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Ron Ashkenas: Get Your Money’s Worth From Consultants

by on May 11, 2011

Huffington Post…

Have you ever hired a consultant or been asked to work with one? If not, you’re a distinct minority. Management consulting is a $160 billion industry, projected to grow at over 6 percent per year. In the U.S. alone, there are 258,239 listings for management consulting firms, with the largest capturing only 3.1 percent of the market. The question is: Are consulting services worth the expense ? There is very little objective data on the subject, partly because when evaluating a project the consulting firm can almost always claim success based on completing the project plan, while “implementation” and “getting results” is the responsibility of the client. And clients will usually report that they’ve received good value because otherwise they would be perceived as having wasted time and money. It’s a wonderfully collusive arrangement, in which both parties always look good. Being a consultant myself, I am not of course saying that consultants are a waste of money. However, like any investment, consultants need to be deployed for the right reasons and in the right ways. To do that, managers need to pay attention to two success factors: The first is to understand the different types of consultants and what they bring to the table; the second is to appreciate that hiring a consultant is not a passive activity — it’s an investment that requires active management. Without hiring the right kinds of consultants and working with them in the right ways, the investment is likely to yield very little. For example, some consultants are merely arms and legs. These consultants are essentially hired as temporary workers. Often called “contractors,” these people fill in on projects because the organization does not have enough full-time people to do the job. Sometimes — when not managed properly — contractors become “permanent-temporary” workers, particularly when they are used to get around head-count restrictions. To avoid this situation (which often represents a substantial cost) you should set strict time limits on the use of contractors. In addition you need to consider whether the work they are doing could be redesigned so that your full-time people would have the bandwidth to do it. A second type of consultants are technical experts, who are brought in to develop or install a system, conduct training on a particular subject, or solve a well-defined problem. Technical experts are particularly useful when you require certain expertise, but don’t need to have it permanently. The challenge for managing experts is that they know more than you do (they are the “experts,” after all). As such they tend to find ways of expanding their work and becoming permanent fixtures. In one particular financial services company, for example, IT experts were brought in to update a client management system. At every key milestone they would recommend further work to enhance not only the client management system but other systems as well — and ended up turning a six-month engagement into an in-house IT shop. Similarly at a large pharmaceutical firm, many of the expert strategy consultants outlasted their departmental clients — which made them indispensable to the new managers. What was worse was that the new managers asked them to refresh the strategy that these same consultants had previously developed, which allowed them to start the cycle all over again. But not all consultants try to create an ongoing presence. In addition to “arms and legs” and “experts,” there are partner consultants. These are people who bring their talents and experience to the organization by working side-by-side with clients, helping them achieve their goals in new ways while building their clients’ capacity. Leadership coaches, team facilitators, and some management consultants fall into this category. Partner consultants — including experts who make their inputs in a collaborative way — give you an opportunity to change the collusive dynamic mentioned earlier. The main vehicle for doing this is to hold them accountable — along with you — for the goals that you are aiming to achieve. If they are truly working with you hand-in-hand, then they will want to have a stake in the business outcome (even if it makes them uncomfortable), and not just in the completion of their assignment. Results will then become the true measure of success. Hiring the wrong consultants or mismanaging them can cause severe problems in organizations — unnecessary expenditures, low morale, and misdirected efforts. By bringing in people with the right roles and keeping them focused on the right goals however, you stand a better chance of getting your money’s worth. What’s your experience with consultants? Cross-Posted from Harvard Business Online

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Ron Ashkenas: Get Your Money’s Worth From Consultants

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Goldman Sachs Says Regulators Might Bring Fraud Charges

by AP on May 10, 2011

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WASHINGTON — Goldman Sachs & Co. says one of its units is being investigated by federal regulators over whether it improperly used investment accounts to make trades and could face civil fraud charges. Goldman says the staff of the Commodity Futures Trading Commission has told the firm it will recommend that the agency file charges. The charges involve money belonging to customers of another financial firm that was a Goldman client. Goldman says in a filing with regulators that the charges would be based on allegations that it knew or should have known that the money belonged to customers of that firm rather than to the firm itself. Goldman says it is cooperating with the investigation. It didn’t name the client firm.

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Goldman Sachs Says Regulators Might Bring Fraud Charges

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Ron Gitter: Lending a Hand to Lenders: How to Speed Up the Closing Process

May 6, 2011

At a co-op closing this week, where I represented the sellers by power of attorney, I sat across from the buyer’s counsel, who dutifully ground through the loan documents with his client, a first-time home buyer. As I checked my Blackberry to pass the time, I listened to the attorney describe in mind-numbing detail, page after page of the bank’s documents, pausing to get his client’s signature after each explanation was completed. All around the closing table, folks who have watched this drill on hundreds of occasions, do what’s always done at every closing… wait. Rethinking the Loan Process At that closing, the bank’s attorney stated the “golden rule” of lending: “He who brings the gold, makes the rules.” The crowd chuckled. That being said, the process by which a bank completes the loan documentation at the closing is about as up to date as applying a wax seal. Each bank has a slightly different set of documents, based upon whether or not the loan will be sold immediately after closing to Fannie, Freddie or to an investor. Basically, the documents are similar: a note, a security agreement or mortgage (depending upon whether it is a co-op or condo), a HUD Settlement Statement, and numerous other documents which are either required by law (as revised by recent Federal legislation and rule making) or by the bank’s own lending policies. With all due respect to those charged with the responsibility of attending to the bank’s closing details, the process consumes an excessive amount of time. There is no reason why a majority of the loan documents, with the exception of the note and security documents, can’t be signed at application or upon issuance of the loan commitment. Why Signing Before Closing is a Better Idea Although efforts are being made to educate and to protect the consumer from nefarious lenders and their minions, a closing, with its time limitations, is not exactly the best place to start explaining the implications of the loan documents. Most purchasers are in a daze at the big finale and really don’t comprehend the significance of each piece of paper which is briefly described to them before execution. Your typical future homeowner is thinking about the ton of money he or she is about to spend, or the costly renovations, or the move-in date, or whether it’s the right decision in the first place. You get the picture. Understanding the “name affidavit” or some other boilerplate document is not at the top of the list. It would clearly be in the consumer’s best interest to have that pile of documents in advance of the closing, so there would be a real opportunity to understand exactly what is being signed. In addition to speeding up the closing geometrically, the consumer would be better protected from signing a document he or she truly doesn’t understand — unfortunately, an occurrence at each and every closing. When I posed this suggestion at the closing table, after a few half-hearted attempts at telling me why it wouldn’t work, the bank attorney finally said, “Are you trying to take away my job?’ Well, actually, just trying to make it significantly easier. Business as Usual A closing represents the culmination of the efforts of a number of people: the attorneys, the brokers, the bank and its counsel, the managing agent, and of course, the seller and purchaser. Those involved in the process understand that a certain amount of time will be required to get to the finish line: that being the delivery of checks in exchange for ownership of the property. In the digitized world we live in today, however, a closing takes way too long and needs to be modernized. Lenders are not the only time-wasting culprits, but expediting the review and execution of loan documents would be a great place to start. On to the Next One The real estate economy thrives on closings. When handled the right way by all concerned, it represents the best efforts of the professionals, good feelings on both sides and the ultimate “win win” scenario. But there’s room for significant improvement in the time it takes to get to the handshakes.

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Poised for Growth, Leading Demand Generation Agency, Left Brain DGA, Announces New Leadership

May 4, 2011

MENLO PARK, CA–(Marketwire – May 4, 2011) – Left Brain DGA, a Silicon Valley-based demand generation agency, announces the addition of three key members to its senior team. The company named Gary McGrath to Chief Revenue Officer; Barbra Gago to Director, Demand Generation Strategy; and Inger Rarick to Director, Client Services.

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Donna Fenn: When Is It Okay To ‘Fire’ A Customer?

April 27, 2011

Q: How much of my company’s resources should be devoted to a difficult but valuable customer? The following answers are provided by the Y.E.C. Mentors . Co-Founded by Donna Fenn and Scott Gerber , Y.E.C. Mentors is an initiative of the Young Entrepreneur Council , a nonprofit organization that provides young entrepreneurs with access to tools, mentorship, community and educational resources that support each stage of their business’s development and growth. Y.E.C. Mentors’ members are successful executives, serial entrepreneurs and thought leaders. A: Are They Really Worth It? This is a great question — especially critical for startups as you are looking to establish and grown your business. You should focus on the lifetime potential value of the customer — are they a customer for “now” with not much potential in the future or is there a lot of potential for growth in the future? Weigh the economic value of the particular customer. –Leonard Schlesinger ( @lschlesinger ), Babson College A: Trust Your Gut If you are transparent about your product and services and offer a Customer Service phone number or electronic means of transparency like a Blog, then consumers will typically not remain difficult. Due to social media and the viral effect of negative crisis to erupt, companies and CEOs are closely monitoring their customers’ feedback on Twitter or Blogs. –Naveen Jain ( @Naveen_Jain_CEO ), Intelius A: Determine the Customer’s True Worth We are in business to serve our customers. That said, some customers are more difficult than others and demand a lot of time and resources to service them. Business should also be fun! (We work hard enough as it is). If they make you miserable- the answer is easy- time to end it. Its not worth being miserable to service a client- might as well work for someone else if you do that. –Ingrid Vanderveldt ( @ontheroadwithiv ), Ingrid Vanderveldt LLC A: Do the Drain Test Companies need to be crystal clear about the profile of customers who align with their strategy, culture and resources. “Difficult” customers can range from an ill-mannered executive to an account that always needs extra hand-holding and support. Prune non-ideal customers relentlessly. Over time, they drain the life force out of your organization, and stop you from finding more ideal fits. –Pamela Slim ( @pamslim ), Escape from Cubicle Nation A: Minimize Contact With Your Staff

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TriNet Strengthens Customer Experience With New Human Capital Services Team

April 19, 2011

HR Outsourcing Partner Promotes Patrick Villella to Vice President as Company Evolves to Meet Ever-Changing Client Needs

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Sexual Assault After Second Date Leads To Match.Com Lawsuit

April 14, 2011

LOS ANGELES — A California woman is suing a popular Internet dating site, saying she was sexually assaulted by a man she met on Match.com. Attorney Mark L. Webb says he filed the Los Angeles Superior Court civil lawsuit on Wednesday on behalf of an entertainment executive identified only as Jane Doe. The suit demands that Match.com screen its members for sexual predators. Webb says he’s asking for a temporary injunction barring the site from signing up more members until his client’s demands are met. Webb says the woman met the alleged assailant last year at the Urth Cafe in West Hollywood. After a second date, the attorney says the man followed her home and attacked her. A telephone message left Thursday for Match.com’s IAC corporate owner in New York wasn’t immediately returned.

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Dan Solin: Your Broker Can Eliminate Your Tax Liability

April 13, 2011

It’s tax time, so I thought I would blog about a little known benefit of using major brokerage firms. A huge profit center for the brokerage industry is its willingness to assist clients who wish to engage in tax evasion. It’s a very lucrative business. You may remember the conduct of UBS, which agreed to pay $780 million and hand over customer details to settle charges of tax fraud in the U.S. UBS allegedly set up shell accounts to assist U.S. based customers in hiding assets from the IRS. Its scheme involved 250-300 U.S. citizens. This conduct is not limited to UBS or to U.S. citizens. I recently experienced it firsthand. A foreign citizen asked me to review his portfolio which was held in the Cayman Islands, in a trust set up by a foreign subsidiary of a major U.S. brokerage firm. The account was managed by another affiliate of the U.S. broker, based in the Caymans. The portfolio was the typical broker fare: high expense ratio proprietary mutual funds, and a mish mash of individual stocks and bonds. I advised the client to extricate himself from the clutches of the broker and to set up another trust in the Caymans, so that he could invest in a globally diversified portfolio of low cost index funds. I referred him to a prominent law firm in the Caymans. Nice plan, but it didn’t work. The law firm, in compliance with local law, insisted on proof that taxes had been paid on these funds. The client could not produce this proof. The firm refused to set up the trust. When I asked how the U.S. brokerage firm was able to create a trust without complying with local law, he told me “everyone knew” how the big brokerage firms use their resources to avoid tax liability for their clients and skirt local laws. It would have been a lot cheaper for this client to pay his taxes and implement a portfolio based on sound principles of finance. Instead, he is essentially held hostage by a brokerage firm that can do whatever it wants with his portfolio, without fear of redress. The experience of this foreign citizen is repeated countless times in the many tax havens in the world. U.S. based brokerage firms, and their foreign counterparts, stand ready to help anyone with sufficient assets avoid their tax obligations, in exchange for taking over “investment management” of their money. For their clients, it’s a Faustian bargain. For the brokerage firms, it’s another day at the office. The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein. Furthermore, the information on this blog should not be construed as an offer of advisory services. Please note that the author does not recommend specific securities nor is he responsible for comments made by persons posting on this blog.

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Omer Rosen: How to Deceive a Client Without Really Trying

April 11, 2011

In my first article, ” Legerdemath: Tricks of the Banking Trade ,” I made brief mention of Treasury-rate locks: “Most brazenly, we taught clients phony math that involved settling Treasury-rate locks by referencing Treasury yields rather than prices.” A number of readers expressed doubt that using a settlement method based on Treasury prices was appropriate. What follows is an abridged explanation of a Treasury-rate lock deception. I offer it not in the misguided hope of stamping out abuses in Treasury-rate lock transactions. Rather, I seek to give a detailed example of a certain type of behavior — hoping it carries more weight coming from an ex-insider speaking onymously. There are two basic ways to describe the value of a Treasury bond, either by price or by yield. Price answers a simple question: How much would it cost you to purchase a bond? This price will change over time, in much the same way that the price of a stock changes over time. Playing counterpart, yield expresses the return that will be earned by purchasing this bond at a certain price. It is similar to how one can describe the speed of a car either by the average number of miles per hour it is traveling at or by the time it takes it to travel one mile — if you know one you can solve for the other, and if one goes up the other comes down. To belabor the point, either “1 mph” or “a 60-minute mile” provides you access to the same knowledge about the speed of a car. And, just as traveling at 1 mph allows you to complete a mile in 60 minutes, purchasing a bond at a certain price “allows” you to earn a certain return (i.e. a certain yield) on your investment. Now back to Treasury-rate locks. When a company puts on a Treasury-rate lock, it is putting on a bet that will pay off for the company if Treasury prices go down and go against them if prices go up. I ask that you accept on faith that sometimes this bet, rather than being a gamble, reduces risk and uncertainty for a company. When the time comes to settle this bet, the change in value of the bond must be calculated. This should be a simple matter of subtracting the bond price at the time of settlement from the price agreed to when the rate lock was put on. However, when it comes to bonds, corporate clients do not think in terms of price; they think in terms of yield because yield is expressed in the language of interest rates, the same language companies are familiar with from business concepts such as rates of return and borrowing costs. And so the client is conveniently never shown how to settle based on prices. Instead they are taught a nonsensical and more complicated method called yield settlement. The sole purpose of this settlement method is to trick the client into allowing the bank extra profit. Unaware that they should even take a second look at what they assume is procedural, the client does not question. Whereas price settlement asks, “By how much did Treasury prices change?” yield settlement asks, “By how much did Treasury yields change?” But how does one convert a change in yield (i.e. a change in an interest rate) into a dollar value that can be paid out? The short answer is that one cannot. But why not? If price and yield are both valid ways of expressing the value of a bond, shouldn’t you be able to measure the change in value of a bond by looking at either the change in its price or the change in its yield? Resorting to hyperbole, teaching a client yield-based settlement is akin to selling them on skipping through time. Return to our car analogy. In this analogy, “mph” will play the role of “yield” and “travel time” will play the role of “price.” And, rather than calculating the difference between two bond values, we will calculate the difference in travel time between each of two laps by our car around a 1-mile track: If lap 1 is completed at a speed of 120 mph and lap 2 at a speed of 1 mph, how would you calculate the difference in travel time between the two laps? If you were using yield-settlement logic, you would first imagine a car that speeds up from 1 to 2 mph. The time required to travel a mile would decrease from 60 to 30 minutes — a 30-minute change. Then you would assume that for all 1-mph changes in speed, travel time per mile would also change by 30 minutes. This logic implies that lap 2 would take 3,570 minutes longer to complete than lap 1 ((120 – 1) x 30). Short of a DeLorean and some lightning, this is not possible. For makes and models without a flux capacitor, correctly calculating the decrease in travel time means converting each speed from mph to travel time per mile, then taking the difference between the two travel times. As a 120-mph lap takes 30 seconds to complete and a 1-mph lap takes 60 minutes to complete, the difference in travel time between the two laps would be 59.5 minutes. Similarly, for rate-lock settlements, yields must be converted to prices, with the correct settlement value being the difference between those prices. Yet we at Citigroup, and in my experience our peers at other banks, almost always instructed clients to use the yield-based settlement method. And so a product that is meant to return the difference between two Treasury prices, a matter of elementary subtraction, is perverted for profit. If yields change by very little, this profit does not amount to much. Fortunately, depending on one’s point of view, banks have other tricks for profiting from rate locks and do not rely solely on yield-based settlement. In fact, miseducating clients with yield-based settlement is almost an afterthought, just a bonus that pays off with large movements in yield. And, in behavior that might be considered yet more sinister, sometimes banks had to agree with one another to miseducate clients with yield settlement. This transpired if a client decided to divvy up a single rate-lock transaction, with each bank getting a piece of the deal and each bank knowing that settlement of the rate lock would have to be a coordinated affair. All this mathiness is hidden in plain sight. Some examples of yield settlement can be found online. Or you can just ask a company that put on a rate lock to dig up some trade confirmations and see what settlement methodology was used. There are hundreds, if not thousands, such documents in corporate offices around the country, each one part of an unwarranted transfer of millions of dollars from clients to banks. For a more in-depth treatment of the above song and dance, with explications of the bond math and client interactions, please click here

