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Thursday, July 30, 2009

Housing Finance Bank gets sh50b

THE Government plans to inject sh50b in the Housing Finance Bank. The housing state minister, Michael Werikhe, said the move was aimed at enabling more people to access credit and to promote development.

The boost follows sh40b that the bank had previously received from the Government.

Addressing journalists at the Media Centre in Kampala on Wednesday, Werikhe said over two million people lack housing units.

There is a deficiency of over 100,000 housing units in Kampala, he said, adding that the Government would address the problem.
The minister said they had established a housing policy and would pass other laws that guide the real estate development and housing constructions.

He explained that the Government was lobbying banks to provide mortgages to the public at affordable rates and other long-term loan facilities for development.
Werikhe noted that there were several slams in the country, but a slam upgrading strategy would be launched in October to facilitate the development of proper houses.

He said the construction sector, which is experiencing a boom had played a key role to socio-economic development and has been growing at 13% per annum.

Werikhe said the ministry had computerised the Kampala, Wakiso and Mpigi land registries to check forgeries of titles and would extend the programme countrywide.

He also announced the opening of the 7th annual construction exhibition and seminar at the Lugogo show grounds in Kampala that started yesterday.
The principal housing officer, Dane Khayangayanga, said the money they had received was generated from sales of the ministry’s houses.

Source: newvision.co.ug

L&T Finance not looking at equity listing for now

L&T Finance Ltd (LTF), a non-banking finance company, is not looking at a listing of its equity shares for now, its Chairman, Mr Y.M. Deosthalee, has said.

The company may go in for a series of non-convertible debenture (NCD) issuances in the coming months after it establishes and creates liquidity in the proposed NCD instrument slated to hit the market in mid-August. Promoted by engineering major Larsen & Toubro in 1994, LTF is a wholly-owned subsidiary of L&T Capital Holdings Ltd (a subsidiary company of L&T).

Two days ago, LTF announced that it proposes to raise at least Rs 500 crore through NCDs, which are to be listed on the National Stock Exchange (NSE).

“This (NCD) is one option we want to make sure is available to us and use it from time to time after creating liquidity in existing NCD instrument through listing. We do understand that investors see a good opportunity in our equity story. But we are not ready (for listing) as yet. We have some homework to do,” Mr Deosthalee said here on Thursday. He was responding to a question on whether LTF intends to list its shares in the coming days. Mr Deosthalee said there were other options for price discovery that could always be explored by LTF.

Although the coupon rate for the proposed NCD instrument was yet to be finalised, Mr Deosthalee indicated that the rate will be higher than the yield of the 10-year G-sec paper. He also said that the NCD will have tenures of 5, 7, or 10 years.

“Our intent is to come up with a long-term instrument for the debt market. Through the NCDs we are also creating additional source of funding for the company. The idea is to make L&T finance a household name. We are also creating a market for NBFCs for retail funding,” he said.

Mr Deosthalee also said that LTF’s decision to come up with an NCD issue did not mean that the company would stop borrowing from banks and mutual funds.

On the possibility of merger with L&T Infrastructure Finance, he said that L&T Finance was not averse to any such move, but added that no decision has been taken on this front.

Asked about interest rates, Mr Deosthalee said that interest rates would remain stable for next few months. “After November or December, there is every likelihood of it going up. Now there is ample liquidity and credit needs of corporates have not gone up. I don’t think interest rates will come down in the near future.”

Source: thehindubusinessline.com

Finance Committee negotiations stall

After being “on the edge of a deal” earlier this week, the Senate Finance Committee has stalled in its health care negotiations, and Senate Majority Leader Harry Reid is no longer promising that the committee will finish its work before the August recess.

Reid would only say he was “cautiously optimistic” that the committee would vote on a bill before the summer break begins next Friday. But in another blow to President Barack Obama’s attempt to move a bill through Congress by the recess, there were signs Thursday that Senate Democrats would not meet the latest deadline.

A morning negotiation session between the three Republicans and three Democrats did not happen as expected, and no further group meetings have been scheduled – an unusual break from the daily talks that have been ongoing for weeks. Finance Chairman Max Baucus (D-Mont.) spoke individually with senators, but there was confusion among Democratic and Republican staff as all sides tried to figure out where the talks stood.

Republicans, meanwhile, emphasized for the second consecutive day that the bipartisan group was not ready to reach an agreement.

“We're trying to do some really crazy stuff on a really short time frame," Sen. Mike Enzi (R-Wyo.), a member of the Finance committee, said Thursday.

The three Republicans on the Senate Finance Committee are under increasing pressure from their leadership not to cut a deal anytime soon, according to sources, and that message has been delivered frequently in recent weeks.

Baucus wanted to show progress on the negotiations before the August recess, either by announcing a deal or releasing the framework of a bill. He presented the senators Thursday with options for moving the process forward, sources said.

But Republicans decided that they did not want to operate on the Democratic timeline, GOP aides said. Despite the uptick in criticism from Enzi and Sen. Chuck Grassley (R-Iowa), there were no plans for them to leave the negotiations, aides said, but there is a desire to slow down the process.

"The Democrats' rush to produce a bill outline before recess was based more on political needs than policy progress," a GOP aide said, who spoke on the condition of anonymity to discuss strategy.

Grassley told National Public Radio Wednesday morning that the bipartisan group was "on the edge" of a deal by the weekend — an assessment he has walked back since then.


Source: politico.com

Tuesday, July 28, 2009

Pearson's shares soar after it beats expectations

Pearson, the international media group, has shrugged off a dire advertising market to post half-year profits ahead of expectations, driven by a robust performance at its international education business.

Shares in Pearson, which owns Penguin books, soared by 73p to 679p yesterday, making it the FTSE 100's biggest riser, after said it expected full-year adjusted earnings per share to be "at or above" the 2008 level of 57.7p a share.

While underlying profit growth at FT Publishing, which includes the Financial Times, tumbled by 40 per cent, the group's education business – its main profit driver – traded ahead of expectations, delivering 5 per cent sales growth at constant currency over the half-year.

The group has substantially shifted its reliance away from advertising to focus on education and services, such as professional examination testing, and Pearson's chief executive, Dame Marjorie Scardino, struck up upbeat tone yesterday. She said: "The transformation we've been pursuing for a decade – from 'publishing' company to content, technology and services company – is paying off." She added: "Market conditions are tough and may stay that way; but we are confident that we will perform well this year and next."

For the half-year to the end of June, Pearson's pre-tax profits rose by 13 per cent to £62m. The group makes the bulk of its profits in the second half of the year, driven by spending on educational materials, as schools and universities start their new year. Over the six-month period, the group's international education division delivered underlying sales growth up 10 per cent to £446m.

Robin Freestone, finance director at Pearson, said that in North America the group was benefiting from the tough economy, particularly in the US, which is pushing more people back to college and university. North American education division grew sales by 1 per cent at constant exchange rates to £943m. Mr Freestone cited the "strength of our higher education business of selling books and digital products into US universities and colleges. You are seeing more students of 18 years old going to, or back to, college because of the tough job market."

Alex DeGroote, analyst at Panmure Gordon, said: "Ordinarily, H2 performance is most meaningful to full-year outcome due to the phasing of the education school year. Against a tough backdrop, however, Pearson talks of a 'stronger business performance offsetting negative currency impact'."

However, in the UK, underlying sales at FT Publishing, which includes the FT newspaper, tumbled by 40 per cent to £14m, hit by the fall in advertising in the financial and corporate sectors.

Mr Freestone said the global advertising market was down by between 20 and 40 per cent. He added: "The market is well down, but we are doing better than the market decline. Print advertising is bad, but online advertising is strong."

Pearson's group revenues were flat at £2.4bn, but adjusted operating profit jumped by 21 per cent to £158m. Pearson said it did not expect the advertising cycle to turn "any time soon", but said it expected its products to remain in demand and its subscription businesses to remain resilient.

The group has benefited from raising the cover price of the FT from £1 to £2 over the past two years. But the FT's circulation globally fell by 6 per cent to 421,429 over the half-year, as the financial crisis took its toll.

Source: independent.co.uk

Looking to use online tools to save? There are several with which you might click

Technology has revolutionized the way many Americans manage money. With a click of a mouse or right from our smartphones, we can get a complete picture of our finances and recommendations for our money.

The sheer multitude of choices, however, can be overwhelming. I did a Google search for “personal finance software’’ and got 25 million results; for personal finance blogs, 50 million.

And no software, no matter how sophisticated, is a substitute for a qualified professional adviser. Fraud and incompetence lurk online, and many “educational’’ sites are simply trying to sell you something.

With those caveats in mind, it can be fun and enlightening to search for innovative financial websites and tools.

Worthy of note is www.mint.com, a free and secure site where you can set up an anonymous virtual account by entering brief information about your bank, investment, and credit card accounts, plus any home loans.

The site can be quite useful to people who are technology-oriented and have little time or disposition to keep track of their money.

Mint.com connects with more than 7,000 financial institutions, so chances are it includes yours. It can pull up your complete financial information in one place. You get weekly e-mails summarizing your spending, savings, and investments, plus alerts if, for example, a credit card bill is due or your bank balance is low.

A survey found 90 percent of Mint.com users have changed their spending patterns based on something they learned from the site.

Also highly useful is www.MoneyAisle.com, another free, automated site where more than 100 federally insured banks compete for your money. You enter the amount you have available for a certificate of deposit or high-yield savings account, and banks bid to offer the highest interest rate. You are not obligated to accept any bid.

