Task Force that President Obama created in November 2009. This task force is the broadest coalition of law enforcement, investigatory and regulatory agencies ever established to combat fraud. Multiple federal agencies, as well as partners at the state level, are working together to ensure that no stone is left unturned when it comes to protecting consumers and investors. Our mission is simple – to bring financial fraud schemes to light and those who operate them to justice. And our aggressive, coordinated approach is working. Since Operation Broken Trust was launched on August 16th, all across the country investment fraud cases have been prioritized. To date, the operation has involved enforcement actions against 343 criminal defendants and 189 civil defendants, whose conduct harmed more than 120,000 victims. Several individuals have been charged with defrauding men and women across the country out of thousands – and sometimes millions – of dollars. The cases in this operation involve a variety of different investment fraud schemes that have led to more than $8.3 billion in losses in just the criminal cases alone. Staggering numbers. These losses represent hard-earned money and even life savings. They represent needs that may not be met ftalphaville.ft.com/blog/2010/12/06/428201/doj-launches-assault-on-mini-madoffs/ |
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Post by sandi66 on Dec 6, 2010 14:32:03 GMT -5
DoJ charges more than 500 with financial fraud Dec. 6, 2010, 12:11 p.m. EST By Wallace Witkowski SAN FRANCISCO (MarketWatch) -- More than 500 people have been charged by the Department of Justice in an operation designed to catch financial fraudsters, the agency said Monday. The DoJ said Operation Broken Trust netted enforcement actions against 343 criminal defendants and 189 civil defendants in scams that affected more than 120,000 victims. The agency estimated criminal losses from the schemes at more than $8.3 billion and civil losses at more than $2.1 billion. The schemes included Ponzi schemes, affinity fraud, prime bank/high-yield investment scams, foreign exchange frauds, and business opportunity fraud, according to the DoJ www.marketwatch.com/story/doj-charges-more-than-500-with-financial-fraud-2010-12-06 |
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Post by sandi66 on Dec 6, 2010 15:02:23 GMT -5
DOJ Says It Smashed Wide Range of Investment Frauds by David Stout December 6, 2010 2:34 pm The Department of Justice said Monday it has smashed a variety of fraud schemes that have cost unwary investors more than $8 billion across the country and resulted in heartbreak that is impossible to measure. Attorney General Eric Holder said the schemes and their perpetrators were brought down by Operation Broken Trust, a drive launched on Aug. 16 that so far has netted 343 criminal defendants and 189 civil defendants whose victims number more than 120,000. Holder said the swindlers included a Florida man with a taste for big yachts and big cars and a former Ohio police officer who victimized fellow officers and firemen. "While there is nothing new about conducting nationwide operations and sweeps -- this one is different in that it brought together a broad array of criminal and civil enforcement tools, at both the federal and state level, the attack investment fraud schemes collectively," Holder said in a news conference. "Operation Broken Trust is the first national operation in history to target the many different types of investment fraud schemes that prey directly on the investing public." "These losses represent hard-earned money and even life savings," Holder said. "They repreesent needs that may not be met and dreams that may not be fulfilled." www.mainjustice.com/2010/12/06/doj-says-it-smashed-wide-range-of-investment-frauds/ |
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Post by sandi66 on Dec 6, 2010 15:13:27 GMT -5
Wall Street next for Wikileaks Monday, December 06, 2010 » 01:18pm The next big secret to be revealed by Wikileaks is tipped to be about the US banking sector. The whistleblowing website's founder Julian Assange has told Forbes magazine that the next big data dump is related to US financial institutions. There are reports that the confidential information could be released as early as next year. Assange did not say which bank or banks will be targeted, but he did in an interview last year reveal that he was in possession of copious amounts of data from a Bank of America executive's hard drive. bigpondnews.com/articles/NZMiners/2010/12/06/Wall_Street_next_for_Wikileaks_548334.html |
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Post by sandi66 on Dec 6, 2010 15:17:34 GMT -5
How WikiLeaks is Wrecking Everything: Part of a Continuing Series Posted Monday, December 06, 2010 2:43 PM | By David Weigel Hillary Clinton is not resigning over WikILeaks, despite Jack Shafer's wishes. Barack Obama will not resign, despite Julian Assange's wishes. Philip Shenon reports that, not surprisingly, the hits are going to come at lower levels, on the people mentioned in cables, and "the State Department, the Pentagon, and the CIA assume that they will have to shake up staffing at a number of American embassies and consulates within the coming months." The difference between these WikiLeaks and the Afghanistan and Iraq leaks -- which drew a much more supportive response from the American left -- is that the diplomats mentioned in the cables are not enabling wars. The WikiLeaks preamble to its endless leaks promised that some level of venality would be revealed, some grand statement about how America's ideals had been lost since the days of George Washington, and we haven't seen that. The problems coming out of the cables are almost entirely message problems, of diplomats revealed to read local news and harbor the same doubts about foreign governments that local reporters do. The way Charlie Gasparino reports on Bank of America's worries about WikiLeaks, the company sounds just like the State Department. I have no evidence whether Countrywide's lending practices were so lax (and some would say corrupt) that loans were made to people who either lied about their finances or had mortgage brokers lie about that information. But it's the same educated guess made by many sophisticated traders last week when the WikiLeaks issue emerged, and BofA's share began to tank. Keep in mind, the reason Countrywide could make loans to anyone with a heartbeat and possibly no job is because those loans could be sold off its books and then packaged into mortgage-backed securities. But if those loans were fraudulent, they could be "put" or sold back to Bank of America. A group of large investors in mortgage bonds holding Countrywide loans are already threatening such action. In every new case where an entity is fretting about WikiLeaks, it's because the organization is making it more difficult to carry on with what had been seen as acceptable, beneficent dishonesty. www.slate.com/blogs/blogs/weigel/archive/2010/12/06/how-wikileaks-is-wrecking-everything-part-of-a-continuing-series.aspx |
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