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Craig K. Comstock: After the American Dream

March 29, 2011

Over breakfast with a client who had a $90 million fortune, I asked a hypothetical question: would it decrease your motivation as an entrepreneur if it were understood that each year people with big incomes would be celebrated and, as if at a potlatch, would give back to the community all but some small multiple of the average family income? After a forkful of Spanish omelette, he told me, “no, it wouldn’t decrease my motivation or my business creativity: what other game would I play?” As my client knew, a potlatch was a Native American custom in the Northwest, a feast at which prosperous members of the community sought prestige not by having wealth, but by giving it away. Let’s plug in figures for a conservative yield on my client’s fortune and for the average family income. Even allowing no deductions at all, he would be giving away the equivalent of an income tax even higher than the 91%* charged under Eisenhower for the biggest incomes. (It’s now down to 35% on whatever portion is taxable after the accountants get done.) The sample size of my breakfast survey was just one, and the respondent was unusual: as a philanthropist, he was already giving some of his fortune away and he had a broad worldview. He took seriously the claim that, above a certain level, money is only a way keeping score. I thought of his reply when reading the results of a survey of a representative sample of more than 5,000 U.S. residents commissioned by a Michael I. Norton, professor at the Harvard Business School, and Dan Ariely, a colleague at Duke University. They found that the average U.S. citizen radically underestimates the actual U.S. inequality, and regards as ideal even less inequality than he or she mistakenly thinks now prevails. Here are the figures from their survey: The sample regarded as fair a 32% share of the national wealth for the top fifth of the population (“quintile”). What they thought is now the share of this same group: 59% The actual share at the time of the survey: 84% The gaps here are so extreme as to raise the question: in a country proud of its democracy, how does the top fifth get away with owning 84% of the national wealth? Even more startling, how is the top 1% of people allowed to own nearly 50% of the wealth? In the last 30 years, since around the start of the 1980s, we have witnessed, apart from the rich, only a “stagnation” of income. So far, this “plateau” has been disguised by more than one member of the household working, by the availability of cheap goods from abroad, and by the magic of inflation (when dollar income rises; but purchasing power does not). We could find many explanations for toleration of the present disparity, but they probably rely on the “little people” not suffering a noticeable decline in purchasing power. In other words, I suggest that the American dream can tolerate shifting from “will be better off than the prior generation” (rise) to “will be no worse off” (plateau), but perhaps not to “will have notably less” (fall). After college my first job was teaching assistant in a course on “American character and social structure” given by the social observer David Riesman, author of The Lonely Crowd. We examined the distinction between economic equality of result (claimed by our enemy of that time) and what this country allegedly had or at least sought, which was “equality of opportunity.” Ambition, ingenuity, and hard work would be “rewarded” by whatever money could be extracted from “the free market.” As much as possible, we were supposed to have a “level playing field,” on which merit and energy would seek to score. People who did well “deserved” everything they got: why should they pay taxes for anything but the military and a few other essentials? Let everything else be “privatized.” According to Erin Currier of the Economic Mobility Project, “There is not equality of opportunity in the way we as a nation imagine there is.” In his view, based on research, “the American dream is struggling.” The Motion Picture Academy just gave an Oscar for best documentary to Inside Job , an expose of what its director regards as “systemic corruption” in what is called the “financial services industry.” However, most Americans still don’t want to inquire too deeply into the financial system, any more than they want to draw conclusions from findings about climate change or the peak of petroleum production. Yet we continue to barrel ahead despite the prospect of declining global production of oil, and a growing demand for it, and evidence that the price of oil above a certain amount leads to severe recession. In a previous article I have suggested that revolts in so-called developing countries can be predicted not only by the fraction of educated youth who are unemployed and other factors, but also by the fraction of household budget spent for food. Now we might ask of developed countries: to what extent will voters tolerate extreme inequality if the standard of living of a large majority of them no longer gradually rises or at least seems to remain stable, but actually declines noticeably?

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Rick Loehrke Joins Engage121 as Senior Vice President, Client Services

March 7, 2011

NORWALK, CT–(Marketwire – March 7, 2011) – Engage121, a software firm specializing in customer relationship management through social media, announces that Rick Loehrke has joined the company as Senior Vice President, Client Services.

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Matt Spangler: Find New Profits From Old Products: YouTube, Brand Channels, and Easy Money

February 18, 2011

“Can you help us quickly find new opportunities and open new markets to deliver short term revenue growth?” It’s the most common question I hear through my consulting practice, when corporate executives from blue chips discuss their challenges with me. In many cases, the answer might be hiding in plain sight. Not to chase after the shiny new thing but look for innovation and new profits in existing systems and businesses. It might not be as sexy as the hot new startup, but those potential revenue streams have the chance to return new profits with less upfront investment. After all, those shiny new things can be quite expensive. Even YouTube , considered one of the most innovative companies in the world, struggles with similar challenges. Through personal experience with the company over the last year, I saw an opportunity to rethink their brand channel process, a mainstay service that already exists but is painfully difficult to setup, and leverage it in new ways to deliver value for users and profits for the video giant. Hard to believe that just five years ago YouTube was that shiny new thing, hemorrhaging money to blaze the internet TV trail. Five years later it’s annual page views are upward of 700 billion and its monthly global audience, according to a recent article by Fast Company , is 500 million people. The crowd-sourced broadcast behemoth is the definitive place to view video online with 35 hours of video footage pushed live every minute. Like many successful online ventures, translating pageviews into revenue has been YouTube’s challenge since its inception. Much of the Fast Company profile focused on YouTube’s “relentless experimentation” with new monetization models but with no public financial data, and speculation on its bandwidth costs, few know if their current models are profitable. One thing not in doubt is that YouTube continues to face rising competition from companies like Hulu , Vimeo , Netflix , Boxee and Apple and will need continual innovation around monetization (along with the constant need to keep consumers happy) to win the race and dominate home entertainment. March 2010 reports indicate that the site should generate close to 1 billion in sales , so what do they offer brands now, and are there ways they could generate new profits before they have to reinvent the wheel? There are many options for how to get involved. A chart in the Fast Company article provides a breakdown that includes traditional ad units, expensive homepage customization, in-video ad units that plays before the content (including Content ID ), promoted videos, an Adwords system and more. Some would argue there is no better place to tell your story then through video, and when it comes to nearly every brand’s involvement with YouTube, a customized “channel” is the starting point. Channel accounts allow you to customize the design of your YouTube page and create a place for brands to send customers to hear the story of a new product or service. This is especially important for emerging companies, since their advertising strategies will likely not begin with ads, but rather the creation of great content to build audience and brand awareness. But even the largest global brands embrace the brand channel model, which makes it all the more surprising that at present YouTube has few answers when it comes to monetizing it or even providing customers with an easy way to set one up. It’s broken. It needs fixing. It needs focus, both from a consumer support and profitability standpoint. And that can be done with a few simple steps. And by increasing focus on channels, you move to grow the YouTube “partner” program , which provides revenue share to encourage audience growth from super users who in turn drive the overall traffic without additional marketing (ex: Huffington Post’s free blogger network ). So how do you setup a brand channel on YouTube? Log on to YouTube and try setting one up. Sounds simple, right? I thought it would be, until I experienced it for myself. In the summer of 2010 while coordinating communication efforts for a small business client, we produced a series of twelve professional parenting videos geared towards YouTube’s active community of new parents. We planned an ongoing series and wanted a page for the videos that fit their brand aesthetic. We searched YouTube for basic information on brand channels and arrived at the Advertising page (http://www.youtube.com/advertise). A downloadable pdf for “creating a brand channel” explained the functionality along with the distinction between free and paid channels but had no information about the costs or installation instructions. There was no automated process to upgrade your page and after an extensive search of the help forum a few random comments indicated the costs to edit your channel was rumored to climb into six figures. I contacted some ad industry contacts with experience working on brand channels, and they confirmed the rumor and insinuated, that while they had heard of cheaper options, their experience opening the iFrames and adding custom code had cost over $100,000. In September 2010 my team filled out the form, to contact a YouTube representative , indicating our interest and budget. No automated email response. Two weeks passed; no response. We filled out the form again; still nothing. A month later the developer I hired to help me implement the channel design was kind enough to send a personal email to a contact at YouTube. Thanks to that lucky break, our request finally found it’s way to the proper person. After one more week. Finally an email arrived, asking what kind of channel we wanted. We waited 10 more days for the first bit of concrete information: they added us to the white list and said our brand channel upgrade would be free, but we would not receive the full capabilities of a paid channel. Perfect. Done. That was, um, easy? Two weeks later, over two months after our first email, we randomly checked our channel page, and it turned out that the account had been upgraded. There was no notification or instructions of any kind. The YouTube brand channel system is something my client was ready to pay for. We allocated a budget to produce the videos and wanted our brand presence to reflect the same quality. We expected a setup fee to help facilitate a timely launch to our channel and would have paid a monthly subscription charge for ongoing service that included analytics on visitors and tools to promote the channel to users interested in our subjects. Currently the only revenue being derived from the program is the extremely high, rumored fees that large brands pay for extensive customization. Note: Since our experience, the help section was updated in early 2011 with a dedicated area for brand channels and a new “Show and Tell” section with examples of brand channels curated by the ADC (Art Directors Club) . This does a decent job of showing examples of custom channel designs but provides no information about the options, pricing or process to join the party. In fact, you’re sent to the same signup form that returned us no results. There is great opportunity here. Small business and personal branding was one of the hottest topics of 2010 with sites like Flavors.me and About.me growing large audiences by making it easier for individuals to create well-designed personal websites. Combined with the proliferation of video tools like the Canon 5D Mar II , more individuals and small businesses are using video to tell their story to the consumer and the volume of individuals interested in controlling their brand’s image creates a bigger market for personalized channels. According to an article published on theStreet.com , in the US alone, local online advertising is expected to grow to nearly one quarter of all advertising dollars spent by 2014 . As the economy continues to recover, much of the growth will come from small to medium businesses looking to establish their name in a crowded market. No place is better positioned to grab that crowd, many still internet novices, than YouTube. It was speculated that Google’s desire to purchase Groupon was because the daily coupon site has, “more than 1,500 employees that deal with places like restaurants, nail salons and spas. Google also hoped to leverage Groupon’s sales team to encourage advertisers to list on its local business directory.” Through automation and product improvements YouTube can help build the small and local business relationships without spending money on acquiring human capital. The ecosystem exists, and the audience is thirsty for reasonably priced alternatives to market their businesses. Automation of the brand channel system would allow customers to choose from a suite of options. They would be presented clearly on the site with all their features, capabilities, and levels of customization delineated. Templates and simple tools would help novice users upload images to brand a page and promote the videos they create. For example lets use a basic three-tiered pricing model; a common pricing strategy for subscription software products ( 37Signals , Mailchimp , Shopify etc). Apply to the brand channel model: Small fees, $25/month, allow you to apply your brand style to the design of the page and greater access to color control. Medium fees, $50/month, provide greater control, improved analytics and promotional options. For $100/month you receive further design customization, additional widgets built exclusively for YouTube and access to advertising tools imbedded in your dashboard. (assuming that a $1200 a year investment on your YouTube page means you are likely interested in buying advertising to drive interest to the page-ex. Facebook ads ) Dedicated reps and in-depth customization would still be available for the six figure rates and include other premium features and promotion on highly trafficked sections of the site. Basic, sure, but if you take the yearly charge of the three example programs levels ($300 / year), and combine it with 1% of the estimated 100 million active viewers (vastly less then their 250 million registered users), you have $300 million per year in additional revenue on customized brand channels with very little additional work or infrastructure. Additionally you would explode your community of engaged brands who would work to drive interest and traffic to their own channels, increasing the growth rate of the site and advertising spend within the ecosystem. YouTube pulls in revenue from something it already offers, and small businesses get an easy and affordable platform to build their brands. It’s a win-win. A s 2011 hits full swing, and you look hard at your own business, YouTube offers a valuable lesson. There might be revenue opportunities hidden inside your existing businesses if they just take the time to look. Sometimes that innovation may be as simple as extending an existing, successful platform, and customizing it for an underserved target with spending power. It seems so simple. It’s unbelievable YouTube hasn’t leveraged their brand channels. And it’s simply a matter of time before they do. Easy money.

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Angela Haines: From Neckties to Nuclear Waste: The U.S. Government Is Open for Business

February 17, 2011

This month it got a little easier to add to your client list the country’s biggest spender: the US Government. The Small Business Administration announced its Women-Owned Small Business Procurement Programs (WOSB) which provides greater access to contracts with 83 industries by allowing procurement officers to set aside contracts for women-owned and economically disadvantaged women-owned businesses (EDWOSB). Federal statute already mandates government contracts over $3000 and under $100,000 be set aside for small businesses, with an additional 5% procurement targeted for women-owned small businesses, but results have never met the mark. While department and agency standards vary, in practice, procurement officers can now exclude other bidders once they receive a minimum of two bids from qualified women business owners. Furthermore, the February ruling requires the set asides go into effect in 2011 government budgets with over $30 billion of contracts available to women. SBA Administrator Karen Mills feels these contracts “can provide women-owned small businesses with the oxygen they need to take their business to the next level.” What’s at stake? Each year the government purchases some $500 billion dollars worth of goods and services. Typically it spends in every category imaginable from goods, such as lab equipment, furniture, office machines, toiletries, clothing, and athletic equipment to services, such as accounting, construction, advertising and janitorial. Occasionally it even wades into unexpected territory. One Army contract totaled $5.6 million for T shirts imprinted with “Go Army.” Another $500,000 contract went for a Spider Man impersonator to entertain troops abroad. Federal contracting consultant Lourdes Martin-Rosa, head of Government Business Solutions , advises business owners “to take advantage of every tool the federal government offers, while making yourself known to the right people within the government.” The Small Business Administration provides requirements on its website; it also offers training and other outreach programs to help small businesses fulfill requirements. Additionally, the Federal Business Opportunities (FedBizOpps) website lists all government contract needs above $25,000. Recently a survey by American Express Open , an initiative that supports small businesses with products, training and educational resources, agrees that given “the government goal of awarding 23% of their spending to small firms — some $115 billion annually — Federal contracting is an important avenue of growth for many small businesses to consider.” Once they win Federal contracts, the report continues, “Women businesses achieve success in equal measure to that of their peers.” But success takes takes time, about 17 months, on average, to land the first contract. Once they bid, the survey concludes, women win 43% of the contracts they seek compared to 40% for men. While becoming contract ready requires extensive research, the steps are relatively straightforward. The first step is to register online in the Central Contractor Registration (CCR). While registration is free, basic identification facts and figure are required. One key is to select your proper product or service classification codes (NAICS) among the 83 categories available for women businesses. Choosing the codes can be one major key to success. Ask small business owner Maureen Borzacchiello, CEO of Creative Display Solutions , an exhibit and events production firm based in Garden City, New York whose blue chip clients include JetBlue, Pfizer and American Express. When the economic slump hit, Maureen decided to explore government contracts, though she admits the project takes dedicated focus. “When I first looked at the categories of industries, I felt we fit two or three, but with more digging I have discovered 43 categories for which we are eligible. One area that turned up unexpected business was storage, a service Creative Display Solutions routinely provides its clients. The government, however, labels storage contracts “general warehousing,” a big budget item at one particular agency which Maureen is currently targeting. Last year she won her first government contract from the Army. Her advice for women seeking government business? Don’t start out with the attitude that you should get these jobs just because you are a woman. Your first goal is to demonstrate you’re a solid company and be willing to provide the financial records they require along with recommendations from other clients. To be a government contractor, you can’t keep your receipts in a shoebox. You need a comprehensive business development strategy. Consultant Lourdes Rosa-Martin, who also advises on government contracting for the American Express Open program, agrees that doing business with the government isn’t a piece of cake. “But,” she adds, “the resources are there because the government provides remarkable transparency.” One website, USASpending.gov , provides details of previously-awarded contracts to help you determine if your prices are competitive. Furthermore, Lourdes adds, “there are 230,000 credit card purchasing officers ready to buy any product or service that costs $3000 or less at any time without further authorization. Just jump in.” One veteran Federal contractor, CEO-Founder Susan Rice of Cavanagh Group Services which provides onsite logistics management for disposal of nuclear, hazardous and toxic wastes to support environmental clean-up, currently derives 85% of her $22 million revenues from government contracts. In some cases, she contracts directly; other times she subcontracts from major companies who routinely develop lists of qualified suppliers. But with ballooning deficits and impending budget cuts, Sue Rice says she now plans to start chasing more private business to achieve a 50-50 split between government and private contracts. “When one sector peaks,” Sue observes, “the other dips. For me the solution is to be nimble enough to ride the waves.”