Another site that helps people save and earn competitive rates is www.SmartyPig.com, which I can describe as a combined piggy bank/federally insured high-yielding online savings account. When you open an account, you establish a personal savings goal. You say how much money you want to save by when, and SmartyPig suggests an amount to deposit each month, automatically deducted from a checking or other account. To keep your SmartyPig account open, you must make this monthly contribution until you reach your goal.

You can make additional contributions at any time and invite family and friends to help you save by going online and adding to your account gifts for birthdays or other occasions. And you can place your SmartyPig widget on your Facebook or MySpace page to give all friends the opportunity to cheer you on toward your goal - and to contribute.

Source: boston.com

Wells Fargo Introduces Online Same Day Payments

Wells Fargo & Company (NYSE:WFC) today announced the nationwide availability of its newest online bill pay feature, which allows customers to make "just in time” online bill payments to merchants, such as utility, auto finance and mortgage companies. The service helps customers avoid missing payments or making late payments.

According to Javelin Strategy & Research, nearly three out of four consumers initiated expedited payments last year and use is expected to continue to rise in the next five years.

"The launch of same day payments further highlights Wells Fargo’s commitment to listening to our customers and continued leadership and innovation in the online space,” said Adam Vancini, senior vice president of Wells Fargo Internet Services Group. "Our customers continue to discover the convenience and speed of paying bills electronically; the expedited payments service is an additional online bill pay option.”

Currently Wells Fargo offers same day payment options for a fee with a select group of payees; additional payees continue to be added on an ongoing basis. Wells Fargo teamed up with Western Union for the service.

"Western Union is pleased to join an industry leader like Wells Fargo to provide expedited bill payment,” said Ranjana Clark, executive vice president, Global Payments and Global Strategy. "Through its Global Payment Services division, Western Union is an expert in connecting consumers with billers. We understand that under current economic circumstances, consumers are managing their budgets more closely than ever and are looking for options that allow them to pay bills quickly, conveniently and without incurring costly late charges.”

Wells Fargo integrates customers’ bill pay data with optional online tools, such as its online budgeting tool My Spending Report with Budget Watch and archiving service Wells Fargo vSafeSM.

Wells Fargo’s bill pay service presents bills online for nearly 460 merchants, lenders and other billers.
Wells Fargo’s online and mobile bill pay alerts give customers more control by notifying them when bills arrive, if a bill didn’t arrive, when a bill is due, when a payment is sent, among other notifications.
With Wells Fargo Mobile, bill pay customers can schedule payments and pay bills with their mobile device while waiting in line, on a break, or anywhere else they want to access the mobile web or WF.com.
About Wells Fargo Online & Mobile Banking

Wells Fargo is a leading provider of online and mobile financial services for individual consumers, small and middle market businesses and large corporations with a full range of banking, money movement, investing, asset management and other financial and risk management products. Wells Fargo launched its personal computer banking service in 1989 and was the first bank to offer Internet banking through wellsfargo.com in May 1995. Since January 2009, Wells Fargo has been named the No. 1 Consumer Internet Bank in the United States by Global Finance Magazine, ranked the No. 1 website out of 68 leading U.S. corporations' websites for technology innovation by the Brookings Institution and was awarded two Monarch Innovation Awards by Barlow Research for online services for small business, including Foreign Exchange Online and My Spending Report with Budget Watch.

About Wells Fargo & Company

Wells Fargo & Company is a diversified financial services company with $1.3 trillion in assets, providing banking, insurance, investments, mortgage and consumer finance through more than 10,000 stores and 12,000 ATMs and the internet (wellsfargo.com) across North America and internationally.

Source: newsticker.welt.de

Online Car Loans Available Through Low Car Loan Interest Rate

We all love to shop online as its ease because it’s easy and simple to buy no matter whatever the thing is, including big purchases such as automobiles. Simply going to EBay Automotive will provide you thousands of choices, which offers you cheap car loans with low interest rates. Knowing of the average auto loan rates in the USA make certain that you can be no way be covered in debt though trying to keep up by the rates of interest on your car loan. Evaluating car loan rates would most certainly give you the idea while dealing with car loans.

Out here in the “actual world”, there are lot of credit organizations such as auto finance companies, banks, and car lenders where you can apply for a car loan. Searching for the best car loan and comparing different interest rates means you need to spend a lot of time. And it’s too not easy to go from one bank to the next in search of low interest car loan. It takes a lot of time to evaluate the various offers and alternatives “out there”. The only way out is to apply for an online car loan.

Online Car Loans made simple

If you’re looking for online car loans, the procedure is quite easy and it saves you money as well as time. In addition, you can compare the rate of interest of different banks as well as finance companies. It’s possible to save some money by applying for “free applications”. Normally, online auto loan rates are lower as compared to the loan rates offered by traditional car dealers or finance companies. Online car loans are approved very fast. Some loans are approved within an hour. While applying for online auto loans you won’t find any hidden fees, any bad credit frauds, and penalties. Once your online auto loan is approved, you will receive a check from the loan company. It’s like, you apply for a car loan today and can drive off in your brand new car tomorrow.

Source: nurido.at

Saturday, July 25, 2009

On the Hill, Finance Officials Draw Battle Lines on Reform

The nation's top economic policymakers aired their differences on how to remake financial regulation Friday, exposing disagreements within the government over the Obama administration's planned overhaul.

Treasury Secretary Timothy F. Geithner appeared before the House Financial Services Committee to make the case for the Obama plan, which among other things would establish a new agency to regulate consumer financial products. Then, a panel that included Federal Reserve Chairman Ben S. Bernanke, Federal Deposit Insurance Corp. Chairman Sheila C. Bair and other regulators took the stage, each voicing criticism on elements of the administration's proposal.

The House is preparing to take action on parts of the financial overhaul plan in the fall, and the debate looks increasingly likely to be contentious. The Obama plan faces opposition from the financial industry, Republicans and some centrist Democrats, as well as current banking regulators.

In addition to creating the new consumer protection agency, the administration also wants to give the Fed authority to regulate any financial institution whose size and complexity threaten the broader economy. But members of both parties are increasingly wary of the Fed's concentrated power and would prefer placing more of that authority with an independent council of financial regulators.

The positions of the agency heads are likely to influence lawmakers' decisions, and there were clear fault lines on Friday among the officials testifying.

On the question of creating a consumer regulator, Bernanke argued that the work the Fed does supervising banks complements its work protecting Americans from potentially risky financial products. John C. Dugan, head of the Office of the Comptroller of the Currency, said he was worried that the new law would explicitly give states the right to regulate banks' interactions with consumers, making it harder for national banks to offer uniform products across state lines.

"For the first time in the nearly 150 year history of the national banking system, federally chartered banks would be subject to this multiplicity of state operating standards," Dugan wrote in his testimony, echoing an argument from the large banks his agency regulates.

Geithner seemed to accuse the bank regulators of simply protecting their turf.

"I think it's perfectly reasonable and understandable that the institutions who have this authority . . . are not enthusiastic about giving up that authority," the Treasury secretary said, responding to a question about why he and Bernanke disagree. "They would just defend the traditional prerogatives of their agencies, and I think, frankly, all arguments need to be viewed through that basic prism."

On systemic risk, the Obama plan would make the Fed the primary overseer of companies whose workings pose threats to the larger financial system. It gives the central bank a prime role in responding to a financial crisis. Bernanke said Friday that he thinks there are around 25 firms that could threaten the financial system, the first time he has attached a number.

The administration would simultaneously create a council of top regulators to identify and respond to risks building in the financial system. That council would play a role deciding which firms were sufficiently intertwined to require special Fed oversight. Bair said Friday that she wants more of that systemic-risk oversight authority vested in the council and less in the Fed.

The administration's vision for the oversight council "currently lacks sufficient authority to effectively address systemic risks," said Bair, who has clashed with Geithner and Bernanke over numerous issues in responding to the financial crisis. She said that the council should be chaired by an independent presidential appointee, rather than the Treasury secretary. She wants the agency to set rules and minimum standards for financial institutions, for example.

"Some have suggested that a council approach would be less effective than having this authority vested in a single agency because of the perception that a deliberative council such as this would need additional time to address emergency situations," Bair said.

But she noted that the FDIC, which is overseen by a board, has been able to make rapid decisions when necessary, and said the council "will provide for an appropriate system of checks and balances to ensure that decisions reflect the various interests of public and private stakeholders."

Bernanke, as it happens, is one who has argued that a committee approach to systemic risk could be ineffective in responding to emergency situations.

Source: washingtonpost.com

75 enrol in finance programme

SEVENTY five participants were enrolled in the fourth intake of the Financial Sector Talent Enrichment Programme (FSTEP) recently.

Of these participants, 36 were sponsored by various financial institutions under the pre-selected scheme that was announced in April, which enables financial institutions to select their own candidates into the programme.

The rest will be funded by the pro-gramame’s staff training fund.

FSTEP is a training programme driven by the financial services industry in collaboration with Bank Negara Malaysia, and is managed by Institut Bank-Bank Malaysia (IBBM).

The programme has since its inception, attracted high calibre graduates from local and foreign institutions of higher learning, as well as those working in the non-financial sector, who want to pursue careers in the financial services industry.

The one-year programme covers four core streams; conventional banking, investment banking, Islamic banking and insurance, and Takaful. Participants undergo a one-month intensive English course after which they have six months of classroom training. This is then followed by a five-month internship with financial institutions.

Upon graduation, the participants have the opportunity to be employed by the financial institution which sponsored them.