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Simon Johnson: Derivatives Industry Report Collapses

February 15, 2011

The credibility of a major report commissioned by the “Derivative End Users Coalition” — run by big banks against implementing the Dodd-Frank reforms — just collapsed. As Andrew Ross Sorkin reports in the New York Times , the report has no meaningful substance — it is destroyed by the critique of Joe Stiglitz — and the consulting company (Keybridge Research) behind the report sought misleading credibility through falsely claiming affiliations with substantive academics. At the end of Sorkin’s article is a remarkable admission by Mr. Wescott, the president of Keybridge, conceding these facts: “When I told Mr. Wescott of Keybridge about Mr. Stiglitz’s comments, he replied that ‘the client had asked us’ to put the report together. ‘It was a hypothetical study.’” Mr. Wescott admits that it is a bogus study (“hypothetical”) that was “asked” for — and in exchange for a fee they delivered what was asked for, i.e., a report that has no basis in fact or credibility. (See also my points about the report’s lack of substance from yesterday. ) This is lobbying for favor on the basis of misrepresenting what is in the public’s interest. Nowhere in this Keybridge “study” or the Chamber’s press release or in any materials put out by the Coalition of Derivative End Users was any of this disclosed. The industry is making completely baseless claims — and must resort to this kind of hollow chicanery. This report is revealed as nothing other than a deliberate attempt to mislead the public and to fool people on Capitol Hill. Cross-posted from The Baseline Scenario .

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John Taylor Skilling Dead: Jeff Skilling’s Son’s Body Found In Apartment

February 3, 2011

SANTA ANA, Calif. — A son of former Enron President Jeff Skilling has been found dead in his Southern California apartment. Santa Ana police Cpl. Anthony Bertagna says 20-year-old John Taylor Skilling was found dead Tuesday after he failed to meet friends for a dinner and they called police. Jeff Skilling’s attorney, Daniel Petrocelli, confirmed to CNBC that the young man was his client’s son. Petrocelli did not immediately return messages from The Associated Press. Bertagna said Thursday that bottles of medication were found near Skilling, who had been distraught over a breakup with his girlfriend. Authorities are awaiting a toxicology report to determine the cause of death. That could take four to six weeks. Skilling was studying at Chapman University in Orange. His father is serving a 24-year sentence in federal prison for fraud, insider trading and conspiracy.

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BNP Paribas Expands Coverage of Financial and Official Institutions in North America

January 27, 2011

NEW YORK, NY–(Marketwire – January 27, 2011) – BNP Paribas Corporate and Investment Banking is pleased to announce the growth of its North American Client Coverage Group and establishment of the Official Institutions Coverage team for the Americas.

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Haines Joins Parsons’ Infrastructure & Technology Group

January 27, 2011

PASADENA, CA–(Marketwire – January 27, 2011) – Parsons announced today that Julie Haines has joined its Infrastructure & Technology group as Vice President and Client Service Leader of its International Development Practice. Ms. Haines is responsible for leading growth in the United States Agency for International Development (USAID) market and expanding Parsons’ sustainable infrastructure footprint worldwide.

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Dan Solin: Rich and Poor Serve Their Wall Street Masters

January 26, 2011

I am often accused of being too hard on brokers (usually by brokers!). They say I cherry pick bad portfolios and there are many “hard working, honest brokers” who do the right thing for their clients. That has some surface appeal and I used to believe it. I no longer do. I have reviewed thousands of portfolios sent to me by readers of my books and blogs. I have yet to see a globally diversified portfolio in an appropriate asset allocation, invested solely in low cost, high quality, stock and bond index funds, exchange traded funds or passively managed funds. Not one! I also regularly review findings (misnamed “awards”) issued by the Financial Industry Regulatory Authority (FINRA) which has exclusive jurisdiction over disputes between investors and their brokers. In last week’s blog , I wrote about the experience of Joanne Bohnke, a 74-year-old widow of modest means, who was harmed by the misconduct of her broker. She got partial recompense, which is rare for investors, since these panels tend to either side totally with the securities industry or award only a fraction of the damages suffered by the investor. Wealthy investors fare even worse, both with their brokers and with FINRA arbitration panels. Lawyers for the broker brand the wealthy as “sophisticated investors”, implying that their financial success in their business life made them fair game for the machinations of their broker. The panels usually buy this defense and rarely make any meaningful awards in these cases. For this reason, my curiosity was piqued by an award (Case Number: 08-04276) in an arbitration brought by James D. Murphy, a 61-year-old Florida retiree, against Salomon Smith Barney. The panel awarded Mr. Murphy $1,042,986.22, plus interest. This is a big number for a FINRA award. According to Robert Savage, Tampa based counsel for Mr. Murphy, his client had net losses in his portfolio of almost $2.3 million, representing a significant portion of his initial investment of $4 million. Mr. Murphy had been a conservative investor, with a portfolio consisting almost exclusively of municipal bonds, which he held to maturity. His broker persuaded him to use these bonds as collateral, and buy stocks on margin with the proceeds. According to the Statement of Claim, the activity in Mr. Murphy’s account was stunning. He started with an average equity in his account of $3.6 million in 2003 and ended with an average equity of $1.3 million in 2008. During this time period, his broker turned over his account thirty times, racked up a whopping $807,301 in margin interest and (according to Mr. Savage) $500,000 in commissions. When I talk about the transfer of wealth from you to your broker, this is precisely what I have in mind. On an account with an average equity of $3.6 million, the brokerage firm gained $1.3 million (in commissions and margin interest) for “managing” this portfolio. Mr. Murphy’s average equity decreased from $3.6 million to $1.3 million during this period. Viewed in context, the award of the FINRA tribunal fits into a familiar pattern. The panel simply required the brokerage firm to return most of the gains it made from its wrongful conduct. It should have awarded what are known as “well managed account damages”, which is the difference in the account as managed and what it would have been if the account had been invested in a globally diversified portfolio of low cost stock and bond index funds, in an appropriate asset allocation for Mr. Murphy (or it could have used other appropriate benchmark investments). There are no circumstances which would justify the excessive trading and margin interest in this account. It would be unsuitable for any investor, except a day trader. I ran some numbers which are interesting. I assumed the right asset allocation for Mr. Murphy was 60% stocks and 40% bonds, which gives the broker the benefit of the doubt since it is probably too aggressive for someone Mr. Murphy’s age. I used an initial investment of $3.6 million in 2003 and computed the value of the portfolio on December 31, 2008, using a passively managed portfolio of stock and bond funds. The ending value was $5,051,660! The panel should have done a similar calculation and made an award that would have compensated Mr. Murphy for his real losses. In addition, since there is no justification for this amount of margin (or any margin) or for the excessive trading in this account, the panel should have assessed punitive damages, attorneys’ fees and all costs against Salomon Smith Barney. Instead, it denied Murphy’s request for attorneys’ fees and for punitive damages. In a final blow, the panel assessed Mr. Murphy $15,300 in hearing fees. It assessed the same amount against Salomon Smith Barney. Mr. Savage stated there was no settlement offer in this case. I am not surprised. There is no incentive to settle when you are confident you will either prevail at the hearing or, at worst, have to give up just a portion of your ill-gotten gains. Whether you are rich or poor, you need to understand the present system is set up to transfer your money from your pocket to the coffers of your brokerage firm. They have closed the loop with the cozy FINRA mandatory arbitration scheme. No matter how bad the conduct of your broker, if you recover at all, it will likely be for a small portion of your losses, which will be further reduced by attorneys’ fees. A corporate representative for the brokerage firm would not respond to questions concerning the case. His comment was limited to noting “respectful disagreement” with the award. He should have been thrilled with it. The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein. Furthermore, the information on this blog should not be construed as an offer of advisory services. Please note that the author does not recommend specific securities nor is he responsible for comments made by persons posting on this blog.

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Goldman Sachs Earnings Plunge As Trading Income Sinks

January 19, 2011

Goldman Sachs’s earnings dropped 38 percent last year as the economy finally took a toll on the most profitable securities firm in Wall Street history. The firm announced Wednesday that it underwrote fewer stock offerings and less debt and conducted fewer trades for its clients, reflecting the decreased trading activity that marked 2010. Investors fled equities last year for the safe haven of bonds as the market continued to face threats such as the sovereign debt crisis in Europe. Less trading leads to decreased revenue for firms like Goldman. But the firm more than made up for the dropoff by trading with its own money. Goldman generated $7.5 billion off its own investments and trades, up 163 percent from 2009. Of that, roughly $5.3 billion came from trading stocks and bonds. Goldman’s investments in exotic financial instruments earned $1.5 billion, up 81 percent. Overall, the firm earned $8.4 billion last year off $39.2 billion in revenue. Though both figures are down from 2009, last year still ranks among the most profitable years in Goldman’s storied history. Economic and market conditions in 2010 were “difficult,” the firm’s chairman and chief executive officer, Lloyd C. Blankfein, said in a statement. He anticipates growth and more economic activity this year. Among its challenges last year were the fallout from revelations that Goldman profited off trades where clients lost, and that it allegedly helped set up a mortgage-linked investment for a favored client that was designed to fail, yet sold it anyway to its other clients, reaping the favored client nearly $1 billion. Goldman settled that case with the Securities and Exchange Commission for $550 million. In an April hearing in the Senate, lawmakers accused the firm of deliberately trading against its clients and profiting from their losses, a debilitating charge for a firm in an industry that’s supposed to be all about putting the client first. This came after Goldman became a poster child in 2009 for Wall Street greed and excess. The firm was accused of playing a pivotal role in the global financial crisis and resulting taxpayer bailout, yet all the while paid its employees handsomely. Last year, the firm faced a dip in the funds it invests for clients. Its assets under management declined by $31 billion, or 4 percent. Clients actually took out $71 billion, but that was mitigated by a rise in the value of the holdings. As a result of the bad publicity, Goldman last week released an updated set of business principles it hopes will guide its future dealings. A survey commissioned by Goldman in which it surveyed its own clients revealed the extent of the damage to its brand. The survey, released last week, polled more than 200 of Goldman’s clients. “In some circumstances,” the resulting report declared, “the firm weighs its interests and short-term incentives too heavily.” Recently, as the firm pitched customers on buying shares in privately-held Facebook, it reportedly didn’t disclose that one of its fund managers rejected the deal for his own clients. The report recommended that the firm strengthen client relationships. “Clients raised concerns about whether the firm has remained true to its traditional values,” the report noted. Revenues from its “market-making” activities — essentially, setting up trades for clients — were also down 38 percent last year. Goldman’s revenues off trades with its own money more than doubled, though. ************************* Shahien Nasiripour is a business reporter for The Huffington Post. You can send him an e-mail ; bookmark his page ; subscribe to his RSS feed ; follow him on Twitter ; friend him on Facebook ; become a fan ; and/or get e-mail alerts when he reports the latest news. He can be reached at 646-274-2455.

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Hamish McLennan: Making the Left- & Right-Brain Work Together: It’s Good Business

December 20, 2010

Over the past few years, the business of marketing is being driven by two seemingly contradictory impulses. On the one hand, the digital world has helped carry the banner of accountability, with its data-driven intelligence-gathering proficiencies. But at the same time, marketers who need to reach customers know painfully well that engaging consumers is not only what you know, but how you express it. The need to creatively connect with our clients’ customers has never been stronger. And so we have been watching the see-saw of left-brain, right-brain thinking. Digital companies have proliferated. But so have the “idea” shops. This dichotomization has been the hallmark of much of the business world. As I look towards 2012 and beyond, it’s becoming clear that the path to long-term business growth is the seamless melding of left- and right-brain thinking. Everyone needs to sit at the same table. Indeed, using that tension of striking a right balance between the best creative and business minds from the beginning of every project is the key to success in today’s ever-changing media landscape. The Daily is Setting the Perfect Example I believe The Daily, the first newspaper designed specifically for the Ipad — and a left-brain/right-brain venture– will become the fastest-growing APP ever. An archetype for future publications? No doubt. A game-changer for the business world? Perhaps. There’s lots of evidence. It starts from the top — a truly interesting match of minds, exemplified by the partnership of News Corp’s Rupert Murdoch and Apple’s Steve Jobs. Both visionaries, but unmistakably different kinds of thinkers. Murdoch brings his great passion for newspapers. Steve Jobs brings the most buzzed-about new consumer platform, the iPad. They are attracting an incredible level of talent on a daily basis. Right from the start, however, Murdoch and Jobs have insisted on one thing. The business side is working side-by-side with the best creative and editorial minds in the business. Not on a need-to-know basis, but as an ensemble act. They know they will be better together. Striking a balance between the left-brain and right-brain is our business model at Young & Rubicam. It is how we work for and with our clients. Just today, we helped our client, the consumer electronics giant, LG, launch an innovative, interactive digital billboard in New York’s Times Square dedicated entirely to good news. LG’s data showed an overwhelming majority of Americans — 83%, in fact — feel that they are suffering from a good news deficit, with six in 10 Americans, saying they don’t even know where to look for good news. With a brand motto of “Life’s Good,” LG’s good news billboard, which you can tweet and text and be answered by an animated good news ambassador, is a complex and elaborate dance of innovative technology and imagination. And within the first hour that it went live, the billboard became the conduit of a marriage proposal. What’s Next? I can’t help but think that the left-brain and right-brain approach is the ideal cultural blueprint for innovative corporations around the world in 2011. The most interesting part, of course, is that there is no exact plan for executing this philosophy. Companies will have to find ways to merge the two ways of thinking that work best for them — and that’s the key to long-term success. Hamish McClennan is the global CEO of Young & Rubicam, the youngest person to hold the post in its history, and the first CEO from the Asia-Pacific Region. Its 186 agencies in 81 countries and whole brain philosophy have contributed to its huge creative and client successes this year. The agency was #1 in the US at Cannes and #3 in the world, there. Y&R was named the Network of the Year three times and was the most-awarded agency at major regional competitions, as well.

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Marian Salzman: Mad as Hell–and Only Getting Madder

November 29, 2010

This is the first in a series of 12 posts expounding on the 2011 forecasts in the annual trends report from Salzman, president of Euro RSCG Worldwide PR and an internationally respected trendspotter. Despite the relatively peaceable environment abroad–there’s a successful coalition, for now, in the U.K., and Australians still appear confident despite debt problems–the U.S. in 2011 is going to flash even red-hotter than the map of the country at midterm elections. Temperatures at home are pushing up the mercury, and not because of global warming or climate change. It’s a trend that extends from politics to domestic life: Expect men at home to be angry at their wives, working women to express ire over being their household’s sole wage-earner, and everybody to be furious about taxes, privacy, individual freedoms and more. Ordinary Americans will have their feedback loops set on tantrum. We maybe haven’t seen so much anger since 1976 when Peter Finch, playing anchorman Howard Beale in Network , came in from the rain to exhort his audience to express themselves. (“I want you to get up right now and go to the window. Open it, and stick your head out, and yell, ‘I’M AS MAD AS HELL, AND I’M NOT GOING TO TAKE THIS ANYMORE!’”) Headlines show banks once again making billions (and well-connected bankers aren’t doing so poorly, either), while the middle class have lost savings, homes, health care, jobs, prospects. The millennials can’t find jobs. The poor have less faith than ever about staying in school (1.2 million Americans drop out ). Washington talks about solutions, but for many Americans, government itself plays out as the problem. Listen in on Rand Paul’s acceptance speech in Kentucky, the new purple-grass state. His chorus of ” Deliberate upon this ” had the ring of a schoolyard heavy premeditating a rumble at the noon bell. During the race, even MSNBC liberal pundit Chris Matthews flashed plenty mad at Paul’s opponent , Democrat Jack Conway, whose attempt to smear Paul with an anonymous source in the “Aqua Buddha” ad toppled as hard in the heartland as the statue of Saddam Hussein once did in Baghdad. On Twitter, AT&T users get really upset at how frequently iPhones drop their calls . AT&T’s SoMe strategy– mapping angry tweeters’ locations to try to restore service and confidence–is, depending on your point of view, either another noxious example of “eavesdropping” or a positive response to a negative. The Gap felt the blowback of contagious wrath on SoMe after it tried redesigning its logo. Even though business press critics called the company ” spineless ” for backing down, the detractors asking for the old Gap back–in droves on social and digital media–won. Don’t doubt it: Consumers are mistake-intolerant for brands and causes. As for what used to be called “customer satisfaction,” Frances Allen, EVP and CMO of Denny’s, offers that “insight” and “innovation” are among the few things you can do when they’re losing it. You can also plan ahead. Before the urge to attack strikes, brands must know what “insightful” means, from extracultural preferences to all-American nostalgia, and anticipate the defensive game plan. You don’t want to wind up with fingers pointing every which way, as Samsung did when its Lebanese ad agency FP7 Doha took a creative prize for a spot the client had never seen. The trouble started when the public saw it–a robed Jesus snapping a picture of a group of nuns–and went berserk. Anger, it turns out, just isn’t that easy to unstrand even by the most evolved among us. The Dalai Lama tweets that the energy of anger feels like progress but is “almost always unreliable,” as emotions go. It’s Buddhist theology that it’s possible to have compassion without attachment and anger without hatred. But don’t try telling that to Rep. John Yarmuth, a Dem whose win of a House seat in Kentucky he called ” bittersweet ” because of the flavor of the harsh language heaped on Nancy Pelosi and President Obama all year. What is sure is that anger is the color of the zeitgeist now, and anyone who isn’t tapping it risks appearing out of touch. When MSNBC network star Keith Olbermann got suspended without pay earlier this month for making three Democratic political contributions, including against Rand Paul, one gloating headline read: “Time to Feast on a Delicious Second Helping of Schadenfreude.” After Election Day, pundits on the right weighed in about Olbermann and MSNBC’s commentators, while other sites noted that the staff of some defeated Democrats had talked to grief counselors after the election–a soft touch seemingly tailor-made for the very angry to dis. Indeed, this emotion–anger–which has been analyzed by everybody from Sigmund Freud to 12-step gurus as sublimation of fear, anxiety or grief, doesn’t feel the need today to get deeply in touch with its masks. Like Bill Clinton trying to parse what “is” is, anger is the new “it.” And being angry makes for dynamics. Seth Godin has noted that angry people grab attention because they are interesting, and interesting people will get more air time for their angry message, helping them in turn set agendas and get elected. In the new movie Skyline , futuristic warmongers descending on Los Angeles first appear as so many dropping points of light. They’re robotic cyberwarriors, metal hulks that first dazzle, then destroy. How ’bout this new phrase: light-rippin’ mad! Back in Prohibition (the era for the new HBO series “Boardwalk Empire”), shrinks thought angry people should dispel their emotion at the piano, by banging out “The Devil’s Sonata.” Not having any was boardwalk boss Enoch Thompson (Steve Buscemi), who skipped go (and did not go directly to jail) by setting his childhood house (and bad memories) literally on fire. With the casualties of voter anger feeling the chill winds of Alaska, and the Tea Party steeping those enmities as one serious kind of ” flippin’ fun ,” look for a kinder, gentler era to become itself an object of public ire. I expect, in the personal sphere, we’ll see more and bigger cases of domestic violence and the faceless menace that is cyberstalking . Meanwhile, expect the political arena to roil ever hotter. Barack Obama’s cool, calming rhetoric hit the spot for many Americans in panic-stricken 2008. In retrospect, his no-drama persona appealed just long enough to get him elected, but now it’s very two years ago. Tomorrow: “Talk to the Hands”

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ArX Mobile Announces New Board Members

November 3, 2010

Board Expanded in Response to Rapid Growth and Client Success

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American Realty Advisors Expands Its Marketing and Client Service Team

November 3, 2010

GLENDALE, CA–(Marketwire – November 3, 2010) –  American Realty Advisors is pleased to announce that Jack Horner has joined the firm as Director, Marketing and Client Service. Based in the firm’s East Coast Regional Office in New Canaan, Connecticut, Mr. Horner will be responsible for developing and maintaining new and existing institutional business relationships for the firm’s full range of real estate investment products. American welcomes Mr. Horner to expand the firm’s sales and client servicing capabilities nationwide.

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Arlene Margulis Joins NWP Services Corporation as Managing Director of Client Services

November 1, 2010

IRVINE, CA–(Marketwire – November 1, 2010) –  NWP Services Corporation (NWP), a leading provider of financial transaction processing solutions for the multifamily housing industry, today announced that Arlene Margulis has joined the company as Managing Director of Client Services, reporting to Tim Carlson, Chief Sales Officer.

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Ray Brescia: First, Let’s Deputize the Lawyers: NY Requires Lawyers to Check Bank Filings, Offers Roadmap Out of Foreclosure Logjam

October 21, 2010

The courts in New York State instituted a new rule yesterday that would require bank lawyers to ensure that their clients’ filings in foreclosure cases are accurate and honest. This requirement enlists the help of lawyers–who are not just advocates, but also officers of the court–in the effort to protect the integrity of the courts in the face of widespread fraud. The penalties that attach to a false certification are criminal: lawyers must endorse the allegations contained in their clients’ filings “under the penalties of perjury.” While using lawyers to check their client’s homework is not novel, the type of detail required of lawyers in New York pursuing foreclosure cases is. Could such an approach help chart a course out of the current foreclosure quagmire? And could this type of an approach help not only in states where judicial intervention is required to foreclose on a home but also where it is not? A series of revelations about flawed bank practices brought about the current state of the foreclosure crisis, with several major banks calling a halt to foreclosures and advocates pressing for a national foreclosure moratorium. Those revelations exposed the widespread practice of robo-signing: bank officials failing to check bank records when making applications for foreclosures, failing to sign their affidavits supporting those applications, and failing to have those affidavits properly notarized. The robo-sign scandal raised deeper and more serious questions: questions about the ability of banks to bring these foreclosure actions in the first place. What are these questions? Shoddy record keeping and flawed procedures during the height of the mortgage securitization market may have infected the chain of title of many mortgages that were sold on that market, so much so that it is not always clear whether banks have legal interests in the mortgages that are at the heart of their foreclosure actions. Without a clear interest in a mortgage, the bank should not be able to foreclose on that mortgage. If a foreclosure goes ahead despite such a question about the bank’s interest in the mortgage, a subsequent purchaser of the foreclosed property may find him or herself in court, fighting to defend title to the property. Such questions about the owners of these mortgages threaten to undermine the property title system, raise doubts about the integrity of the courts, and could expose banks to criminal liability for the ways in which they handled hundreds of thousands of foreclosure actions. Attempting to resolve these issues is like a giant game of pickup sticks: it is a challenge to address one aspect of the crisis without making other matters worse. Ignoring the defective bank filings excuses criminal conduct and threatens the legitimacy of courts as guardians of due process. Assessing bank filings on a case-by-case basis would require significant resources that overworked court personnel are unable to do on short order, likely delaying matters for a significant amount of time. Is there some way to ensure the legitimacy of bank filings without placing a strain on already overburdened courts and without leaving the assessment of those filings to bank personnel who have a clear stake in the outcome that might cloud their judgment? New York’s new foreclosure filing requirements attempt to work a fine balance between efficiency and legitimacy, by placing the burden on bank lawyers to check their client’s homework and ensure that banks have a strong basis for bringing their foreclosure claims. These requirements include a statement by the lawyer that he or she has spoken with a bank official personally and that bank official has assured the lawyer that he or she has personally reviewed bank records, confirmed the legitimacy of the bank’s claims and can attest to the propriety of the notary public’s endorsement of the filing. The lawyer must also conduct a “diligent inquiry” into the legitimacy of the bank’s claims on his or her own, and cannot just sit by and rubber-stamp bank allegations. These requirements hold lawyer’s personally accountable for failing to monitor bank practices closely; indeed, these certifications must be made under the penalties of perjury, and shoddy lawyer oversight will most certainly result in a referral for disciplinary proceedings separate and apart from any criminal prosecution that might arise as a result of poor oversight. Are these obligations on lawyers new, different or more detailed? In most civil litigation, in both state and federal courts, lawyers are under a duty to present only good faith claims, and cannot offer falsified evidence in the cases they bring. The new requirements, imposed by court rule in New York State, raise the ante for lawyers handling foreclosure cases by imposing highly detailed obligations and requiring a hands-on diligent inquiry (which, I would argue, means an “independent” inquiry) into the legitimacy of their clients’ claims. In this way, they require lawyers to perform a critical gate keeping function for the courts and weed out illegitimate from legitimate claims. Lawyers should always do this, but New York’s new rule places new and more detailed requirements on lawyers unlike any others, and adds criminal penalties for violation of the rule. Will such requirements help? Possibly. Lawyers play the dual role of advocates and officers of the court. Too often, lawyers favor the first of these roles, and neglect the second. This new requirement places the onus squarely on bank lawyers to monitor their clients’ conduct, and holds them accountable when such conduct is improper. With a lawyer’s license and livelihood on the line, it is possible that New York may have found a straightforward, simple and efficient way to cut through the myriad problems the robo-sign scandal revealed and ensure the legitimacy of foreclosure filings and the integrity of the courts. Could this approach be used in other jurisdictions? Unquestionably. This could prove an effective tool in the 22 states, like New York, that require judicial intervention in foreclosures. But it could also prove adaptable in non-judicial foreclosure states. State law could require this type of certification before any foreclosure auction takes place, and could require that any attempt to file title documents with the county clerk’s office be accompanied by an attorney’s certification, signed under the penalties of perjury, that the attorney for the bank has reviewed the records and found them legitimate and the sale proper. It is not a perfect solution, and it is one that certainly still poses the risk that a lawyer’s desire for personal gain will trump his or her professional honor. Let’s bank on honor, for now, and see whether the lawyers will not disappoint.

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Fred Whelan and Gladys Stone: How to Get Out of Consulting and Into a Steady Paycheck

October 20, 2010

Many people who were laid off and couldn’t find another position turned to consulting. For some of these people, what they thought would be an interim situation has turned into years of consulting as a sole proprietor. Because of this, it’s been harder for them to get a full-time job. The perception by many employers is that if someone has been self-employed for many years, they’ve lost touch with the demands of what happens day-to-day inside a company. For example, when you are working alone, you typically don’t have to respond to crisis situations, have fast-turnaround deadlines and often do more strategy than executing. In addition, you may not have managed people in a while and the landscape has changed. We spoke with a consultant who hadn’t managed a team since 2000 and was trying to sell himself for a management position. We told him we needed recent management experience and he said, “But managing is in my DNA.” While this may be the case, employers are always looking to reduce risk and it’s safer to find someone who has recent management experience. So what do you do if you’ve been a consultant for a few years and want to get back into a fulltime position? Try Consulting Firms — There are many employment firms that specialize in placing consultants in companies for interim projects. Many of these are project management positions which can help update your management skills. There are large consulting firms like Resources Global and M Squared which service every functional area and smaller ones like Sage Consulting Associates which focuses primarily on marketing. What these firms have in common is they offer consultants an opportunity to have long engagements (e.g., 12 months) in blue chip companies. Longer term assignments provide you with a steady income and an opportunity to “try before you buy”, as many of these turn into fulltime jobs. Also, consulting firms generally have Fortune 1000 companies as their clients. These companies have state of the art technology, cutting edge business processes and best practices which will augment your skills and experience. In this competitive marketplace, this option might be one of the easiest ways to get back into a full-time position. Work On-site — If you don’t want to go the consulting firm route, the best way you can leverage your consulting business is by working at the client’s site whenever possible. Many consultants make the mistake of working almost exclusively from their own office and miss a terrific opportunity to more fully engage with a client by working from that client’s offices. When you establish an office at the client’s location, you’ll be more of a “go to person” by virtue of the fact that you are physically there and that client could hire you for additional projects for his/her area. You’ll also meet more people and automatically engage in “off-line” discussions and will appear to be part of the team already. Working at the client’s office also enables you to see what the culture of that company is like and, likewise for the client to see first hand how you interact with their employees. All these things grease the skids for a potential transition from consultant to full-time employee. Attend Meetings – If working on-site is not a possibility, ask to be included in meetings which involve your assignment. No matter how small your piece of the pie is, attending meetings is a great way to showcase your talents beyond that project and get better perspective on what the company’s other needs are. The more people you interact with at the senior management level, the better your chances of migrating to a full-time employee. Many people see themselves as a consultant for life, but if you’re a consultant with designs on returning to full-time employment, apply the same strategic thinking to your re-entry as you do to each of your consulting assignments. We’ve seen firsthand how consultants have applied the guidelines above to land a great full-time job in the company of their choice. Fred & Gladys Whelan Stone Executive Search and Coaching Authors of GOAL! Your 30 Day Career Plan for Business & Career Success

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The 14th Banker: How Do We Judge the Homeowner?

October 18, 2010

In the rush to foreclosure, the banks and even government officials have been taking the position that the borrower/homeowners are fully to blame for the situations they find themselves in and that the paperwork technicalities just need to be worked out in order for there to be a just outcome, which is to say, a foreclosure. Industry executives note that few, if any, borrowers in the foreclosure process dispute the fact that they’re not paying their mortgages. “We’re not evicting people who deserve to stay in their house,” James Dimon, J.P. Morgan chief executive, told analysts Wednesday. Okay. This seems simple enough. The contract between the bank and the borrower says that the borrower will make their payments and that if they don’t, the bank can foreclose. Assuming the bank did everything right, it can. We live under the free market paradigm and that is simple free market — and contract law — cause and effect. But, what if the borrower was defrauded in either a legal sense or a moral sense at the inception of the contract? That may not make the contract unenforceable, but does it make the enforcement inequitable? Does it erode this moral high ground that lenders are claiming? Perhaps we need to be more discriminating here.  Some time ago I posted on asymmetrical information in regard to one type of transaction. But suppose that there was asymmetrical information at the time the mortgage was originated? According to Dealbroker, Jamie decided on October 2006 to get J.P. Morgan out of Subprime. According to the article, the JPM team decided that quality control had slipped at the originator level. What might this mean? I suspect “quality control” is a euphemism for rampant fraud. So lets just say that October, 2006 is “Day Zero.” It used to be said that a business person needed a good banker, a good accountant, and a good lawyer. (Now it might be said that a banker needs a good lawyer.) Implied in this is that there is a professional relationship and that the customer depends on the advice of these professionals. Bankers have until recently seen themselves as professionals. In the less heady days of local banking, the President and senior officers of the bank made the loan decisions. One of them generally had a relationship with the borrower. They knew the borrower and had their interest in mind along with the interest of the bank. There was a certain implied fairness at work. The judgment of the banker often accrued to the benefit of the borrower. If the banker thought something was a bad deal, they said so. If they thought the borrower was making a bad investment either in general or in relation to their specific circumstances (knowledge, skills, income, liquidity, time horizons…) they would tell them that. The mechanistic finance models took that away. So is there any difference in the way we should look at someone who purchased a house on Day Zero minus One versus Day Zero Plus One?  Perhaps before Day Zero, the general conditions in the market were that everyone was wrong. Everyone thought prices would continue to rise. Everyone thought the rising prices would mitigate the imprudent loan processes and structures, the no-doc loans, the 97% loans or 120% home equity loans. At Day Zero plus One, that changed. The caution light should have come on and the relationship of the professional banker to the client should have included caveats about the investments that were being made. This is idealistic, I admit. But, someone should investigate when JP Morgan and every other bank changed their policies in regard to loan to value, income verification, product recommendations to customers, instructions to bankers, incentives to bankers, etc. If banks knew in the executive suite or the research department that the fundamentals were turning ugly, and still kept making loans and shoving them into government guarantee programs or selling them to investors, then there is no moral high ground. The information asymmetry was used to make more money. In a moral sensibility, the contract should be looked at what it was, a gamble by both parties. If at this point in time the stupidity of the lender has allowed the contract to become unenforceable, then that is the lender’s problem. Too bad, so sad. Now, none of this absolves the borrower of responsibility for their decision. It just puts the borrower and the lender on a level moral ground and perhaps they find themselves on level legal grounds. If that is the case, the lenders should get off their high horse and negotiate modifications that share the losses between two equally culpable parties.