Participants will also undergo various personal development programmes as well as Outward Bound School activities to develop personal resilience, teamwork and leadership qualities.

FSTEP head Lee Khee Joo said that the support from financial institutions towards the programme was encouraging.

“We anticipate that more financial institutions will participate in the pre-selected scheme for future intakes,” he said.

Previously, participants were only recruited under the sponsorship of the programme’s staff training fund.

Source: thestar.com.my

Finance chief says Enrile power bills to cost gov’t P21 billion

THE GOVERNMENT stands to lose about P21 billion in foregone revenues should Senate President Juan Ponce Enrile’s twin-power bills, designed to cut electricity prices, become law, Finance Secretary Margarito B. Teves told reporters yesterday.

Mr. Enrile’s Senate Bill (SB) 3282 seeks to reduce electricity rates by cutting to a flat 3% government royalties from the exploration, development and production of the country’s indigenous sources of energy from the current 60% of net proceeds from natural gas development, 60% of net proceeds from geothermal development and 30% of net proceeds from indigenous coal.

SB 3147, meanwhile, seeks to impose a franchise tax of 3% on gross distribution income on power utility firms in lieu of all other taxes, duties and fees.

"In terms of royalties, P14 billion, for franchise tax, it’s P7 billion," Mr. Teves said when asked of estimated revenue losses from both measures.

The finance chief, however, said that the initial estimates will still have to be validated further.

Regarding the possible increased economic activity to be generated by the projected reduction of power rates, Mr. Teves said the department will also study it.

"We’ll take note of that and try to see the timing of this versus the benefits, as suggested," he said.

Mr. Enrile said in a forum with the foreign press last Tuesday evening that the potential benefits outweigh any cost to government.

"The impact of a significant reduction in electricity prices, in a country reputed to have one of the highest power rates in the region, will be greatly felt," Mr. Enrile had said. "The ultimate effect will far outweigh the reduction of the royalty of government." — Jose Bimbo F. Santos

Source: bworldonline.com

National Finance Commission reconstituted

ISLAMABAD: President Asif Ali Zardari on Saturday reconstituted the nine-member National Finance Commission (NFC) to finalise the much-awaited 6th NFC award.

Minister of State for Finance Hina Rabbani Khar has been dropped from the list of members of the newly reconstituted NFC as her appointment in the last NFC had sparked criticism from the smaller provinces.

According to a notification, the president reconstituted the NFC in pursuance of Article 160(1) of the constitution.

The commission will consist of the federal minister for finance as its chairman, Punjab Finance Minister Tanvir Ashraf Kaira, Sindh Chief Minister Qaim Ali Shah, NWFP Finance Minister Humayun Khan and Balochistan Finance Minister Mir Asim Kurd.

Abdul Ghafoor Mirza was nominated as a private member from Punjab, Kaiser Bengali from Sindh, Senator Haji Muhammad Adeel from NWFP and Gulfaraz Ahmad was nominated from Balochistan.

The commission will make recommendations on the sales tax on services (CE Mode), examine the question of rationalisation of payment of royalties on crude oil, and of a surcharge on natural gas collected by the federal government. The Finance Division will provide the Secretariat support to the Commission as per the Rules of Business 1973.

Share: The NFC would also finalise the share of the federal and provincial governments in federal tax revenue, a new mechanism for provincial borrowing from the federal government and interest payment with revised terms and conditions. The commission would facilitate the provinces to agree on a distribution mechanism for the royalty on crude oil production and surcharge on gas production.

According to official sources, Finance Adviser Shaukat Tareen is likely to be elected as the member of Senate on the seat left vacant after Senator Javed Leghari resigned from the House.

Tareen’s election to the Senate will elevate him to the status of federal minister and he will be able to chair the meetings of the seventh NFC award.

The government has already decided to finalised the new NFC award in consultation with all federating units before December 31.

Currently the portfolio of the federal minister for finance rests with Prime Minister Yousuf Raza Gilani, who owing to his hectic official schedule is unable to chair the meetings of the commission.

Source: dailytimes.com

Thursday, July 23, 2009

Treasury nears end on financial reform proposals

WASHINGTON (Reuters) - The Treasury Department on Wednesday gave lawmakers proposals to dampen financial firms' appetites for growing to giant size and said it was one step away from giving Congress its full package of reforms.

In the wake of a two-year-old financial crisis, the Obama administration has been sending pieces of its reform ideas to Congress piecemeal as they are prepared, including Wednesday's proposals for toughening capital rules for big firms.

On Thursday, it will send up a proposal for consolidating some banking regulatory agencies into a new national Bank Supervisor and, after that, has only to propose changes for how markets in hard-to-value derivatives work.

Treasury Assistant Secretary Michael Barr said the language on derivatives reforms would be given to lawmakers -- who must draft and approve final legislation for implementing a complete regulatory overhaul -- before they leave for an August recess.

"The overall trajectory of reform here I think is quite strong," Barr said, noting Congress will then have proposals covering every aspect of Treasury's proposals for creating a tougher regulatory framework that should be less subject to a meltdown such has occurred over the past two years.

Wednesday's proposals called for a new eight-member financial oversight council that would act as a coordinator for financial regulation, making the Federal Reserve the consolidated supervisor for all systemically important financial firms.

The plan would also impose stricter and more conservative standards for capital, liquidity and risk management for so-called tier one firms that are deemed to big to fail, from fear of the damage they would do the wider economy if they got into trouble.

"These standards will be set with a focus on the risks that these firms could pose to the financial system as a whole, not just the risks to each institution," the Treasury said in a fact sheet that it released to explain the proposals.

Barr, in a telephone press conference, said the new capital rules effectively create a clear disincentive for firms to become so big that they reach too-big-to-fail status. The bigger they are, the more capital that they would have to put up as a guard against possible economic downturn or failure.

Big firms can gain unfair competitive advantage through growth, because they are perceived as safer bets for investors and so get access to cheaper capital and make bigger profits.

But this had disastrous consequences for the U.S. economy when several big firms got into trouble last year and had to be bailed out, at the potential cost of billions of dollars to the U.S. taxpayer.

The proposals also would require banks or other firms that "securitize", or package asset-backed securities into new securities that are then resold to hold on to five percent of the credit risk. The proposal is colloquially known as making companies have "skin in the game" so they are less likely to try to package and resell risky securities that may fail.

Treasury said it wants to make sure that "robust, consolidated supervision and regulation" is applied to any company that controls a bank with the Fed in charge.

"The legislation will require all financial holding companies -- including tier one financial holding companies -- to be 'well capitalized' and 'well managed' on a consolidated basis, significantly raising minimum capital standards for these firms," the Treasury said.

Source: reuters.com

Back On Capitol Hill, Fed's Bernanke Faces Key Senate Panel

WASHINGTON -(Dow Jones)- U.S. Federal Reserve Chairman Ben Bernanke, in a second day of Capitol Hill testimony, reiterated Wednesday that financial markets remain stressed and that a key interest rate is likely to stay at a record low near zero for some time.

Lawmakers, however, appear less interested in monetary policy and more interested in debating plans to expand the Fed's powers as a financial system regulator. They also are concerned about the weak labor market and tight credit markets.

Senators argued that while the Fed has taken extraordinary measures to stem the crisis, real families and small businesses are still suffering amid rising unemployment and a persistent housing market challenges.

"Mr. Chairman, I appreciate the work you've done...on the monetary policy side of the equation and the positive indicators that we've seen in recent weeks. But these positive indicators seem to be stuck at the top in the process," said Senate Banking Committee Chairman Christopher Dodd, D-Conn., in his opening remarks.

Dodd went on to call on the central bank to take more forceful action.

"I'm very supportive of the effort you've been trying to make as the chairman of the Federal Reserve, but I have serious issues about the institutional issues of all of this as we go forward," said Dodd.

Noting that the Fed regulates major banks, Dodd said "many are asking why that authority is not being exercised to convince these institutions that they need to be moving more aggressively when it comes to bank lending."

Similarly, the panel's top Republican, Richard Shelby of Alabama, said the Fed failed as a banking regulator in the run-up to the financial crisis.

"If the Fed had conducted its regulatory oversight with great diligence, I do not think the financial crisis would have achieved depth and scope that it did," said Shelby.

"In light of the Fed's record of failure as a bank regulator, it should come as no surprise that Congress would take a closer look at the Fed and reconsider its mandate."

Bernanke, who noted that unemployment is one of the Fed's most difficult challenges, faces tough questions from the Senate Banking Committee just as the chairman's term is running out and questions about his future are running rampant. Bernanke's term as chairman expires in only six months, and it's unclear if U.S. President Barack Obama will reappoint him.

Meanwhile, the banking panel is likely to play a key role in helping to decide if Bernanke is renominated.

During Tuesday's hearing before the House Financial Services Committee, there were no direct questions about Bernanke's future.

Instead, lawmakers laid out concerns about the commercial real estate market and inflation.

Lawmakers, who will have to decide how to overhaul finance rules in a way that could prevent future crises, also questioned whether the Fed should keep its consumer protection role.

They also debated a bill introduced by Fed critic U.S. Rep. Ron Paul, R-Texas, to have Congress' investigative arm audit the central bank. More than half of the House has signed on as co-sponsors of that bill.

Bernanke, however, argued that Government Accountability Office audits would be viewed as "a serious weakening of monetary policy."