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Chad Dobson: Economist Jeffrey Sachs makes the case for contract transparency at Annual Meetings of World Bank/IMF

October 14, 2010

Co-authored by Rebecca Harris On Wednesday, October 6, the opening of the Civil Society Policy Forum of the World Bank/IMF Annual Meetings, economist and Columbia University professor Jeffrey Sachs spoke on a panel, “New Issues and Opportunities in Resource-based Development.” Sachs, director of Columbia’s Earth Institute, addressed resource-based investments in low-income countries within the context of rising global prices of minerals, food grains and hydrocarbons. He discussed the ongoing challenge of converting natural resources into sustainable development in low-income countries. Sachs was joined by Karin Lissakers, director of the Revenue Watch Institute, who released their “Revenue Watch Index” during this year’s Annual Meetings. The 2010 Revenue Watch Index is an assessment of government-published data, such as contract terms and revenues related to oil, gas and mineral resources, a tool that was developed to be employed by government officials, civil society and media in order to demand accountability and improved public disclosure. Professor Sachs initiated the discussion with an explanation of a paper he had written years ago on the paradox of the resource curse, examining how economic growth differed between resource-rich and resource-poor countries, and noted that he observed that between 1960 and 1980, it was the resource-poor countries that outperformed the resource-rich in economic development. He asked how, then, resource-rich countries must harness the benefits of such wealth, especially in light of the high natural resource prices on the global market. Sachs responded that transparency is the answer. He stated that he “wholly subscribed” to the notion that “transparency, public scrutiny and to the maximum extent possible, proper democratic governance over these resources” were essential in avoiding the resource curse and ensuring positive development outcomes. The conversation then shifted to the key macroeconomic aspects of natural resource management, which included contracting. He outlined the difficulties that natural resource-dependent governments face in negotiating a fair deal with the international actors who bring the necessary capital and technology to extract resource deposits. Also emphasized was the wide range of difficult choices resource-rich governments incur, ranging from types of contracts to concessions, bidding processes and investment guarantees and asserted that it was because of the confidentiality of such contracts that governments could not compare terms with other similarly resource-rich countries. “I think this is something that really needs to be busted open completely, in my view, because the companies’ interests in the confidentiality, I think, are rarely suitable grounds for maintaining the confidentiality, vis-à-vis the public and the high social costs of having many of the contracts remain confidential has been extraordinary,” insisted Sachs. The development-based argument for contract transparency was further illustrated by the real-life example of the World Bank-financed Chad-Cameroon pipeline . He noted that despite the fact that the project was bankrolled by international public funds, the World Bank refused to reveal the contract, insisting that it was confidential. Sachs exclaimed that he was shocked by this, due to the large quantity of public money involved and explained that “it turned out to be a very bad deal on all sides.” He continued that it was “completely useless from Chad’s development perspective, but part of the problem was that it was secret and it remains secret even after the process went forward.” Sachs underscored the importance of planning and how a given project is implemented in terms of infrastructure development, whether or not it will be “an enclave project that has no spillovers” or “a nucleus of a successful regional development.” He once again cited the Chad-Cameroon pipeline project as an example of failure. He explained that “in the Chad pipeline, the only electricity generated for the project was the electricity used to pump the oil, so Chad was left with fuel wood and no electricity.” He continued, “There was one power plant built in the project and it was built for the pumping station and there was no consideration given to actually using any of the energy resources for the country’s own electrification.” Such strong statements in favor of transparency for extractive industry projects are timely, in that the International Finance Corporation (IFC), the private sector arm of the World Bank, is in the process of reviewing and revising their Sustainability Policy, Performance Standards and Disclosure Policy. Currently, the IFC lacks a meaningful requirement of extractive industry contract disclosure between IFC clients and the host governments. As it stands, IFC clients have to disclose “relative terms” of “key agreements” only when the project generates 10% or more of government revenues. To date, not a single project from all the extractive industry projects approved by the institution since 2006 has met this criterion. Furthermore, civil society contends that this benchmark is arbitrary, in that the fiscal and developmental impacts of extractives projects “occur irrespective of the size of a country’s total revenues.” Many civil society organizations, including the Bank Information Center, are advocating that all IFC-supported extractive industry projects must disclose all contracts, principal and derivative, related to the EI operation to which the government is a party. In addition, we are asking that for any information that is removed from an EI contract, the client or government must provide a clear reason for confidentiality and the merits for confidentially must outweigh the importance to the public. Because the influence that it wields is disproportionate to the amount that it invests, IFC represents an important target for civil society advocacy to not only strengthen social and environmental requirements in IFC’s own projects, but also potentially to a host of private banks and across the industries in which it invests. As Professor Sachs noted in his closing remarks, “To get things right…would be hugely complicated and require many players, many sectors and many political and institutional processes. All of that, in my view, means transparency is essential so that there can be the active public debate and dialogue, confidence building that is need to get right a process that will take a generation or even more.”

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Donna Flagg: Managing Behavior With One Strike, You’re Out

October 5, 2010

Corporate America has a bad habit. It tolerates, perpetuates and systemically ignores bad behavior by keeping problem employees around far longer than they should. Organizations are then left with disease within the ranks, festering there to infect the business and derail results. I came to this realization while in the midst of writing the performance management section of an employee handbook for a client when our attorney pointed out how illogical a process it was. Until then, the client had employed a fairly standard model commonly used to manage problem employees “out” that is often referred to as “30, 60, 90.” It went something like this: Step 1: Communicate conditions of poor performance with the employee • Counsel, document and advise the employee of the next 30 day follow-up. Step 2: Conduct first 30 day follow-up • At 30 days, if performance has not improved, place employee on written warning and advise him/her that there will be another 30 day follow up. Step 3: Conduct 60 day follow up • At 60 days, if performance has not improved place the employee on final warning and advise him/her that there will be another 30 day follow up. Step 4: Conduct 90 day follow up • If performance has not improved, terminate employment, effective immediately. The point is that if an individual’s performance is going to improve, it shouldn’t take a full quarter to find out. It’s a waste of resources, misuse of time and certain to cause a loss in productivity. Alternatively, the system can be structured differently to give companies the information they need about an employee’s ability to turn it around sooner, rather than later. It could go something like this. Step 1: Be explicitly clear about what the organizational expectations are. Step 2: Be even clearer that the company has no intention of tolerating behaviors, conduct or breaches should they surface at any time down the road. Step 3: Then, if an employee does violate company policy, inform him or her of the problem ONCE, and explain why it is in fact a problem. This is the warning and his/her chance to fix it. Make sure the employee knows that if it happens again, his or her employment with the company is over. Step 4: And you wait. Hopefully they “get it” and don’t want to lose their jobs, and the company never has to revisit the issue again, or watch them languish further through a laborious and inefficient process. The “problem” is eliminated and the company is clean of the people who bog the business down. It’s quite straightforward actually. If we treat employees like children, we increase our chances that running a business will feel more like running a daycare center. One thing to keep in mind however, is that if there is a legitimate performance issue that requires an employee to learn and master skills that he or she does not currently possess, this is not a behavioral problem. In this case, if there is a chance that development, or lack thereof, is the underlying cause, then it’s better to coach and train then to threaten with disciplinary action. This gives both the organization and employee an opportunity to decide together whether the objectives of the job can be met. If it turns out not to be the right place for the employee, both parties can mutually agree to make a change.

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Roxanne Taylor: Putting People Back to Work Means Teaching Skills to Succeed

October 5, 2010

Amid encouraging signs that the global economy has once again begun to grow, the International Labour Organization last week issued some sobering news. The UN work agency said global employment will not recover to pre-crisis levels until 2015 if current policies are pursued. The agency said 22 million jobs still need to be created to return to pre-financial crisis job levels. Putting millions of people back to work is the special expertise of the private sector; governments cannot possibly do it alone. But it is no longer enough for businesses to simply create jobs, we now must create a skilled and flexible workforce, as well. Last month, my company, Accenture, announced plans to train at least 250,000 people around the world by 2015 on the skills needed to get a job or start a business. In our efforts, we’re not alone. Companies like Marks & Spencer in the U.K. have set a goal of offering 500,000 employees in their clothing supply chain with education and training in healthcare, worker’s rights and, where possible, literacy and math. (Marks & Spencer calls their sustainability program Plan A because “There’s no Plan B.”) Goldman Sachs’ 10,000 Women initiative will provide “underserved” women around the world with business and management education. Our own Skills to Succeed initiative teams us with some of the world’s most knowledgeable NGOs, like Oxfam, Junior Achievement and Women’s World Banking, to ready people for the job market. In Africa, for example, we’ve partnered with the Canadian-headquartered Enablis which just accredited its 100,000th business person in a highly successful, continent-wide entrepreneur’s network. And in Brazil, where official unemployment stands at more than 8%, with youth unemployment in urban areas much higher, we’ve partnered with two local agencies, Rede Cidada and the Committee for the Democratization of Information, to create Conexao, now part of YBI. Some 13,500 young people have been trained in everything from rudimentary computer to job-ready technology skills. About 3,500 have already found jobs. At the moment, Accenture employees are engaged in more than 80 other initiatives in our local markets around the world. Skills to Succeed is not a weekend project peripheral to our business. All activities are done on Accenture time. It’s real dollars and the pro-bono time and skills of our talented people, not just their good will on Saturdays. While the initiative reflects the individual core values, culture and character of Accenture, the program says something greater about the nature of any private sector program that strives for sustainability and success. It is the outgrowth of what we do for a living. Developing skills to help people get jobs, build businesses and improve their communities is one of the top three issues our clients tell us they care about. So the program aligns both with our client concerns and our core skills. We’ve tried to be extremely disciplined in our focus on teaching employment-readiness and business- and market-building, including the use of technology in business development. We’ve made sure to set goals that are realistic but at the same time stretch us. We’ve focused on building partnerships and programs that are sustainable. We’ve set some very clear and specific performance outcomes that we can measure. Over the next three years, we’ll be spending something on the order of $100 million, part cash and part pro-bono work by our employees. That’s substantial for a company like ours. But if our efforts can help reduce the time the ILO says it will take to put people back to work, if it will speed the global economic recovery in some small way, then it will benefit not just the newly employed worker or Accenture. Skills to Succeed will benefit us all.

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Casino Owners, State Senators, Lobbyists Charged In Alabama Bribery Case

October 5, 2010

MONTGOMERY, Ala. — After the governor began raiding the state’s electronic bingo halls, casino owners sent lobbyists to the Capitol with orders to make their Vegas-style parlors legal. Part of the plan, federal authorities said Monday, was to offer lawmakers millions of dollars in bribes. The Justice Department unveiled an indictment accusing the owners of two of Alabama’s largest casinos, four state senators and several lobbyists of a scheme to buy and sell votes in the Legislature. One defendant has pleaded guilty to offering a senator $2 million to vote for a bill to keep the bingo machines operating. Since Republican Gov. Bob Riley began his raids nearly two years ago, the issue has set off angry statehouse rallies and complaints by local officials that casino closures cost poor counties much-needed jobs. Against this backdrop and with the pro-gambling bill on the verge of passage, the Justice Department announced last spring that it was looking into corruption at the statehouse. On Monday, federal agents spread out across the state to arrest 11 people on federal charges of conspiracy, bribery and honest services fraud. The head of the Justice Department’s criminal division, Lanny Breuer, said the corrupt scheming was “astonishing in scope … a full-scale campaign to bribe legislators and others.” Electronic bingo games, which have flashing lights and sound effects similar to slot machines, were a rapidly growing business in Alabama until Riley formed his task force to shut them down. The task force raided bingo halls, seized machines and won court battles that resulted in the closure of all privately operated electronic bingo casinos. Three operated by the Poarch Creek Indians, who aren’t under state control, have thrived amid the shutdowns. State legislators tried to pass bills in 2009 and 2010 to allow the games to operate, but both bills failed. Behind the scenes, federal prosecutors said, operators of the two largest private casinos and teams of lobbyist were offering millions in campaign contributions, benefit concerts by country music artists, free polling and hidden $1 million-a-year payments in return for votes. Ronnie Gilley, developer of the Country Crossing casino in Dothan, and Milton McGregor, owner of VictoryLand casino in Shorter and a financial backer of Country Crossing, were indicted along with three of their lobbyists and state Sens. Harri Anne Smith of Slocomb, James Preuitt of Talladega, Larry Means of Attalla, and Quinton Ross Jr. of Montgomery. All four senators voted for an unsuccessful bill to legalize the machines. McGregor’s lawyer, Joe Espy, said his client is innocent and looks forward to proving it. Smith called the indictments “a nakedly political move, coordinated by prosecutors in cahoots with the governor’s office” to influence November elections. All except Preuitt are seeking re-election. The 11 defendants made their first court appearance Monday afternoon, and all were released on bond. After the hearing, Gilley’s attorney, Doug Jones, said the indictments are tied to politics and the November gubernatorial election, in which the biggest issue is Democratic nominee Ron Sparks’ plan to legalize and tax electronic bingo. Federal authorities said Monday that a 12th defendant – an employee of one of the indicted lobbyists – pleaded guilty Sept. 28 to conspiracy. Jennifer Pouncy of Montgomery admitted that at Massey’s direction, she offered Preuitt $2 million for his vote and that Massey authorized her to offer $100,000 to Means for his vote. Electronic bingo developed slowly in Alabama, with about 30 casinos operating around the state two years ago, often out of storefronts or modest cinderblock buildings. But the landscape changed dramatically in 2009. McGregor expanded his dog track 15 miles east of Montgomery to include 6,000 machines and added a luxury hotel and upscale restaurant. Last year, Gilley and several country music artists – including George Jones and Darryl Worley – opened Country Crossing in Dothan, with a casino, concert amphitheater, restaurants and inn. It became a regular stop for tourists headed to the Florida Panhandle beaches until it was forced to close in January. Operators argued that their machines were nothing more than a high-tech version of traditional paper bingo, which is legal in some Alabama counties. Riley maintained the machines were essentially slot machines, which are illegal in Alabama. The last non-Indian casino, VictoryLand, closed its games in August. The federal investigation into allegations of vote buying began in 2009. It came to light last spring, before the final votes on the bingo bill, which died when sponsors could not line up enough for passage. Backers of the bill accused Riley of derailing the measure with the announcement of the probe. State and federal authorities, though, countered that the Justice Department was running the investigation. The governor’s spokesman, Jeff Emerson, said that last spring, Riley had labeled the gambling bill “the most corrupt piece of legislation ever considered by the Senate.” “Today’s action by the Justice Department shows he was, sadly, right,” Emerson said. If convicted, the defendants face up to five years in prison for conspiracy, 10 years for bribery, and 20 years for honest services fraud. ___ Associated Press writers Pete Yost in Washington and Bob Johnson in Montgomery contributed to this report.

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Foreclosure Paperwork Scandal ‘Same Process’ That Fed The Housing Bubble

October 4, 2010

The paperwork scandal that has prompted several banks to halt evictions and review their foreclosure procedures is reminiscent of the predatory lending scheme that inflated the housing bubble. “It’s the same process, falsifying documents to make them look acceptable to someone,” said Tom Domonoske, a lawyer and consumer advocate in Virginia. “They’re falsifying foreclosure documents so judges will look at them and say, ‘Here’s an affidavit. It’s signed.’” Domonoske represents Virginia and Donald Naill, who unwittingly found themselves in an exploding mortgage after refinancing in 2006. “I figured they had my taxes, my Social Security number, that they knew everything,” Naill told HuffPost last year. She and her husband live on Ordinary Road in Mineral, Va. The broker who put the Naills in their “stated income” adjustable loan, on which the interest rate and monthly payment jumped dramatically after two years, admitted in a sworn deposition last fall that the loan application was bogus. “It was a stated deal on this particular one, so — and again, the Naills knew that we was doing a stated deal,” the broker said. “So, and of course, we always — I always, anyway, told my client that, ‘If you’re getting a stated deal, you know we’re stating your income. So you all need to make sure that you’re going to be able to abide by making your monthly payment.’” Several of the nation’s largest banks have announced in the last two weeks that they are halting evictions and investigating their foreclosure procedures after employees at “foreclosure mill” law firms admitted in sworn depositions that they never verified information in potentially hundreds of thousands of foreclosure documents. The bogus loans and bad foreclosure paperwork are both the result of Wall Street’s massive appetite for mortgages during the housing bubble, experts say, as banks repackaged mortgages as asset-backed securities and sold them to investors. As mortgages repeatedly changed hands, servicers in many instances lost track of who owned them. In states where foreclosures need a court’s approval, servicers now find themselves unable to prove they have a legal right to foreclose. “The birth of the securitization concept has created both problems,” said Jim Kowalski, a foreclosure defense attorney in Florida. “It created a beast that needed to be fed at the front end with sloppy originated loans and a huge beast at the back end with those loans going through the foreclosure process.” Rep. Alan Grayson (D-Fla.) also pointed to securitization in a video explaining the foreclosure paperwork scandal. “Securitizing mortgages was originally a way to take the cost of a mortgage off of a banks’ books. From 2005 onward, the securitization chain went out of control and Wall Street wanted as many mortgages as it could get as quickly as possible and as cheaply as possible. In order to allow it to pull out more fees at every link in the chain, these subprime lenders, trusts and banks decided to cut as many costs as possible including the cost of record keeping,” Grayson said. “Obviously the banks do not want to grapple with the consequences of trillions of dollars of securitized mortgages having no legal standing to foreclose, so they have simply created a system where they use foreclosure mill law firms whose business is to forge documents showing or purporting to show they have the legal right to foreclose.” As for the Naills, Domonoske said that their foreclosure, which he is fighting as a contract attorney for the Virginia Legal Aid Justice Center, is not an example of the foreclosure paperwork scandal. But the fact that their servicer, GMAC, suspended foreclosures in 23 states, may help the Naills’ case. “Unless and until GMAC Mortgage fixes the problems in its foreclosure process,” wrote Domonoske in a Sep. 28 filing, “this Court should allow the legal issues before it to be decided before allowing GMAC Mortgage to engage in this foreclosure.”