Still, the legislation's growing popularity proves just how delicate a time this is for the central bank. Bernanke has argued that the government's actions have helped prevent a deeper recession. But the Fed has still come under attack for many of its financial market rescue efforts, including its role in Bank of America's Corp. (BAC) acquisition of Merrill Lynch. Some lawmakers, fed up over government bailouts for giant firms such as American International Group Inc. ( AIG), argue that the central bank is shrouded in secrecy and that the bank's crisis measures should be more transparent.

Still, others have warned lawmakers against going too far: more than 175 prominent economists recently warned that Fed critics are jeopardizing the Fed's independence and its ability to manage the economy.

Source: cnn.com

Why Banks Should Support a Consumer Financial Protection Agency

In thinking about the forthcoming economic recovery, many people — including articulate corporate leaders — rightly emphasize the importance of consumer confidence. Our economy is largely consumer driven and while some increase in personal savings is surely warranted, if we collectively try to save “too much and too soon,” it will mean sluggish growth and persistently high unemployment.

At the same time, it is striking that many of the same corporate leaders — and their lobbyists — emphasize their determination to defeat the administration’s proposed Consumer Financial Protection Agency. This agency would act as a form of safety commission for financial products, with an eye to preventing the kinds of abuses that have characterized mortgage lending, credit cards and other retail financial products in the recent past.


Elizabeth Warren, head of the Congressional Oversight Panel, is advocating a Consumer Financial Protection Agency over the protests of financial institutions.
Elizabeth Warren, head of the Congressional Oversight Panel, has been the most articulate advocate of a consumer protection agency, including with a blog post Tuesday and a YouTube video released on Monday.

As Professor Warren points out in some detail, the primary counterarguments against the agency are based on either misunderstanding or misinformation. The consumer protection agency would not prevent the creation of products by the private sector, but it would make it much more likely that the products are not toxic for the people who use them — in the same way that we worry about the safety of cribs or medicine. This would actually encourage sensible forms of innovation.

But, in addition, there is an important reason to think that protecting consumer safety on financial products would support exactly the kind of broader confidence that business is looking for.

Many consumers were burned, one way or another, by a financial product in recent years. They are now suspicious. They can spend time looking for vanilla alternatives from reputable companies, but, frankly, everything is to some extent tainted.

What happens when there is a scare regarding food contamination in the United States or globally? People buy less of that food until the government assures them that: 1) we now understand the cause of the problem; and 2) it will not happen again.

Word has gotten around that many financial products are not safe — as well as the idea that the debt levels encouraged by the finance industry are not always healthy. Consumers are going to be more careful and, if there is no way to reassure them fully, they may be excessively careful.

In addition, we have learned that allowing financial firms to abuse consumers is bad for our overall financial system health — leading directly to the current crisis, loss of jobs and still rising unemployment; all of this further undermines confidence of all kinds. If the financial system can turn nasty or even nastier, we should all carry more “precautionary” savings.

There’s no question that some financial firms would like to return to abusive practices, figuring they can once again make money and then move on. Yet serious financial sector firms would prefer to clean up their acts and work with properly informed customers. These firms are making a bad mistake in opposing the consumer protection agency.

If the agency does not make it through Congress –- and right now it seems a tossup –- this will just feed the enmity against finance more generally and possibly in the 2010 midterm elections and beyond. There is no way that is good for overall confidence. It just doesn’t make sense for well-run financial firms to go down this road.

Thought leaders in the industry, the American Bankers Association, the Financial Services Roundtable and other interest groups should switch their positions and support the consumer protection agency — if they really want consumer confidence in financial products and in general to return.

Source: economix.blogs.nytimes.com

PNC Financial posts lower second-quarter profi

NEW YORK (MarketWatch) -- PNC Financial Services Group Inc. (PNC 37.18, -0.23, -0.62%) said Thursday that its second-quarter net income fell to $207 million, or 14 cents a share, from $517 million, or $1.45 a share, in the year-earlier period. The Pittsburgh-based bank said that the latest results include a special FDIC assessment of 19 cents a share and integration costs of 20 cents a share. On average, analysts polled by FactSet Research were expecting earnings of 51 cents a share. Revenue rose to $3.99 billion from $2.04 billion, and net interest income more than doubled to $2.18 billion from $977 million.

Source: marketwatch.com

Wednesday, July 22, 2009

Newton finance panel backs tax increase on hotel rooms

The Finance Committee of the Newton Board of Aldermen voted Monday to recommend a tax increase on local hotel rooms, but delayed action on a more-lucrative restaurant meals tax increase.

The eight-member committee voted 6 to 0, with Aldermen Scott Lennon and Ken Parker abstaining, to recommend increasing the tax on hotel rooms from 4 percent to 6 percent.

The proposal will go before the full Board of Aldermen at their Aug. 10 meeting.

Local-option taxes, enabled under the new budget signed this month by Governor Deval Patrick, are being examined in communities including Newton, Natick, Lexington, Milford, Millis, Plainville, and Wrentham.


In Newton, the committee voted 5 to 3, with Adlermen Paul Coletti, John Freedman, and Sydra Schnipper opposed, to place a hold a recommendation on an additional .75 percent tax on restaurant meals.

Committee clerk Danielle Delaney said the committee may hold a public information session on the meals tax and then take up the issue again.

Mayor David Cohen requested earlier this month that aldermen approve both taxes. He said the meals tax increase would generate about $800,000 this year and about $1.2 million in subsequent years.

The hotel tax increase, by contrast, would bring in around $367,000 this year and $550,000 in later years.

Source: boston.com

Senate Panel Takes Careful Approach to Crafting Health Bill

While the issue of health-care reform has divided Democrats in the House and stirred relentless GOP attacks, members of the Senate Finance Committee have seemingly ignored the hubbub, and a presidential deadline, as they huddle daily in pursuit of a breakthrough bill.

Committee members say they are trying to resolve potential controversies behind closed doors, to produce a bill that can withstand the close scrutiny. And on Tuesday, senior panel members expressed confidence that they could complete committee action on such a bill before President Obama's Aug. 7 deadline -- and, in the process, attract significant bipartisan support.

The measure would meet Obama's goal of expanding coverage while lowering long-term health costs, without relying on a surtax on wealthy households as the House's bill would impose.

"The Finance Committee is the only place left where a bipartisan bill that also gets on top of the spiraling health-care costs can be achieved," Sen. Charles E. Grassley (Iowa), the panel's top GOP negotiator, told Iowa reporters Tuesday. "And that's what we're trying to do. We may fail, but I feel very positive and optimistic that we won't."

House Democratic leaders are closely monitoring the marathon huddles held daily in the office of Finance Committee Chairman Max Baucus (D-Mont.). Rank-and-file Democrats have recoiled at the surtax idea, and Rep. Mike Ross (D-Ark.), a leader of the rebellious Blue Dog Coalition, was unequivocal that the group wants a House bill that is "more closely aligned with what the Senate Finance Committee is going to do."

Obama brought the conservative Blue Dogs to the White House on Tuesday afternoon to negotiate a series of fixes with the aim of winning their support in the Energy and Commerce Committee, where the House bill has stalled. The president declared from the Rose Garden before the meeting that reform was "closer than ever." But after the session, Ross and other House lawmakers said numerous issues remain unresolved.

As negotiations intensify, and Obama prepares for a televised news conference Wednesday night to make his case to the public, a striking contrast has developed between the two chambers of Congress. The House still aims to meet Obama's timetable of completing committee action before the August recess, while the Senate is taking a far more deliberative approach.

"There are certain fundamental questions that have to be addressed, because at the end of the day, people are going to be asking those questions," Sen. Olympia J. Snowe (Maine), another Republican negotiator.

Baucus said: "We want to make sure that whatever we come up with is defensible. This is complicated."

A critical objective for both chambers is to "bend the curve" on skyrocketing health-care costs. White House budget chief Peter Orszag delivered a new round of savings proposals to Finance negotiators over the weekend, and he defended the administration against Republican attacks that it has not vigorously pursued both long- and short-term savings.

Already, Orszag said, Obama has outlined $650 billion in Medicare and Medicaid cuts that could be used to finance coverage for nearly 50 million people. And the White House has gained support among Blue Dogs and Senate Finance members for creating an independent panel to oversee Medicare reimbursement rates and broader reforms -- authority that now lies with Congress.

On Monday, Obama met with Douglas Elmendorf, director of the Congressional Budget Office, and a handful of economists to "make sure we had exhausted all the possibilities that could help on the long-term deficit picture," Orszag said. Elmendorf delivered a serious blow last week to the House effort, along with a separate Senate health committee bill, when he testified that the measures could raise long-term health costs.

Orszag also said the White House is open to a proposal by Sen. John F. Kerry (D-Mass.), a Finance Committee member, to tax insurers for very generous health policies. The idea is a variation on a provision that Baucus, Grassley and others on the committee had pushed: to tax beneficiaries who receive generous policies through their employers.

Obama staunchly opposed taxing beneficiaries as a candidate, and on Monday he threatened to veto a bill that targets individuals. But Orszag said that the White House is open to the Kerry alternative, noting that a fee on high-value policies would "create an incentive for companies to create more efficient plans."

A senior House leadership aide said Democratic lawmakers there are keenly interested in the Kerry provision, along with other revenue measures with consensus support in the Finance Committee, to replace the wealth surtax that Baucus and others have already declared dead on arrival. "Our guys want to see some movement there," the aide said. "They're loath to vote on a tax increase if it is not going anywhere in the Senate."

House Speaker Nancy Pelosi (D-Calif.) defended the surtax at a meeting of House Democrats on Tuesday, but she assured lawmakers that she would look for alternatives. One option Pelosi floated Monday would raise the income at which the surtax begins to take effect to $500,000 for individuals and $1 million for households, up from $280,000 for individuals and $350,000 for households. But some Democrats complained that small businesses would still be ensnared.

Finance members said the committee was leaning against requiring employers to provide health coverage, although it would impose a fee on individuals who do not purchase insurance. They also said the panel had rejected the government health plan that Obama wants to create and would instead adopt a cooperative model, similar to rural electricity providers.

Source: washingtonpost.com

Microsoft ends vendor finance deal with CIT

SEATTLE, July 21 (Reuters) - Microsoft Corp (MSFT.O) said on Tuesday it had terminated a vendor-financing deal with lender CIT Group (CIT.N), but declined to give further details.

CIT makes loans to small and medium-sized businesses to buy equipment and it faces crushing losses on bad loans. The lender is hoping to stave off bankruptcy protection with emergency financing from private investors secured on Monday.

Microsoft did not put a value on the loans CIT had issued to customers under its pact.

"Microsoft works with a number of financial institutions, including CIT, that provide vendor services and we continue to offer financing to qualified customers as a way to pay for software and services," said Microsoft in a statement. "Microsoft Financing has contingency plans in place to protect our customers and partners needs." (Reporting by Bill Rigby; editing by Carol Bishopric).

Source: reuters.com

Saturday, July 18, 2009

GE Committed to Keeping Finance Division Intact, Sherin

July 17 (Bloomberg) -- General Electric Co. is committed to keeping its finance arm and expects to be able to fund the unit once a U.S. government bond-insurance program expires, Chief Financial Officer Keith Sherin said in an interview.

GE Capital, which is shrinking its balance sheet, has issued about $9 billion in bonds so far outside the Federal Deposit Insurance Corp. program, the most of any company, he said. Known as the Treasury Liquidity Guarantee Program, it expires in October.

“That’s more than any other issuer for long-term debt,” Sherin said in an interview. “We’ve made so much progress strengthening GE Capital.”

GE said today that profit at the finance arm declined 80 percent in the second quarter as the first global recession since World War II slashed consumer spending and real estate markets collapsed. GE remains an important source of lending to small and medium-sized businesses in the U.S., Sherin said on a call today with investors. The unit lent $69 billion in the first half of 2009.

It’s too early to tell whether the company will gain any business if New York-based CIT Group Inc. files bankruptcy, he said. CIT, a 101-year-old commercial finance company whose customers including Dunkin’ Brands Inc., said yesterday it’s “continuing to evaluate alternatives” after failing to receive federal guarantees for its bonds.

Unlike CIT, GE doesn’t provide factoring financing, or cash used by vendors to produce goods that retailers typically pay for later, usually within 90 days. GE does compete with CIT in offering loans to smaller companies and leasing planes.

‘Some Opportunities’

“There are some opportunities where we do have overlap,” Sherin said on the investors call. “We’ll have to wait and see how that plays out.”

The company, which isn’t a bank holding company and didn’t take money from the Federal Reserve’s Troubled Asset Relief Program, can take advantage of two government programs. In addition to using the FDIC bond-insurance, GE can sell into the Commercial Paper Funding Facility set up by the Fed, which it tapped once.

GE has already issued about $12 billion in notes, or about a third of the $35 billion to $40 billion it plans to refinance in 2010. The company has “prefunded” all of the $45 billion it planned to refinance this year.

The company remains “extremely committed” to keeping GE Capital, Chief Executive Officer Jeffrey Immelt said on the call with investors today, even as proposals that may force the separation of the parent and finance unit begin to work their way through Congress.

GE Capital Partner

In the interview, Sherin said he isn’t working on a scenario that would include giving ownership of the majority of GE Capital to a joint venture outside the parent company. Nicholas Heymann, a New York-based analyst with Sterne Agee & Leach Inc., expects GE to seek a partner for all of GE Capital in the second half of next year, he said in an interview with Bloomberg Radio.

GE doesn’t think it’s being targeted by President Barack Obama’s proposed law strengthening financial regulations. The company is fighting for so-called grandfathering that would allow the parent company to keep its finance arm even if the final version of the law is written in a way that would apply to GE, General Counsel Brackett Denniston said on the call. GE favors the proposed law’s broad themes on systemic regulation, Denniston said.

“GE has benefited from government assistance in the form of liquidity provisions” under the FDIC insurance program, said Gary Jenkins, a credit strategist at Evolution Securities in London. “In order to restore themselves to independent good health, they require no further economic shocks that would negatively impact their business.”

Commercial Paper Balances

GE has reduced its commercial paper balances to $50 billion from about $74 billion at the beginning of the year, ahead of schedule, the company said today.

Profit from GE’s continuing operations declined to $2.87 billion, or 26 cents a share, from $5.39 billion, or 54 cents, a year earlier, the company reported today. Analysts’ average estimate was 24 cents a share.

GE fell 75 cents, or 6 percent, to $11.65 at 4:01 p.m. in New York Stock Exchange composite trading, the most since April 9. The shares have gained 8.1 percent this week and are up from $5.73 on March 4, the lowest intraday price since December 1991.

Souce: bloomberg.com

Personal-Finance Help Migrates to the Web

More Americans feel uneasy about the state of their finances -- and not because of any change to their income or expenses.

Instead, the latest bad news concerns software that many people use to manage their cash flow. One of these applications, Microsoft Money, perished at the end of June after Microsoft chose to stop developing it. Another, the Mac version of Intuit's Quicken -- which needed a rewrite when it shipped in 2006-- now won't get its next update until February, the latest in a long string of delays.

The Windows version of Quicken continues to chug along, but its users have to buy a new version every few years to retain access to the online services that automate most of its work.

In this stagnant market, most of the signs of life lie not in disc-based programs (though smaller developers are doing interesting work) but on the Web. There a few sites provide simpler ways to manage your money -- and do so for free.

Mint (http://mint.com), Intuit's Quicken Online (http://quickenonline.com) and Wesabe (http://wesabe.com), among others, automatically synchronize their records with those of your financial institutions, then categorize transactions to track your spending. There's no extra software to install -- though these three provide basic, free iPhone applications for on-the-go access.

The only catch is that in most cases, you must store your bank account passwords on these sites. (All three say they encrypt these data to block them from being misused.)

I handed over many of my own log-ins to these sites in May 2008, and I found them promising but limited; this time around, two of the three did significantly better.

Mint.com is now closer to the utility of Money or Quicken, thanks to a series of updates that added support for mortgages and such assets as houses and cars. (It uses Web sources to estimate values for the former but not the latter.)

Mint connected to all the bank, credit card, investment and mortgage accounts I tested, then correctly categorized most transactions in each. It was even smart enough to split ATM surcharges into separate transactions, though it didn't then file those charges under its "ATM Fee" category.


The site will set up budget goals based on your past spending, which you can and should adjust yourself. But you can't enter a pending transaction; if you write a large check, you must remember it's out there. Mint's automatic alerts of upcoming bills also missed some of mine, and it doesn't let you fix any oversights by adding your own alerts.

Mint, based in Mountain View, Calif., now claims more than a million active users. It makes its money by suggesting credit cards, banks and investments to fit your habits, then collecting referrals on accounts opened through these "Ways to Save" tips. Keep this advice in context -- a credit card's points rewards aren't as useful as cash back.

Quicken Online got its biggest upgrade when Intuit, also in Mountain View, dropped a $2.99 monthly fee, helping it win more than 1.3 million users. This time around, Quicken Online automatically categorized almost as many transactions as Mint and easily outdid that site at warning me of upcoming bills.

Source: washingtonpost.com

G.E.’s Earnings Fall 47%, Led by Finance Unit

General Electric reported a steep fall in second-quarter earnings on Friday, weighed down by the continuing struggles of its big finance business, falling orders for industrial equipment and declining advertising spending at its NBC television network and local stations.

Yet analysts said that the giant multinational’s results showed a steady performance at a time of worldwide recession. They said G.E. was doing a good job of cutting costs and seemed to be progressing in paring the size and risks of its finance arm.

G.E., which has industrial businesses spanning energy, aviation and health care, reported earnings per share of 26 cents, down from 54 cents in the quarter a year earlier. The 26 cents was slightly more than analysts’ consensus estimate of 23 cents a share, as compiled by Thomson Reuters.

The company’s net income fell 47 percent, to $2.9 billion, down from $5.4 billion a year ago.

Given its global reach across product lines as diverse as gas turbines, power plants and aircraft engines, G.E. provides a concentrated glimpse of the health of capital spending in the industrial economy as a whole.

On that score, the G.E. report showed continued weakness. The company’s revenue fell 17 percent, to $39.08 billion. After adjusting for a stronger dollar, which reduces the value of overseas sales, sales were down 12 percent from the previous year. G.E.’s quarterly revenue was about $3 billion less than the Wall Street forecast.

Capital equipment orders for G.E. fell sharply, especially transportation machinery like locomotives and health care equipment like medical-imaging machines. In a conference call with analysts, company executives said they expected industrial equipment orders to be off about 25 percent for the year.

“That’s a pretty significant decline, but it’s not unexpected in this economy,” said Richard Tortoriello, an analyst at Standard & Poor’s.

Still, analysts said, the fall in industrial orders disappointed investors, sending G.E.’s shares down 6.05 percent, to $11.65.

Jeffrey R. Immelt, G.E.’s chief executive, said his management team was focused on cutting costs, operational improvements and repairing the finance unit, while still investing in businesses likely to prosper when the economy recovers. “We’re as well positioned as you can be in this environment,” Mr. Immelt said.