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Dan Solin: Higher Returns. Lower Risk.

September 29, 2010

Defining the holy grail of investing is easy. Achieving it is hard. I define it as additional returns without greater risk. Most investors don’t appreciate that increased returns typically involve more risk. You can get a higher return on lower rated bonds, but the risk of default is higher. There’s no free lunch. Or is there? Here’s an example of an exception to the rule. A small community bank offers a higher interest rate on its Certificate of Deposit than a large national bank. Both banks are FDIC insured and the amount of your deposit is within FDIC coverage guidelines. By purchasing the higher interest rate CD, you have obtained more return, but have incurred no additional risk. Here’s another anomaly I recently discovered. I was asked by a wealthy prospective client to put together a laddered portfolio of low cost, bond index funds. The client was adamant that he wanted no exposure to the stock market, because he is concerned about the risk. A laddered portfolio staggers the maturity date of the bonds. When the bonds mature, the investor can reinvest the proceeds, taking into consideration the interest rate climate at the time. I had suggested to the client that he read The Big Short , by Michael Lewis. It’s my belief that anyone who reads that book would never do business with any broker, and would be especially terrified of purchasing individual bonds. I also referred him to excellent study from Vanguard which explained why bond investors should use bond funds and not individual bonds. Among the advantages of bond funds noted were diversification, cash-flow treatment, liquidity and costs. To those benefits I would add honesty and transparency, both of which are in short supply at your brokerage firm. He was persuaded by this data, but here’s what neither of us expected. We built a ten year ladder of very high quality, low cost, passively managed, bond funds and ran the returns for the period from January, 1973 to August, 2010. We wanted to measure the returns over a significant period of time so they would be representative. This laddered bond portfolio had an annualized return of 6.71%, with a risk (as measured by standard deviation) of 4.27%. Standard deviation measures volatility of a portfolio (or stock or bond). It shows how much variation there is from the “average” over a given period of time. A low standard deviation means the portfolio measure is unlikely to deviate significantly from its average, based on historical data. While standard deviation is not predictive, it is a useful historical measurement of risk. This data told us the ten year laddered bond portfolio we constructed had a very decent annualized return, with low risk. We wanted to find out what would happen if we added a globally diversified portfolio of low cost, passively managed, stock funds to the mix. The stock portion would make up only 15% of the portfolio. We reduced the bond ladder to five years. Here’s what we found: The annualized returns increased to 7.16% and the risk decreased to 3.72%! For those who believe I have cherry picked the numbers, or used an unrealistically long time period, I ran the returns for this portfolio for the past ten years, which is often incorrectly referred to as “the lost decade.” The portfolio had an annualized return of 4.14%, with an annualized standard deviation of 2.74%. An investment of $50,000 grew to $75,250.68. Nothing was “lost.” How can that be? We added a riskier asset class which we expect would increase returns, but it should also have increased risk. It didn’t. The explanation can be found in Modern Portfolio Theory , the Nobel Prize winning work of Harry Markowitz, which explained how to construct optimal portfolios for a given amount of risk. It’s possible to achieve decent returns with relatively low risk. A portfolio of 100% bonds may not be less risky than a portfolio with a small exposure to the global stock markets. Don’t expect to get this advice from your broker. The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein. Furthermore, the information on this blog should not be construed as an offer of advisory services. Please note that the author does not recommend specific securities nor is he responsible for comments made by persons posting on this blog. Here is the trailer for my new book, Timeless Investment Advice .

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Pam Lassiter: Stop Looking for Jobs! Shortcut Your Job Search by Getting off of the Job Boards

September 21, 2010

Spending time in front of the computer searching for the ideal job, either in your current company or a new one, is a bad, low yield way to plan your next career move, especially during daylight hours. I just finished interviewing multiple thought leaders around the country for the revision of The New Job Security and we’re all on the same page — except executive recruiters, more shortly — about the importance of trends and problems in finding the work you love. Are the two ways you look for work working? Typically, when you’re looking for the next job, you’ll do two things: search for job postings on the internet and ask all of your friends if they’ve heard about any “opportunities,” the code word for jobs. Sound familiar? Let’s flip that around so you’re not in a reactive position, chasing whatever is out there and hoping people remember you. Job postings are only 3% of the offers. Job postings you find on the internet typically have a 3% yield for offers compared to other ways to land jobs. Granted, this research is on mid-career professionals, but 3% is still too low to warrant much of your time. When the economy is slow — like now — that number could even go down because fewer jobs are posted and everyone is chasing the same openings. If a company is looking for ten qualifications in their newly posted job, they can get ten. You’re one of hundreds of resumes that is crossing the transom and not getting the respect that you deserve. Don’t go to your best prospects first. Asking friends about openings sounds like a logical alternative, but it depends on who and how. Running to your best connections shortly after a layoff when you’re in the shocked-and-muddled phase can burn some bridges that you may want later on. The “who” is best begun with your closest allies who can listen and advise but who you don’t want as your future boss. Your messaging about direction and building company profitability will be stronger shortly. Change your questions. The “how” is even more important. If you stop asking people about “opportunities” — i.e. already defined job openings that they’re probably not going to know about anyway — and get some questions focused on problems to be solved and responses to trends, you’ll get different answers and ways to open up multiple jobs — a.k.a. “work to be done” — rather than pursuing just one opening with a lot of competition. “Have you decided how to best change your practices to comply with the new financial reform bill?” This is an example of leading the discussion towards an area you already know something about. “I’ve been doing some work with mobile marketing, which is bringing in a whole new set of customers. Want to hear some ideas?” Heading towards regulatory requirements — a trend — and increasing profitability — an evergreen problem-to-be-solved — in well-framed business questions gets people interested in your ideas… and then you. Keeping your conversations focused on their business needs often ends up in consulting work or job creation, with no competition. These same strategies count inside of your current company as well as between companies. I’ve worked with people who’ve written their own job descriptions and compensation packages when coming into large companies — i.e. the ones with the most structure. Isn’t that a lot more fun than sitting in front of a computer screen punching “reply”? Oh, about those executive recruiters… their job is to think in terms of already approved, funded, job openings, and they are typically looking for someone who is doing the same thing that their client wants, only for the competition. It’s not a recruiter’s job to look for problems to be solved inside of companies, or to create meaningful work that addresses these problems. However, it is your job, and you’ll find a lot more jobs when you stop — or put off until the dark of night — looking for job openings. Pam Lassiter is Principal of Lassiter Consulting, a career management firm that provides transition services for companies and professionals worldwide. Her book can, “The New Job Security,” can be ordered here .

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Fred Whelan and Gladys Stone: Rejected Outright for the Job Because of Their Online Image

August 31, 2010

Business strategist and Webby Award winner David Allen Ibsen (runs business consultancy 5 Meetings Before Lunch ) was helping one of his start-up clients with their organizational needs. Specifically, they were looking to make a couple of key hires. Ibsen tapped into his business/social network on LinkedIn to search and identify potential candidates. “LinkedIn is great because you have the person’s resume right in front of you.” He then gave the short list of candidates to his client who “Googled” each person’s name to do a background check. The client put the names into two buckets: “People with a positive web presence” and “Not”. The positives were called in for interviews, the rest were rejected outright. While these people had professional LinkedIn profiles, they were dinged because of what they had on other social networking sites. A professional profile is great but it doesn’t mean you’ll get a pass on them checking Facebook, Twitter or blogs you may have written. According to Ibsen, these people should consider taking a look at their personal brand. “Just like my corporate clients who covet their brand reputation, individuals need to look at what type of story is being told about them online and make sure it matches who they are and how they want to be perceived.” So, where should you start if you have a less than favorable web presence? Facebook – Look at your profile photo. Is this how you would want to be judged by a potential employer? We know it’s supposed to be just for friends, but the reality is that your photo along with your profile’s “likes” and “dislikes” are open to public review. Give your likes and dislikes the same scrutiny. If you happened to be “tagged” in a photo, that picture could also make its way to a hiring manager or recruiter. Let your friends know that you would rather not be tagged. Twitter – Whatever you tweet can get retweeted, on and on. It’s like the old Faberge shampoo commercials , “I told two friends, who told two friends” and before you know it, it’s out there in a big way. Tweets do fall off Google searches rather quickly, which is the good news. If you need to do some damage control on something you’ve tweeted, then tweet a number of positive things. LinkedIn – A way to rebrand yourself here would be to raise your profile by answering questions in your area of expertise. Also, review your profile for keywords and positioning. That can make a difference in how people find you and perceive you. We coached a woman who was a professor, author and speaker. Her profile emphasized her academic background, when she really wanted to focus on her writing and speaking engagements. This was an easy fix and got her more attention in the areas she wanted. David Allen Ibsen: “The Internet and the rise of social media have changed the rules in terms of how prospective employers do background checks. Even though the rules have changed, one thing still holds true – building a good reputation is invaluable.” People make the mistake of viewing LinkedIn as their professional image and consider Facebook and Twitter as their personal ones. While you might make this distinction, hiring managers don’t. Ibsen: “Never post anything on the Internet you wouldn’t want your mother – or boss – to see.” Fred & Gladys Whelan Stone Executive Search and Coaching Authors of GOAL! Your 30 Day Career Plan for Business & Career Success

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Echo360 Expands Client Services Group to Support Higher Education’s Enterprise Lecture Capture Deployments

August 24, 2010

Robert Stoneking Tapped as Vice President of Client Services and Operations

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Echo360 Expands Client Services Group to Support Higher Education’s Enterprise Lecture Capture Deployments

August 24, 2010

Robert Stoneking Tapped as Vice President of Client Services and Operations

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Richard Gaudreau: Are Loan Modifications Causing Foreclosures?

August 20, 2010

When the economy crumbled in 2008 as real estate values plummeted, Congress was under pressure to appease the public’s demand for action to stem the tide of foreclosures. Congress considered repealing the prohibition in the law against bankruptcy judges modifying the terms of predatory mortgages, but rejected that option, inexplicably taking its marching orders from bank lobbyists, the very industry that caused the economic collapse in the first place. Instead, in February, 2009, Congress passed HAMP, a loan modification program touted as the answer for American homeowners facing foreclosure. While HAMP permits the banks to pay “lip service” to their commitment to helping the American homeowner save their homes, the banks are well aware that most loan modifications requests fail. The banks are also aware that the price of failure is often a foreclosure precipitated at least in part by the HAMP requirement that homeowners must be in default on their mortgage before applying for a loan modification. One-and-a-half years after HAMP, the foreclosure rate continues to soar. For every one of the past 17 months, foreclosures have remained above 300,000 per month, an unprecedented event in American history. According to RealtyTrac, the foreclosure numbers for the first half of 2010 increased by eight percent compared to 2009, and the 2nd quarter of 2010 set a record for the number of foreclosures in a three-month period. Not only is HAMP helping far fewer homeowners than promised, there’s some evidence that HAMP may be leaving more homeowners worse off than if they never had entered the “loan mod” program in the first place. The government pays mortgage servicers $1,000 for each “loan mod” application. Studies have shown though that mortgage servicers stand to make far more in fees from a foreclosure than they ever will from a loan modification request. ( Why Servicers Foreclose When They Should Modify , Nat. Cons. Law Center, 2010). No one has ever accused corporate America of not knowing how to put its own self-interest first. Perhaps this is why my client’s complaints sound a consistent theme about loan modifications. They describe a bureaucratic nightmare, fraught with delay, and requests for the same documents again and again. Phone calls go unanswered and messages unreturned. When clients do reach a live person, they complain that the answers they get vary depending on who happens to pick up the phone that day. When homeowners ask their bank whether they’re eligible for a “loan mod,” they are incredulous to hear that they need to be at least 60 days behind on their mortgage in order to qualify. This is a rigid requirement. It doesn’t matter if a homeowner has managed to stay up to date only by liquidating a 401k or borrowing from parents. The bank won’t even consider a HAMP “loan mod” unless the mortgage is in default for 60 days. Many homeowners, already skating on thin ice financially, don’t need to be invited twice to begin missing mortgage payments. The banks do nothing to pre-screen homeowners to ensure they are good candidates for a loan modification. Unwitting homeowners, not realizing a loan modification will take from six to 12 months, often get far more than 60 days behind with the bank’s encouragement. In fact, one couple recently told me that the bank denied them a loan modification because they were “only” 60 days behind on the mortgage. The problem with requiring these kind of defaults is that it forces homeowners to bet their home on a successful outcome despite the fact most “loan mods” fail. HAMP requires a trial period of payments before a “loan mod” receives final approval. I have had several clients stuck in “loan mod” limbo making probationary payments for more than six months. During this process, one received a call from a bank collector apparently working from a list of people behind on their mortgage. This person asked if she was interested in one of their “loan mod” programs. My client informed him that she already enrolled in one so she was not interested in applying. She later learned that her answer was misconstrued to mean she was not interested in any program, and her application was canceled. This left her several months behind on her mortgage without a solution, jeopardizing her home. The overwhelming majority of “loan mods” are either denied outright or fail, leading to a foreclosure. One of my clients faced a foreclosure on July 30th after a “loan mod” denial, even though the HAMP regulations were amended in June 2010 to prohibit foreclosures while a “loan mod” is pending. One of the many problems with HAMP is that it is toothless, not providing any private right of action to homeowners to go to court to complain that their bank failed to follow HAMP regulations. This client had paid an internet company $2500 to do a loan modification for them. He still had to file a chapter 13 bankruptcy to save his home from foreclosure. The government imposes no penalties for banks that have backlogs of hundreds of thousands of loan modification requests. Banks, overwhelmed by the number of loan mod applicants, find it easier to cut down on the number of applicants by losing paperwork and creating other unnecessary hoops for homeowners to jump through. Many homeowners are so discouraged by this kind of institutional arrogance that they just stop trying. To the banks, this is just a number’s game, and they don’t much care that there are real people facing real disasters on the other end of any “loan mod” request that slips between the cracks. As one bank told one of my clients, “we don’t need to work with you, we’ve already been bailed out.” There’s no bailout for the little guy. That being said, there’s no reason a homeowner can’t complete a “loan mod” on their own if they are cautious. Here are some tips that might help homeowners trying to negotiate the ‘loan mod’ labyrinth on their own: (1) Given that HAMP is helping far fewer homeowners than expected, do a reality check on your monthly budget before applying for a loan modification. If juggling credit card payments is the only way you are able to afford your mortgage every month, hoping to drop your mortgage payment low enough to afford all your credit card payments is probably not going to work. That’s like trying to hit the perfect golf shot in a difficult situation. I can say from long experience that this doesn’t happen very often, so you might not want to bet your house on the outcome. If you can’t pay everything, prioritize your debt based on what’s most important to you. If you’ve already applied for a “loan mod,” paying your credit cards from the extra money created by your reduced mortgage payments may lead to a foreclosure if you are denied, unless you have a rich uncle to bail you out. (2) At the risk of oversimplifying, loan modifications are designed to lower your mortgage payment down to 31% of your gross income. If your mortgage payment is already lower than 31% of your gross, you probably won’t qualify. (3) If you decide to do a “loan mod,” don’t pay an internet marketing company to do it for you. Your desperation makes you vulnerable to being scammed. Even if you get lucky, there’s nothing they will do that you can’t do for yourself. If you want help, call your local HUD office for the telephone number of a HUD loan modification counselor near you or call 1-888-995-HOPE (4673). They will help you for free. (4) You might think providing all of the required documentation in a timely fashion is enough, but that just gets your foot in the door — you and the other few hundred thousand homeowners waiting for the same answer. Assume your bank is overwhelmed, will lose your paperwork and not return your phone calls as a means of controlling the number of “loan mods” it has to actually consider. Don’t take it personally. The clients that succeed have a bulldog persistence and aren’t shy about contacting their bank on a regular basis. Keep a copy of everything you provide the bank. (5) Don’t get any more than 60 days behind on your mortgage unless you are ready to give up your home if you aren’t approved for a “loan mod.” If your bank insists that you have to be more than 60 days behind before being accepted for a loan modification, ask them to put it in writing and file a complaint. Try to bank the money saved by not paying your regular mortgage payment, or the “loan mod” process may leave you in a worse position than you were before applying. (6) Keeping in mind that most banks have several “loan mod” programs available, you should make sure you’ve exhausted all the alternatives before accepting “no” for an answer. I had one client denied under HAMP who was able to avert a foreclosure by qualifying for another “loan mod” program, something the bank had never mentioned.