Analysts say two main concerns cloud the outlook for G.E. Its industrial side is a collection of capital-equipment businesses, and many customers will delay large purchases until genuine signs of economic recovery surface, they say.

The worry about the finance unit, analysts say, is the possibility that G.E. may not yet have seen the worst of losses and that it may have to set aside more money to cover them. But for a quarter at least, the trends looked encouraging.

The finance business was the biggest drag on G.E.’s results. Its operating profits fell 80 percent, to $590 million, down from $2.9 billion a year ago. And revenue in the finance unit, which includes home mortgages in Britain and private-label credit cards in the United States, declined 29 percent, to less than $12.8 billion, from nearly $18 billion.

G.E. has moved to strengthen the finance business. It said leverage, or the ratio of borrowings to equity, is down to 5.6 to 1, compared with 7 to 1 a year ago. And borrowing in the short-term commercial paper market is down to $50 billion, from $72 billion a year ago.

A new uncertainty about G.E.’s finance business was raised last month with the Treasury Department’s initial plans to overhaul the financial system. One recommendation, aimed at companies with large financial and nonfinancial businesses, would require G.E. to shed its big finance unit.

G.E. executives said the company would fight the proposal. “We are really committed to GE Capital,” Mr. Immelt said.

The company’s television network and movie studio unit, NBC Universal, also hurt the quarterly results, with earnings off 41 percent because of charge-offs and falling television advertising.

The impact of economic stimulus programs has not yet been evident, Mr. Immelt said. “We’ll see benefit from the global stimulus in the second half of the year,” he said.

Source: nytimes.com

Health Reform: But What Will Senate Finance Bill Say?

If the government’s health care costs are high and rising, and you extend subsidized health insurance to millions more people without fundamentally changing the system, you’re going to put the government on the hook for a lot more money.

Douglas Elmendorf, the guy who heads the Congressional Budget Office, made that point yesterday and became the lead health-reform story of the day. (See coverage from the WSJ, Washington Post, the New York Times and Politico.)

But Elmendorf made clear he wasn’t referring to the bill expected any day now from the Senate Finance Committee, because leaders of the panel “have not yet released” that bill. Two other bills — one from the House and one from the Senate health committee — have been in the news this week.

All along, the conventional wisdom has been that the key health reform bill would come from Senate Finance. Max Baucus, the moderate Dem who chairs the committee, has said he wants a bipartisan bill, and he’s been working closely with Chuck Grassley, the committee’s ranking Republican — suggesting that the bill may be closer to the political center than the bills we’ve seen so far.

But the committee hasn’t been able to get a deal worked out, and said yesterday that they wouldn’t have anything until next week. So we’ll have to wait a bit more to see what the committee comes up with — and how it plays with the all-important CBO.

Source: blogs.wsj.com/

Thursday, July 16, 2009

British liberal heads EU Parliament finance group

BRUSSELS -- British liberal lawmaker Sharon Bowles was elected Thursday to lead a key European Parliament committee that will shape financial regulation over the next five years.

The EU parliament is slated to discuss and potentially alter new rules on hedge funds, bankers' pay and capital requirements in coming months. It must back any new financial rules.

The economic and monetary affairs committee regularly quizzes EU and European Central Bank officials, including ECB President Jean-Claude Trichet.

Bowles, 56, is a former patent attorney and a member of Britain's third largest political party, the Liberal Democrats.

Source: forbes.com

Boston Medical sues state for funds

Boston Medical Center filed suit yesterday against the state, accusing officials of illegally cutting payments made to the hospital for treating thousands of poor patients, a decision executives said could financially unravel the urban hospital’s key services.

The 26-page complaint - filed in Suffolk Superior Court against Dr. JudyAnn Bigby, health and human services secretary - follows two years of payment negotiations between the state and its largest provider of medical care to poverty-stricken families. It argues that the state has financed its landmark health insurance law, a model for national healthcare overhaul, on the backs of poor residents by cutting money to the hospital that cares for many of them to pay for expanded coverage.

The lawsuit could influence the national debate on healthcare by warning of the potential repercussions for hospitals that treat the poor. “This absolutely has implications for the national debate,’’ said Larry Gage, president of the National Association of Public Hospitals.

Bigby, in a statement to the Globe last night, said: “The administration is greatly disappointed that BMC, which has received $1.5 billion in state funding in the past year, has chosen this path. At a time when everyone funded and served by state government is being asked to do more with less, BMC has been treated no differently.

“We are confident that the administration’s actions in this area comply with all applicable law and will be upheld,’’ she said.

In interviews with the Globe last week, state officials questioned BMC’s request for more funding, considering the state’s extraordinary budget crisis and the hospital’s large cash reserves.

The $1.5 billion the state paid the hospital in the past year went not just to the hospital, but also to its community health centers and health insurance plan, officials said.

BMC - where half of the patients earn less than $20,000 annually, 30 percent do not speak English, and one-third are on Medicaid - estimates that it will lose $175 million in the fiscal year starting Oct. 1, an 18 percent operating loss. By the end of this year, the hospital is likely to be $38 million in the red, its first loss in five years.

Hospital executives blame these projected losses on the state’s decision to slash the amount it pays BMC for treating a Medicaid patient in the hospital from $12,476 per admission last year to $9,323 this year and for paying what the hospital considers inadequate rates to care for uninsured patients and newly insured patients.

The state calculated the new Medicaid rate by considering the average cost of caring for Medicaid patients at Massachusetts hospitals, and paying 75 percent of that amount to encourage efficiency, the lawsuit says.

BMC argues this approach is illegal, because a 1991 law requires the state to pay hospitals that treat large numbers of poor patients based on each institution’s unique financial needs and BMC’s need is great. The hospital employs 75 translators, more than any other Boston hospital, and treats nearly 70 percent of the city’s trauma cases, among other added expenses required to care patients from the city’s poorest neighborhoods.

Source: boston.com

Fifth Street Finance investment income rises

TEL AVIV (MarketWatch) -- Fifth Street Finance Corp., (FSC 9.45, +0.04, +0.43%) the White Plains, N.Y., provider of financing and investments for small and medium-sized companies, estimated that for the quarter ended June 30, net investment income was 34 cents to 36 cents a share, compared with 33 cents in the quarter ended March 31. The company on Wednesday estimated that its net asset value at the end of the June quarter was about flat with the $11.94 a share reported at March 31. The number of investments on non-accrual status also was about level with the previous quarter, Fifth Street Finance reported. Separately, the company plans a public offering of 6.5 million common shares. The underwriters will have an option on 975,000 more shares if demand for the offering requires. Wells Fargo and UBS will run the books for the offering. Fifth Street expects to use $16.5 million of the offering proceeds to pay down its secured revolving-credit line and the rest for investments.

Source: marketwatch.com

Wednesday, July 15, 2009

Avizent promotes finance chief to CEO

A Central Ohio claims and risk management provider has a new CEO.

Avizent named Tom Watson as CEO of the Dublin-based company, which specializes in claims management, medical managed care and risk management services. He will oversee the company’s national property and casualty third party administrative services and Avizent’s managed care company, occupational preferred provider organization networks and alternative risk division.

Former CEO Lori Daughtery left “to pursue other professional interests,” the company said.

Watson had previously served as the company’s CFO and, before that, as president and chief operating officer at UnitedHealthcare Benefit Services and as CFO of OptumHealth Financial Services.

Avizent, which until April 2008 was known as Frank Gates Service Co., posted revenue last year of nearly $93 million. The privately held company has nearly 800 employees throughout the country with 232 in Ohio. It operates a branch in Cincinnati, which employs 10.

Source: izjournals.com

Bank of America to finance Tesla Roadster purchases

With a Tesla -- like a Ferrari -- if you have to ask how much it costs, you can't afford it.

Starting at $109,000 and with just enough trunk space for a pitching wedge and a decent bottle of single malt, the all-electric Tesla Roadster would hardly appear to be the car for the guy who counts his every dime. But now, thanks to Bank of America, cheapskates (read: the lumpen masses) may finally have an entree into the electric sports car market.

The Charlotte, N.C.- based banking behemoth, long a leader in auto loans, will begin offering financing for the purchase of a Tesla. Qualified borrowers will be eligible for a loan of up to 75% of the value of the car and can have up to five years to pay it off.

According to Tesla Motors, based in San Carlos, Calif., that means for just $20,000 down, you too can get behind the wheel of the coveted Roadster.

Of course, that number isn't exactly accurate. It includes a $7,500 tax credit that you don't get until you file your taxes next year. It also doesn't account for $10,628 in sales tax and $1,322 in registration fees you'd pay if you were a resident of Los Angeles. (Sadly, the new car sales tax deduction included in this year's stimulus bill doesn't apply to cars that cost as much as a Tesla. Ditto for the Cash for Clunkers program.)

So, in reality, for just $30,237.50 down -- or about the sticker price for a Ford Mustang Premium GT, you too can get behind the wheel of the coveted Roadster.

Then you get to make monthly payments, which Tesla suggests could run at around a 5% annual rate, of a mere $1,700 a month. At the end of the day, you'll have paid just shy of $12,000 in interest on the electron-fired hot rod as well.

According to Tesla's Chief Executive Elon Musk, the loan program "will help advance EV adoption by allowing more Americans to experience the joy and convenience of owning a Tesla.”

Leaving aside the fact that there's a pretty darn long waiting list just to get a Tesla, one might wonder just how many Americans can afford $30 large down and a monthly nut as much as a nice one-bedroom apartment on the Westside just for the right to drive an electric car.

Another question also comes to mind: Which lasts longer, the monthly payment or the 6,831 lithium ion cells in the Tesla battery?

Source: latimesblogs.latimes.com

Tuesday, July 14, 2009

British Air to Sharpen Premium-Class Focus Amid Drop in Travel

British Airways Plc, Europe’s third- largest airline, plans to sharpen its focus on business fliers as the recession saps travel demand, the carrier’s U.S. chief said.

All-business-class flights between London’s City Airport and New York start in September, and a promotion begins today offering U.S. executives free travel to Europe to promote their companies, said Simon Talling-Smith, British Airways’ executive vice president for the Americas.

“We will continue to position ourselves as a premium airline, that is absolutely core to our business model,” he said in an interview yesterday. “There is an ongoing demand for business travel, and that isn’t going to go away.”

The London-based airline is slashing jobs and grounding flights to help survive a slump that will cause $9 billion in worldwide industry losses this year, according to a June 8 forecast by the International Air Transport Association.

A return to pre-recession traffic levels like those seen in 2007 probably will take five years, Talling-Smith said. British Airways is mired in 10 straight months of declines in premium traffic, which measures kilometers flown by paying passengers in the first- and business-class cabins.

While British Airways hasn’t sold out its initial flights between London City and New York’s John F. Kennedy International Airport, the carrier is “pretty confident” demand will rise as the Sept. 29 start date nears, Talling-Smith said.

‘Good Return’

“Our biggest customers are telling us that they are very interested,” said Talling-Smith, who has worked for the carrier for 18 years. “We’re still confident we will make a good return on that flight.”

British Airways, working to promote its premium-class service to U.S. business passengers, will use some of its excess capacity for the “Face-to-Face” competition for free European trips on three special flights carrying 1,000 people.

“One of the only benefits of the economic climate is that we have quite a lot of empty seats, and a few spare aircraft so the cost of the promotion is pretty small,” Talling-Smith said.

British Airways said an advisory panel would help assess the free-flight requests, which require entrants to complete an online form that includes a 500-word essay on the value they would reap from an overseas trip.

British Airways has tumbled 30 percent this year in London trading, closing at 126.6 pence yesterday.

Source: bloomberg.com

The Small Business Surtax

Jason Furman owes an apology to Michael Boskin, the Stanford economist who wrote a year ago on these pages that Barack Obama would raise American income tax rates nearly to 60%. Mr. Furman, then in the Obama campaign and now at the White House, claimed this was wrong and that Democrats would merely raise taxes back to their Clinton-era level.

House Democrats are now proving that Mr. Boskin had it right, and before it's over even he may have underestimated how high taxes will go. In the middle of a recession and with rising unemployment, Democrats have been letting it leak that they want to raise U.S. tax rates higher than they've been in nearly 30 years in order to finance government health care.

Every detail isn't known, but late last week Ways and Means Chairman Charlie Rangel disclosed that his draft bill would impose a "surtax" on individuals with adjusted gross income of more than $280,000 a year. This would hit job creators especially hard because more than six of every 10 who earn that much are small business owners, operators or investors, according to a 2007 Treasury study. That study also found that almost half of the income taxed at this highest rate is small business income from the more than 500,000 sole proprietorships and subchapter S corporations whose owners pay the individual rate.

In addition, many more smaller business owners with lower profits would be hit by the Rangel plan's payroll tax surcharge. That surcharge would apply to all firms with 25 or more workers that don't offer health insurance to their employees, and it would amount to an astonishing eight percentage point fee above the current 15% payroll levy.

Here's the ugly income-tax math. First, Mr. Obama has promised to let the lower Bush tax rates expire after 2010. This would raise the top personal income tax rate to 39.6% from 35%, and the next rate to 36% from 33%. The Bush expiration would also phase out various tax deductions and exemptions, bringing the top marginal rate to as high as 41%.

Then add the Rangel Surtax of one percentage point, starting at $280,000 ($350,000 for couples), plus another percentage point at $400,000 ($500,000 for couples), rising to three points on more than $800,000 ($1 million) in 2011. But wait, there's more. The surcharge could rise by two more percentage points in 2013 if health-care costs are larger than advertised -- which is a near-certainty. Add all of this up and the top marginal tax rate would climb to 46%, which hasn't been seen in the U.S. since the Reagan tax reform of 1986 cut the top rate to 28% from 50%.

States have also been raising their income tax rates, so in California and New York City the top rate would be around 58%. The Tax Foundation reports that at least half of all states would have combined state-federal tax rates of more than 50%.

Mr. Rangel also wants to apply his surcharges to investment income like capital gains. So the combined effect of repealing the Bush tax cuts and the new surcharges would be to raise the tax on stock appreciation by at least 60% -- to as high as 24% from 15% today. President Obama has been worrying about a capital squeeze on small businesses, but raising the capital gains tax would only further starve them of funds.

Democrats claim these tax increases on the rich won't do any economic harm. They should read the work of Christina Romer before she became chief White House economist. Ms. Romer and her husband, David Romer, a Berkeley economist, have published multiple studies on the impact of tax policy changes over the past 100 years. One of their findings is that "tax increases appear to have a very large, sustained and highly significant negative impact on output." In other words, tax hikes are an antistimulus.

Another implication of the Rangel plan is that America's successful small businesses would pay higher tax rates than the Fortune 500, and for that matter than most companies around the world. The corporate federal-state tax rate applied to General Electric and Google is about 39% in the U.S., and the business tax rate is about 25% in the OECD countries. So the U.S. would have close to the most punitive taxes on small business income anywhere on the globe.

Mr. Rangel and House Democrats are also banking on the idea that raising tax rates by 20% will raise 20% more tax revenue, but that's like telling Wal-Mart it can raise prices by 20% and get 20% more profit. When taxes on the rich rise, their reported income tends to decline. The last time the top federal income tax rate was 50%, the richest 1% paid only about 25% of all income taxes. Today, at a 35% rate they pay nearly 40%.

A new study by the Kaufman Foundation finds that small business entrepreneurs have led America out of its last seven post-World War II recessions. They also generate about two of every three new jobs during a recovery. The more the Obama Democrats reveal of their policies, the more it's clear that they prize income redistribution above all else, including job creation and economic growth.

Source: online.wsj.com

Google Finance Gets A Little More Fancy

It's been more than a month since Google Finance shed its beta label, and finally today it is rolling out some design tweaks it has been testing out for the past few months.

In the screen shot above you can see most of the changes. There is now a persistent navigation bar on the left with links to news, portfolios, historical prices, and financials. In the left column, you also now see streaming live quotes for the most recent stock tickers you've entered. It is a sparer version of the left-hand column on Yahoo Finance, with more dynamic and personalized content.

The charting is also a little more sophisticated, with various technical charting capabilities available as an option via a drop down menu below each chart. Finally, the company comparison table is now more customizable, allowing you to choose which financial metrics you want to add or remove. It doesn't go as far as Wikinvest's recent redesign, which highlights much more insightful industry metrics for many stocks.

All in all, the tweaks to Google Finance are a step in teh right direction, but nothing too radical.

Source: washingtonpost.com

On Campaign Finance Board, Sotomayor Balked at Overstepping Law

As Judge Sonia Sotomayor prepares for the second day of her Supreme Court confirmation hearings, a new document is being circulated as one that foreshadows her future injection into the debate over so-called “judicial activism.”

On Dec. 11, 1991, at a meeting of the New York City Campaign Finance Board, where she was a member from 1988 until she became a federal judge in 1992, Ms. Sotomayor objected to interpreting laws in a way that would alter the plain meaning of the text written by lawmakers – even if doing so would be an improvement on policy grounds.

Ms. Sotomayor made her remarks in response to a complaint by Carolyn Maloney, who at that time was a City Council member and who now is a Democratic congresswoman, over a board advisory opinion that said that expenditures by a political party did not count toward individual candidates’ spending limits under the city’s election financing law.

Ms. Maloney said that the board’s interpretation was “wrong” because it would allow “the political machines to ride roughshod over our good government efforts to limit campaign spending.” She said she was introducing legislation to override the advisory opinion, but also urged the board to “correct it” on its own.

Ms. Sotomayor replied:

I assume in any situation in which there is a board, or even judges, that the people who write the laws are going to disagree with the way we interpret them. I hope that you don’t take our decision with respect to the political party spending as being an endorsement of that concept, meaning that’s the way we, as a board, believe it should be.

Our decision was based on what we thought the law said. Not on what we thought would be right in the law. That question we leave to the Council to decide and if it changes it, so be it. That is their prerogative as legislators to change that if they disagree, but we wanted to make sure that the Council understands our decision was not based on what we think the law should be, but only what we thought the law said as it exists.
The New York City Campaign Finance Board provided the minutes from that meeting and several others to The New York Times on Monday. The paper had earlier requested all such documents related to Judge Sotomayor’s tenure at the agency, and most were provided weeks ago. A board staff member notified The Times on Monday that it had located the additional minutes and provided them to the newspaper.

Since her Supreme Court nomination, Judge Sotomayor’s conservative critics have frequently accused her of being an “activist” who “legislates from the bench.” Here is an article that examines the evidence supporting such claims.

In addition, The Times analyzed a set of Campaign Finance Board minutes that was previously unearthed as part of this story about Judge Sotomayor’s record on election financing regulations.

Source: hecaucus.blogs.nytimes.com

Sunday, July 12, 2009

Obama’s Consumer Finance Plan Stirs Turf Tussle

The Obama administration’s proposal to create a consumer money watchdog may get roughed up a bit in Capitol Hill turf battles.