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David B. Thomas Joins New Marketing Labs as Executive Director

August 16, 2010

SAS Social Media Manager Will Lead Client Relations and Development of Enterprise Products and Services

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Lita Smith-Mines: Slicing Away Some of Suburbia

August 2, 2010

There are so many vacant stores in my area that the disappearance of another storefront pizza parlor shouldn’t have had much of an impact on me. I’m a vegan who never even tasted the pizza at Bella Nonna (though my family liked their food well enough), and there are as many pizzerias within a few miles of my house as there are slices in a large pizza. Yet the recent failure of this local business has been bothering me a lot. According to a neighboring business owner, the pizzeria’s owner was forced to close by the landlord after falling behind in the rent. I have no clue if the proprietor of the shuttered pizzeria tried to negotiate with the landlord. In my real estate law practice, I’ve assisted some of my commercial clients in receiving rent reductions and talked other landlords into extending lease terms without any increases in payments. Such concessions helped some shopkeepers and service businesses stay open, even if their lines of credit were curtailed or cut off. However, there have been just as many landlords who flatly refused to renegotiate or offer any incentives to keep an occupant from seeking more favorable terms down the turnpike. The end result is that the landlords often only gain more empty stores. No property owner has to take less than desired or deserved; there may be lots of reasons why a landlord won’t — or can’t — negotiate. But some of the reasons I’ve been given don’t make a lot of sense to me as a fellow business operator. As examples, there’s the rationale that “if I give your client a reduction I’ll have to do it for everyone” to the baton-passing excuse that “the bank won’t consent to this center generating any less income.” In negotiations on behalf of tenants, I’ve always countered the first argument to landlord’s counsel by suggesting that keeping a lot of paying proprietors satisfied seems preferable to losing them one by one. As for stubborn banks, I defy my intractable colleague to explain how having a lack of occupants in a shopping center was likely to delight any controlling financial institution. Again, I don’t know if the pizzeria’s landlord was mulishly obstinate about taking less money. I have no notion about how bustling Bella Nonna’ s business was before it fell behind in the rent, though I suspect that the lack of cars out front during peak pizza hours was a major clue that it wasn’t selling enough slices, calzones, and garlic knots to keep its ovens operating. What’s bothering me about the closing of this particular eatery is not that there is one less business in a nondescript strip shopping center, but that there are proprietors failing in just about every business area around town. Each closure equates to less employment and dampens depressed real estate values even further. After all, who wants to settle in a suburban setting devoid of delis, hair salons, shoe stores and pizza parlors?

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MCM Solutions for Better Health Announces Organizational Change

July 26, 2010

CHICAGO, IL–(Marketwire – July 26, 2010) –  MCM , a national leader in providing population health management services, is pleased to announce organizational changes in the Sales/Marketing and Client Services Department. The changes reflect MCM’s goal of being the market leader in offering innovative and cost effective medical management solutions for health care payers.

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Simon Sinek: I Hate You: A Tale About Advertising

July 16, 2010

What do you do if nearly every consumer hates nearly every product you produce? This is exactly what has happened with advertising today. Think about the lengths people go to to avoid watching ads on TV. As soon as they come on, we lunge for the remote to change the channel. We buy expensive DVRs that advertise the ability to skip ads AS A BENEFIT. And we willingly pay a premium for some websites or iPhone apps for which the only additional value is that the paid version is free of advertising. How embarrassing is that? That people are paying NOT to consume your product. The irony is, the advertising industry knows everyone hates what they produce. This is why they keep looking for new ways to force people to stay tuned. There are now ads at the beginning of online news clips or other online video content that are impossible to skip. It’s infuriating. There are ads on BlueRay DVDs now that we can’t fast-forward or skip to the main menu until we’ve endured the pitch. But here’s a more interesting question – how did it come to pass that modern day advertising so painful? The reason is simple, and it has nothing to do with the rise of the internet and other technologies. The reason we hate advertising is because the ad industry has no idea who its customer is; it is we – the general public who are the final consumer of their product. Ironic that an industry devoted to telling others who to focus on doesn’t know who to focus on. Probably not so ironically, it’s the same issue that stymies the music industry, the publishing industry and every other industry that seems to be struggling “to define itself” in this internet generation. They are all looking for an internet strategy when its their customer they are ignoring. Steve Jobs recently shared his thoughts about how the entire music industry failed to innovate something like iTunes. His answer was as profound as it was simple (fancy that). The music industry, he expounds, thought their customer was Tower Records or Virgin MegaStore…but it never was. Those were their distribution channels. The actual customer is the person who consumes the music. And it is the end user, not the intermediaries, whom Apple focuses on in all they do. The ad industry thinks their clients are their customers. They think the companies who pay for the production are the ones they are supposed to serve. So the ads they produce make their clients happy…but infuriate the rest of us. So much so, that the only innovations in the industry are the new ways they find to force us to watch what we are actively trying to avoid watching. Like the music industry, the corporate marketers are the distribution channel. They pay for the production and the media to distribute the creative product. But it is the buying customer who consumes the media. Like any other industry on the planet that has a problem with selling their product (and in the case of advertising, selling doesn’t mean pay for – it means pay attention to), the first thing they do is improve the quality of their product. In this case, that means making something people like, something people will watch without being forced. Leave America and you’ll find that the consumers in many other countries enjoy watching advertising. Not because the products are better, but because the ads are produced to be entertaining. Sometimes they are funny. Sometimes they are dramatic. Sometimes they are just beautiful. But they are, on balance, produced to be more appealing for the people watching them. Here’s what I propose: the ad industry should work to improve the quality of their product to a point where people want to watch it. American companies do this once a year on the Super Bowl – the only time of the year Americans enjoy watching advertising. Why is that quality of entertainment not being produced the other 354 days? Simple – because what gets measured gets done. And the Super Bowl is the only day of the year that the quality of ads is measured based on its entertainment value. The quality of advertising should always be measured based on how entertaining or engaging it is. They should stop measuring how many people are forced to watch (reach and frequency) and start measuring how many people choose to watch. Count how many people skip an ad versus how many opt to keep watching it. The more people that watch means you have produced better, more compelling advertising. Producing a product for the consumers who are the ones actually consuming the product makes more business sense, too. Clients would be able to spend less on media because the work would be more memorable. Plus, if people CHOOSE to watch the ads then they are more likely like the brands, products and companies featured in those ads. In other words, if advertising was made for consumers and not clients the ultimate benefactor would actually be the client…and isn’t that supposed to be the job of good advertising?

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David Isenberg: The GAO Transcripts, Part 13: Houston, We’ve Had A Problem

July 15, 2010

No, this is not about the Apollo 13 mission. But this is the thirteenth installment of the Government Accountability Office interview transcripts that were prepared pursuant to the July 2005 GAO report ” Rebuilding Iraq: Actions Needed To Improve Use of Private Security Providers .” It is pretty obvious that the company in this transcript is Kellogg Brown and Root Services, Inc., (KBR), as evidenced by language like this, “The only reports seen in Houston office are serious reports that have to be given to the client. Serious reports involve the destruction of government property, USG embarrassment, or death/injury of contractor personnel.” I can’t help but wonder what KBR thinks constitutes “USG embarrassment;” KBR contractors in possession of child porn ? Personally, treating US troops like trash by running burn pits that may have given them cancer seems pretty embarrassing to me. Reading some of the below language one understands that getting adequate security for the logistics contractors was frequently a big problem. For example, “___________ that they are not receiving the amount of force protection ___________ contractually entitled to in coalition sectors… On Army camps, 1st tier subcontractors working with entitled to the same level of protection granted to below first tier subcontractors as unsure about the level protection provided to contractors by the military. He assumes that if the subcontractor were on the base, then they would get the same level of service as first tier subcontractors. But, most second and third tier subcontractors typically do not live on ___________ mps/sites.” Sometimes the lack of adequate security could negatively impact supply missions as this passage illustrates: ___________ is heard about situations in which the ratio for convoy security was not sufficient. ___________ acquiesced to this statement, saying that he was not sure if the Army’s status quo requirements provide enough protection to securely cross convoys. He said that J ___________ would better be able to answer that question. ___________tated that in the early days there could be as many as 1,000 trucks backed up awaiting security details. Because convoy transportation is so insecure, ___________ as an air shuttle run that goes to five locations in Iraq. ___________ noted that there is a problem with “free wheelers” in Iraq. “Free wheelers” are contractors that don’t want to wait for US Army protection for their convoys. ___________ ___________ ___________ ___________ ___________ ___________ At least in the early days, according to this interview, private security contractors were left on their own. “The general expectation among the multinational coalition forces is that ___________ fend for themselves; PSCs are the lowest priority for coalition services.” Standard disclaimer: I have put in ( _____ ) to reflect those words of phrases which have been blacked out in the transcript. I have also put in the underlining as it appeared in the original transcript. As in the transcript, I have left out letters from various words, even when it seems obvious what the word is. Prepared by: Kate Walker Index: Type bundle index, here Date Prepared: August 24, 2004 DOC Number: Type document number here Reviewed by: Type reviewer name here DOC Library: Type library name here Job Code: 350544 Record of Interview Title ___________ coordination with Military Purpose To understand how ___________ and its subcontractors coordinated with the military Contract Method Face-to-face Contact Place ___________ Contact Date August 11, 2004 Participants ___________ ___________ ___________ ___________ ___________ ___________ Carole Coffee, GAO Dave Grover, GAO William McPhail, GAO Steve Sternlieb, GAO Kate Walker, GAO Comments/Remarks: ___________ a military contractor that provides ___________ the US Army under the___________ contracts. Under this contract, the Army is supposed to provide ___________ with security protection. In addition to this protection, ___________ subcontracts for security with the ___________ a private security firm based out of ___________ . In this meeting, a number of ___________ fficials spoke with us about the current situation in Iraq, their experiences with the US military and the subcontractor relationships. ___________ did most of the talking. ______________________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ major contributors ___________ utilized a PowerPoint presentation to review the questions that we had sent to them in advance. (Analyst Note: Presentation included in Interview Notes.) ___________ resence in Theatre ___________ urrently has ___________ rsonnel in theatre ___________ rotates its employees in and out of field on yearlong rotations. Some people choose to stay the whole rotation. Page 1 Record of Interview Regional security managers handle sectors of Iraq. The security manager manages main camps and sites in Kuwait, Iraq, ___________ is th ___________ in Iraq. ___________ ___________ to the military officials almost hourly. Security coordinators are typically US expatriates with security clearances that work at Army camps. While their roles and responsibilities vary with their location, their primary job is to serve as the senior liaison with the US military and make sure that force protection measures are in place. Security technicians write reports and conduct analysis of security situations. ___________ has a regional office in ___________ at the ___________ which is protected by US military parameter defense troops ___________ rks out of the ___________ office. ___________ subcontracts with the ___________ for security protection. Military Force Protection: Who is responsible? The military provides protection for ___________ tractors. This protection is delegated to coalition forces in the sector closest the contractors. Currently, coalition forces provide limited perimeter protection. ___________ otes that coalition forces lack of quick response teams and that some coalition sectors could be stronger. ___________ that they are not receiving the amount of force protection ___________ contractually entitled to in coalition sectors. The military also provides protection for first tier subcontractors located on Army bases, and sometimes will also provide protection for second and third tier contractors if they are located on an Army base. ______________ What level of protection is provided? Under the provisions of the ___________ contract, the US military is required to provide its contractors with the same level of protection as that provided to the military troops. The level of protection is decided cooperatively based on ___________ rforms vulnerability assessments. If KBR had concerns, their first response would be to talk to ___________ they wouldn’t go direct y to the military. If that attempt elicited no response, ____________then go to the PCO in writing. On Army camps, 1st tier subcontractors working with entitled to the same level of protection granted to elow first tier subcontractors as unsure about the level protection provided to contractors by the military. He assumes that if the subcontractor were on the base, then they would get the same level of service as first tier subcontractors. But, most second and third tier subcontractors typically do not live on ___________ mps/sites. In general, ___________ eceived good cooperation and support from the U.S. military. While there have been some minor incidents ___________ unaware of any major situations in which ___________ sn’t received good support from the military. ___________ no ___________ have a very “symbiotic relationship” with the military as most of its employees were former military officials. ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ Page 2 Record of Interview ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ______________________ ___________ ___________ ___________ Military Force Protection: Convoys The US military is responsible for establishing security requirements and coordinating details for contractor convoys ___________ rks “hand and glove” with their military counterparts to help assess whether convoy standards meet adequate protection levels. If ___________ sn’t satisfied with the level of security offered by the military ___________ to contact their prime security manger. The manager can then talk to the commander. The military is also responsible for coordinating dedicated detail for convoy travels from point A to point B. MOW has a dedicated team for convoy/personnel movements that coordinates with the military, ___________ ployees and subcontractors. ___________ _________________________________ ___________ ______________________ believe that convoy details are dedicated to specific regions, resulting in convoy handoffs at checkpoints between sectors. Military requirements for convoys are written into Fragmentary Orders (FRAG Orders). Specific force protection requirements are based on the size of the convoy. (Analyst note: See page 7 of the ___________ Force Discussions PowerPoint presentation.) ___________ is heard about situations in which the ratio for convoy security was not sufficient. ___________ acquiesced to this statement, saying that he was not sure if the Army’s status quo requirements provide enough protection to securely cross convoys. He said that J ___________ would better be able to answer that question. ___________tated that in the early days there could be as many as 1,000 trucks backed up awaiting security details. Because convoy transportation is so insecure, ___________ as an air shuttle run that goes to five locations in Iraq. ___________ noted that there is a problem with “free wheelers” in Iraq. “Free wheelers” are contractors that don’t want to wait for US Army protection for their convoys. ___________ ___________ ___________ ___________ ___________ ___________ One of the most dangerous roads to travel in Iraq right now is the 13km road from Biop to the Green Zone. This is a military supply route/army supply route (MSR/ASR) that needs to be protected. The MSR/ASR is not secure right now. ___________ that even in secure places there is still rock throwing, etc., that is thwarting progress. ___________ provided the following anecdote to illustrate his point. He spoke with a victim of the 9 April 2004 convoy attack that it was the 5th convoy that he had been in that had been attacked. ___________ eported that the convoy experience is different in different parts of Iraq. The South is unlike the West, East, or North. The PMO keeps a tally of convoy attacks. ___________ operational center ir ___________ keeps tabs on attacks on contracts for ___________ Multinational Coalition Force Protection: Convoys The general expectation among the multinational coalition forces is that ___________ fend for themselves; PSCs are the lowest priority for coalition services . Convoy movements have to be Page 3 Record of Interview scheduled, Unscheduled/non-regular convoy protection is nearly non-existent. The company will not move unless they are secure. ___________ that if their inability to move impedes their ability to fulfill the contract they would bring it up with their contracting officer. ___________ thinks that the convoy protection is under charter of ___________ While ___________ elieves that there are areas in convoy protection that could be stronger, they have not yet reached the threshold where they can say they are not getting adequate protection and need to subcontract for security. Weapons: It is against ___________ and ______________________ovisions for ___________ mployees to hold guns; ___________ employees are not shooters. If anyone is found with a gun, he/she is fired immediately. Subcontractors protecting ___________ch as the ___________ ___________ wever, can have weapons if they are required in the scope of work (SOW) for the subcontractor. Subcotractors have run into a number of problems acquiring weapons. ___________ ___________ ontract reported that, “it is very difficult to get weapons; availability is everything.” The requirements are based on cost importation and custom issues include: o 7.62 mm for rifles o Minimum 9 mm for side arms o Some AK47/45 and MP5 can be allowed depending on subcontractor location ___________ reported th ___________ subcontracted had originally planned to import and lease their weapons on day rate, but UN embargo prohibits importation of weapons. Ultimately, the ___________ ___________ contractor, ended up buying in country, forensically clean weapons and register them on government property books. ___________ formed us that a FRAGO had been issued defining which small arms/personal weapons could be used in Iraq. This FRAGO also required those operating or owning guns in Iraq to have weapons cards. (Analyst note: We have a copy of this FRAGO issued in September 2003 in our files.) Camp Protection ___________ unaware of any contractors living outside military camps in Iraq. There is a concern that high-rise hotels are too dangerous, when but 500-600 people are cycling in at a time, ___________ few choices other than housing them at a hotel. At complexes with a large number of people can hire PSC, but they have to be unarmed. There is no security at such hotels other than unarmed military. Recently, ___________s been warned about the security situation in Kuwait. There is some intelligence that the local insurgents were specifically striking contractors. Records of Activity: Military Reporting FRAG orders are distributed by and to all military. Records of Activity: Daily Reports ______________________ daily report about all personnel at each o___________ its subcontractors’ work locations by pay rate. He also has a roster of all personnel present for Page 4 Record of interview duty and their registered weapons. Activities are well recorded. The most common incidents vary depending on your location. o North: rockets, improvised explosive devices (IEDs), mortars. o Baghdad: Everything, vehicle borne IEDs, IEDs, kidnappings, small arms fi (SAF), rockets, mortars, attacks on camps, convoys, aircraft South: Occasional mortar attacks, hijackings, theft, vandalism Records of Activity: Operations Reports Operations reports have evolved over time and give security managers insight into what types of issues different bases are facing . They are provided and maintained in the security managers’ offices in Iraq. The ___________ ubmits operations reports as well. The ___________s also absolutely required to provide an after-accident and incident reports. ___________ gested that the new Project Manager would be the best person to talk regarding operations reports. The only reports seen in Houston office are serious reports that have to be given to the client. Serious reports involve the destruction of government property, USG embarrassment, or death/injury of contractor personnel. Serious incident and operations reports also go to the PC0. ___________ not contractually required to report security concerns to the PCO. ___________ as lost 42 ___________ people (including subcontractors) to date in theatre. Anytime a service person in injured or killed, ___________reports to the PCO. ___________ does not know, however, what the PCO does with that information. ___________ ports both ___________ nd subcontractor information to the PCO. ___________ general sentiment is that nobody has a grip on the contractors’ facilities, etc. because PSCs are not required by contract to report anything. (Analyst note ___________ suggested tha ___________would be the best person to ask ___________ ports to the client if anyone dies.) Intelligence Sharing: Among PSCs Currently, there are no contractual requirements that PSC communicate with each other, but intelligence sharing between all major companies is occurring. Note, however, that those companies perceived as “fly-by-night types” by major companies are not included in this communication. Emergency Action Plans: Al ___________ ocations have an emergency action plan. ___________ reports, however, that many military units have not created a coordinated emergency action plan with their contractors. ___________ CONTRACT Force Protection The origina ___________ nd PCO Oil Contract required that the Services Theater Command provide ___________ with force protection “commensurate with that given to Service/Agency civilians.” As this force has been found insufficient, the ___________ contract now has a hybrid of military security augmented by private security subcontractors. ___________ private security supplements the guard force in camps, provides escort security to move to work sites, and temporary perimeters at worksites supplemental security protects itself, its subcontractors, and DOD civilians. Coalition Forces still, however, provide a secure perimeter for the areas where ___________ ts subcontractors, and DOD personnel sleep. The ___________ came aboard the ___________ ontract ___________ ___________ rovides security for pipelines ___________s unaware of any subcontractors f___________ roviding private security for oil. Page 5 Record of interview