The administration propsed creating an independent Consumer Financial Protection Agency to look out for users of such financial products as credit cards and mortgages.


The proposal would strip some authority from the Federal Trade Commission (FTC).

On Capitol Hill, one measure of a committee’s clout is the range of executive branch functions that panel oversees. Take authority away from the FTC, and that takes some power away from the committee that keeps watch over the FTC.

Obama’s proposal will be vetted not by the Energy and Commerce Committee, which has jurisdiction over the FTC, but by the Financial Services Committee.

Rep. John D. Dingell , D-Mich., who was ousted as committee chairman in November after 27 years as the top Democrat on Energy and Commerce, views the Obama proposal as an “unwarranted reassignment of FTC’s authority” and the decision to give the bill to Financial Services a raid on Energy and Commerce’s jurisdiction.

“I have significant concerns about these plans,” he said last week.

While not going as far as Dingell, Democrat Bobby L. Rush of Illinois said he was concerned that the new agency would not do enough for consumers in the short term. Rush, the chairman of the Subcommittee on Commerce, Trade and Consumer Protection, suggested the administration could instead give the FTC authority to regulate financial consumer products.

Michael Barr, assistant Treasury secretary for financial institutions, said the existing oversight structure was inadequate to take on greater responsibility.

“Our basic view is that the current system is fundamentally broken. We need to have one agency for one marketplace with one mission,” he said.

The Financial Services Committee, headed by Barney Frank , D-Mass., has taken the lead on the legislation authorizing the new agency and is expected to have a version ready for committee action before lawmakers leave town at the end of July.

The Energy and Commerce Committee could slow down the bill’s progress by insisting on its right to act on the portions dealing with changes to the FTC’s authority.

The FTC oversees consumer protection issues, including unfair and deceptive advertising, telemarketing and identity theft. Under current law, it can bring enforcement actions against non-bank financial entities, such as mortgage brokers and finance companies. However, banks, savings and loan institutions and credit unions are exempt from FTC oversight.

Source: cqpolitics.com

FACTBOX: Campaign finance, criminal cases await Sotomayor

The federal campaign finance law, juvenile justice and several important business disputes are among the pending cases Judge Sonia Sotomayor will confront if approved by the Senate for the U.S. Supreme Court.

President Barack Obama has nominated Sotomayor, a federal appeals court judge from New York, as his first appointment to the nation's highest court. If confirmed, she would be the first Hispanic and the third woman on the court.

Sotomayor would replace liberal Justice David Souter, who retired at the end of June. She would not change the balance of power on the court, which has been divided with five conservatives and four liberals.

The Supreme Court has pending a number of major cases that will be argued and decided, including:

CAMPAIGN FINANCE LAW

* Arguments scheduled for a special session on September 9 on whether to uphold a ban on corporate spending in federal political elections. The case could affect the congressional elections in 2010 and the presidential race in 2012.

The case stemmed from a conservative advocacy group's challenge to the campaign finance law as part of its effort to broadcast and promote a movie critical of Hillary Clinton during her presidential campaign.

The group, Citizens United, released a 90-minute documentary film "Hillary: The Movie" in January 2008 when Clinton, then a U.S. senator from New York, was running for president. She later became Obama's secretary of state.

The justices heard arguments in the case in March but decided at the end of June to hear arguments again in September and to consider broader constitutional issues of whether to strike down a central provision of the law.

JUVENILE JUSTICE

* Whether a sentence of life in prison for juveniles who commit crimes other than murder violated the constitutional ban on cruel and unusual punishment.

The ruling could affect more than 2,500 individuals in the United States serving sentences of life imprisonment for crimes committed before they turned 18, human rights groups said.

The two Florida cases the Supreme Court will hear and decide involve a 13-year-old convicted of raping an elderly woman and a 17-year-old who took part in an armed home-invasion robbery while on probation for an earlier violent crime.

ANIMAL TORTURE VIDEOS

* Whether a federal law that makes it a crime to sell videos of animals being tortured or killed violated constitutional free-speech rights.

The U.S. Justice Department defended the 1999 law that Congress adopted in an effort to crack down on videos like those depicting dog fights. It compared animal cruelty to child pornography, which the Supreme Court has said does not qualify for free-speech protection.

Source: reuters.com

India Inc questions Finance Minister

Is it much to do about nothing, a day after the Budget?
Well, in his first industry interaction, the Finance Minister has been frank about lot of issues.
But, there do not seem to be any solutions or the mention of a definitive roadmap on any of the big policy matters.
A day after the Budget, Pranab Mukherjee was in a candid mood, telling the industry that it was a conscious decision to push up expenditure and allowing FRBM targets to slip.

Mukherjee said, “ I had no option except to depend heavily on borrowings. In 7-8 months I shall have to start the strenuous work of fiscal tightening. I will address the fiscal deficit issue, as soon as the impact of meltdown is over. The government has to accept higher level of fiscal deficit in the short term."

With plainer speak on issues like GST, the minister indicated that all states might not come on board by April 2010.

“I know there are differences and do not rule out the possibility as in the case of VAT, when some states followed later,” he said.

And then the question many journalists, analysts and economists and corporates are asking—where is his divestment agenda?

"The Budget is not the document for mentioning disinvestment details," Mukherjee answered.

India Inc showed up in full force to meet the Finance Minister after his Budget, but were left wanting on many matters from tax benefits for R&D to affordable housing.

Shivinder Mohan Singh of Fortis Healthcare, said, ''This time the interaction has been different from the past many years. The fact that he is open and positive and says I agree with all of you but it has to happen at the last time. This is a departure from the past.''

Adi Godrej of Godrej Industries, said, "Generally I think it was a very positive meeting."

Are these politically correct reactions? Perhaps, but the questions persist—is the FM treading the path of big ideas with no serious roadmap of implementation?
Meanwhile, the industry awaits more clarity on policy matters by early August when the Budget gets passed in the parliament.

Source: profit.ndtv.com

Saturday, July 11, 2009

Finance 101: Estate tax hits few ordinary people

NEW YORK (AP) — As attention turns from Michael Jackson's death to the complex estate the pop icon left behind, experts are sorting through his holdings and putting price tags on their value — with an eye on the tax bill they will generate.

While the superstar's property is worth far more than ordinary people could ever dream of amassing, some of the issues that will come up surrounding Jackson's estate taxes reflect common concerns about the so-called "death tax."

The estate tax is a tax on the transfer of property when someone dies, which means that the estate itself — not the heirs — foots the bill. (Of course, it can significantly eat into the amount the heirs inherit.)

For the most part, only very large estates have to pay — in 2004, just 0.82 percent of all estates were taxed by the federal government. That figure will likely drop, according to the Internal Revenue Service, because the size of estates exempt from the tax more than doubled — to $3.5 million this year from $1.5 million in 2004.
Here are some questions and answers about the estate tax.

Q: What assets are included in an estate?
A: The federal estate tax is calculated by adding up the fair market value of what you own — cash and accounts, stocks and bonds, real estate, trusts, life insurance, businesses, personal property like art work or collectibles, and so forth — at the time of your death. In certain cases, it may also include money or property that was transferred during the deceased's lifetime. The total is called your "gross estate."
Then certain deductions may be taken, like mortgages and other debts, and property left to your spouse or to charity. The amount that remains is your "taxable estate."
Q: Who has to pay estate tax?

A: For 2009, up to $3.5 million per person in assets are excluded from the federal estate tax. The value of property above that level is taxed at a rate of 45 percent. An estate worth less than $3.5 million doesn't even have to file a federal return, said William E. Massey, senior tax analyst for Thomson Reuters.
State thresholds vary, and not every state has an estate tax. Check your state's tax department Web site for details.
Besides the first $3.5 million, everything that is left to a surviving spouse is exempt from federal estate tax. The taxable estate may also be reduced by deductions, funeral expenses and any claims against the estate.
In 2010, the federal tax as it currently stands will expire; if Congress does not change the law, there will be no estate tax next year. In 2011, the old exclusion of $1 million returns, and the top rate for holdings above that amount would jump back to 55 percent, where it was in 2001.
Several bills have been proposed in Congress to address the issue, but none has passed yet.
Whether or not a person has a will doesn't affect the tax their estate owes, said Lynette Atchley, an accountant and certified financial planner in Redlands, Calif.

Q: Are small business owners more at risk for having to pay the estate tax?
A: The value of a business can depend on a number of factors, including how closely associated it was with the deceased person. But business owners do have a challenge in planning for issues like succession and transfer of ownership, and the plans they make could greatly affect estate taxes, said Bill Rys, a tax counselor with the National Federation of Independent Business.
"You need to sit down with an adviser to get a good sense of what the value of your business is, and what works best for the kind of business that you have," he said.
There are provisions that allow family-owned businesses to put off paying the entire estate tax bill at once, said Steve Armstrong, director of transactional tax planning for Rehmann, a financial planning and consulting firm based in Saginaw, Mich., but sometimes it's necessary to sell off part of the company's holdings to pay the tax.

Q: Are there legal ways to reduce the size of an estate if it appears that it might be subject to estate tax?
A: There are several different steps that can be taken to reduce an estate tax bill, but they must be done before the person dies. Among the options are setting up different types of trusts, giving cash gifts or transferring property, particularly real estate or securities, to family or friends.
In some cases the value of the property or gifts may be added back into the estate, but it would be the value at the time of transfer, not including any appreciation that has happened since that time, Armstrong said.


Source: google.com