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ProPublica: Investment Funds Stir Controversey Over For-Profit School Recruiting

July 13, 2010

By Sharona Coutts , ProPublica . Nancy Panico runs a large center for homeless and at-risk youth in Tucson, Ariz. About a year ago, a woman contacted her with some questions about for-profit schools that have tried to recruit homeless youths — a problem that Panico’s shelter had encountered. The woman, Johnette McConnell Early, visited Panico at the center and, a few months later, asked for her signature on a letter [1] alerting the U.S. Department of Education to the issue. Panico and 19 other executives from homeless shelters and service agencies around the country eventually signed the letter, addressed to Secretary of Education Arne Duncan, asserting that “for-profit trade schools and career colleges are systematically preying upon our clients.” The June 17 letter pledged “unequivocal” support to the department’s steps to tighten regulation of the for-profit industry. Some who signed had personal knowledge of aggressive recruiting tactics, but others told ProPublica they had only heard about them secondhand from colleagues and news reports. Early visited with many of the executives, they said, drafted the letter and coordinated the effort to get them to sign. What Early did not tell Panico or several others who signed: She was working for a financial firm that pays her to investigate for-profit schools. “Had I known, I probably wouldn’t have signed on,” Panico said. “I probably would have contacted one of the other people and said, ‘Hey, now that we have all this information, let’s do this ourselves.’ I think it’s sleazy to basically use me and use other executive directors that have a real issue to make a profit for some companies.” For-profit universities have come under increasing scrutiny of regulators and congressional committees who have heard complaints about alleged recruiting abuses (PDF). More recently, attention has turned to the behind-the-scenes influence of hedge funds (PDF) that are also critical of the industry and have sold short, betting that the stock of publicly traded universities will drop in price if, for instance, Congress or the Department of Education cracks down. To cover tuition costs, the schools rely heavily on federal grant and loan programs controlled by Duncan’s agency. In an interview, Early confirmed to ProPublica that an “investment firm is paying for my time” but would not disclose the identity of that firm. When asked whether her client was betting against the for-profit higher education industry, Early said she did not know. “Since I’m not part of their firm, I can’t say what their position is,” Early said. “But clearly an investment firm is not going to look into something unless they’re thinking about whether it’s a good or bad investment.” Last month, the prominent investment fund manager Steven Eisman testified before a Senate education subcommittee hearing on the “emerging risk” posed by increasing federal subsidies to for-profit schools. Eisman is best known for predicting the crash of the subprime mortgage market . He’s become a scathing critic of for-profit colleges and universities, and in his testimony referred to the practice of recruiting at homeless shelters. Eisman predicted that students at these schools will default on $275 billion in government loans over the next 10 years. Less than a week after Eisman’s appearance, Sen. Dick Durbin, D-Ill., called for congressional action to tighten the rules governing for-profits. Referring to Eisman’s testimony, Durbin said some schools were enticing “low-income, high-risk students” into “mortgaging their futures — not on overpriced homes this time, but on worthless diplomas,” and said Congress must clamp down on the quality of education the schools deliver, and the way the government administers financial aid. Eisman’s testimony was controversial. Advocates of for-profit schools and a government watchdog group criticized the subcommittee, saying Eisman was allowed to present himself as an expert and make self-serving criticisms of an industry in whose failure they believe he has a vested interest. One group, Citizens for Responsibility and Ethics , wrote to Health, Education, Labor and Pensions Committee Chairman Sen. Tom Harkin, D-Iowa, to complain that Eisman had a conflict of interest in delivering his testimony. Eisman did not return calls requesting comment. He told the Senate subcommittee he had a stake in the industry, but did not disclose specifics. In an earlier speech , Eisman named five particular companies that he said would suffer if the Education Department adopted regulations tying tuition to the employment their graduates obtain — Apollo Group, the owner of the University of Phoenix; ITT Educational Services; Corinthian Colleges; Education Management Corporation; and The Washington Post Company, which owns Kaplan University. Since April, a nonprofit group associated with another high-profile investor, Manuel P. Asensio, has written five letters criticizing the for-profit education industry and calling for tighter regulation to congressmen and regulators with jurisdiction over the sector. Short sellers have shown a steadily increasing interest in for-profit schools, according to Will Duff Gordon, an analyst at Data Explorers, a company that collects and analyzes data about short-selling. Since April, his company has also seen a spike in short positions in the sector, indicating a strengthening view that the stocks will fall. In general, short sellers place bets that a company’s stock or some other financial instrument will decline in value. “This is not an opportunistic bit of short selling,” Gordon said of for-profit schools. “People have worked out that these companies are overvalued. They’ve put on bigger and bigger short positions as the price keeps going down. And they have been right because the price keeps dropping.” For their part, short sellers claim they are merely bringing to light the fundamental problems of an industry that survives in large part on taxpayer largesse. More than 1,600 for-profit colleges, universities and trade schools received $3.3 billion in Pell grants in the year ending last June, according to Department of Education data. About 950 schools shared some $2.5 billion in federal loans in the same period. Proprietary schools are slated to pocket significantly more this year, thanks to the Obama administration’s increased funding for the need-based Pell grants. Short sellers say they provide a public service by exposing fraud or mismanagement of publicly traded companies. Most academic studies that have examined the issue confirm that short sellers are most often correct in their assessment that particular companies or industries are overvalued, according to William N. Goetzmann, director of the International Center for Finance at the Yale School of Management. But some short sellers appear to be moving beyond assessing particular companies and taking a financial position accordingly. Now, says the Career College Association, some are trying to stage-manage the reporting of negative stories to fuel the impression of a groundswell of anger against the schools. “Certainly there are legitimate critics. I may not agree with them, but they’re not in it to fatten their wallets,” said Harris Miller, president of the CCA, which represents for-profit schools. “But I think that a lot of the activity going on, and with other media reports, is being driven by the short sellers, who are hiring people who are semi-disguising who they are and not being candid with people about their role in trying to drive down the stock price of certain companies.” Early terminated the interview with ProPublica when asked whether the hedge fund knew she had drafted the letter and coordinated the effort to have it cosigned by representatives for homeless shelters. But when informed of Early’s connection to an investment firm, several people who signed the letter said they found the episode disquieting. Two who signed told ProPublica they were under the impression that Early was conducting research for a Bloomberg Businessweek reporter working on a story about for-profit schools enrolling homeless people. Early confirmed in the interview that she “connected” the reporter with several people at homeless shelters. Bloomberg Businessweek in May ran an article under the headline, ” Homeless high school dropouts lured by for-profit colleges .” In a statement, a Bloomberg spokesperson said: “We did not obtain information from anyone working on our behalf. Our story was the product solely of our own reporting.” The PBS investigative news program Frontline posted the letter on its website after it was provided by another short seller, Frontline producer Marrie Campbell told ProPublica. Campbell said she would “absolutely not” have posted the letter had she known the full circumstances of its provenance. It is not unusual for reporters to follow up on tips from hedge funds, financial firms or other sources with an interest in how a story might shape events. ProPublica has interviewed hedge fund managers and their researchers about for-profit colleges and universities to learn about their concerns and get leads. They disclosed they were short on the sector; any information or sources they provided were independently verified and vetted by a reporter. Others who signed the letter said Early told them that she worked for a think tank, or that they believed she was working on a book. Like Panico, they supported the substance of the letter. But one of the signers — Jennifer Brandon, executive director of Community Voicemail in Seattle, Wash. — said she had no direct knowledge of for-profits recruiting homeless people. Early told Neil Donovan, executive director and president of the National Coalition for the Homeless in Washington, D.C., that she worked for a Dallas company that offered advice and private research called J.W. McConnell & Sons, Donovan said. ProPublica contacted state and local officials in Texas who said they could find no record of the firm. Donovan said he was angered to learn of Early’s association with an investment firm. “My next letter will be to Arne Duncan saying that I didn’t know that, and I’m going to ask his inspector general to look into the fact that they received a letter where the source of the letter was misrepresenting themselves,” Donovan said. “I think that’s completely inappropriate and it’s using homeless people as pawns, and that is what our mission is against.” “It makes me feel uncomfortable,” added Larry James, president and CEO of Central Dallas Ministries. “I’m quite certain none of us knew that connection, and that would have given me pause.” Not all those who signed were troubled by Early’s conduct. Jane Burch, CEO of New Beginnings for Women and Children in Tucson, said Early told a staffer that she had “something to do with an investment firm,” and that her organization would never have signed a letter unless they agreed with its contents. “I have no evidence that there is any wrongdoing here,” Burch said. “Why would I not want to see another avenue to have our clients’ rights protected?” Both sides in the debate claim moral ground. The for-profits argue they are performing a social service by making education available to many who have been excluded from traditional four-year colleges; the short sellers claim they are protecting the same groups of people from deceptive marketing techniques and a mountain of debt. A Department of Education spokesperson said the agency remains focused on regulatory matters. Among other things, the department has announced plans to scrap regulations that watered down a ban on schools paying recruiters according to how many new students they brought in. ProPublica intern Joe Kokenge contributed reporting to this story.

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Diane Francis: Market Monkeys Guarding Bananas Again

July 12, 2010

The tale of the tipsy oil trader in 2009 who went on a binge of drinking and manipulating the world’s oil market captured headlines as an amusing story when he was recently punished by British authorities. But his story illustrates how vulnerable the world’s financial system remains. Stephen Perkins, the 34-year-old trader, was fined and kicked out of the business for five years by Britain’s Financial Services Authority early this month. But the affair, plus the still-mysterious $1-trillion “flash crash” of May 6, which resulted in a temporary stock market dive, points out that access to the world’s digital trading grid is not properly monitored. Perkins had worked since 1998 for the world’s largest oil trader, PMV Oil Futures Ltd. in London. In late June 2009, he got drunk at a golf tournament, then continued to binge at home all night as he bought and sold hundreds of millions of dollars’ worth of oil contracts. His overnight trading represented 17 times the normal amount and he singlehandedly increased the price of oil by US$2 a barrel to US$73.50 a barrel. It doesn’t sound like much but he established a new high up to that point in spring 2009. His employer called him at home the next day to ask who his client was, after he committed US$600 million without so much as a form filled in. He told them he had a client and when they discovered shortly after that he didn’t, and had been drunk, he was fired and security officials were called. His offense was defined as “market abuse”. His employer was not fined at all because it had lost US$10 million unwinding the trades and convinced authorities that it was a “victim of unauthorized trading.” The point is that PMV was responsible for whoever traded under their banner, or should have been. So are other financial firms who do not have safeguards and therefore permit access by the irresponsible to trading privileges. PMV’s failure to police and limit its traders, in or out of the office, to the world’s trading grid should have been enough to take away its license for good, if for no other reason than to set an example that would frighten others into protecting the world’s financial system. The probe into the “flash crash” has yet to report the cause, but whatever it is will provide another example that the system is dangerously unpoliced and that manipulative, or otherwise errant, behavior is unchecked. FSA made no criticism of PVM, nor did other regulators around the world. This constitutes a regulatory lapse which undermines the integrity of markets themselves, prices and could damage the global economy once again or help unscrupulous players enrich themselves at the expense of others. Much attention is devoted to preventing hacking into the world’s financial systems. The case of the tipsy trader exposes the fact that the greatest danger may not lie outside, but within an industry that doesn’t police itself properly. This appeared in the Financial Post

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Grant Cardone: Virtual Training Goes Mainstream

July 9, 2010

Virtual training appears to be going mainstream, replacing the traditional methods of training employees, management and executives of organizations. While the cost savings is one reason, companies are suggesting their move to virtual training is due to issues like; handling the attention deficit generation, using interactive engagement to more successfully transfer skills, ability to access information 24/7 and access to solutions in real time to solve problems and increase productivity. Many of these things are not offered with traditional training methods. The challenges of today’s workforce training and technological developments are causing more and more companies to look to new forms of training like e-learning and interactive-web based solutions. Each of these terms describes virtual training whereby the employee does not have to leave his business to engage in training, instead accessing it via computer. Virtual training has the prospect of greater interaction, two-way communication, full accountability, testing and allows for 24/7 accessibility. Finding innovative ways to transfer knowledge and skills is a generational issue and an economic challenge critical to a company’s survival. For 22 years I have explored innovative ways to deliver the best practices and processes to companies in order to improve productivity per employee. The limitations of all training companies are limited by the inability to be available 24/7, handle attention difficulties, get interactive participation due to generational barriers and ensure long-term use of new skills. Ultimately how the employee solves real world challenges is the measure of how effective a company’s training is or is not. We recently surveyed thousands of individuals utilizing virtual training to see how this new way of training compared to traditional methods. The benefits communicated were; – no longer miss clients – no travel required – able to train at my computer – able to train in my own time – able to avoid asking embarrassing question in front of peers Surprisingly enough and without inquiring there were also rumblings that while the virtual training was an improvement the content was outdated, not relevant, too long, too informational, not solution-oriented and the presenter was difficult to listen to. Employees of a major accounting firm related to being required to watch 45 minute segments of training content online that was no longer relevant and felt more like punishment than an education. Using the survey results we set out to build virtual training programs that included short, concise relevant segments and then combined the training with solutions for solving problems when the training was over. The key was to demonstrate how the information makes the user’s jobs easier, his/her position more productive and all the while positively influencing their personal life. From Fortune 100 companies like Microsoft, accounting giant Ernst & Young, retail companies like JC Penny and Macy’s, most if not all the automotive manufacturers and even independently owned small businesses are currently adopting virtual training as a way to reduce training cost, transfer skills and disseminate information. The National Auto Dealers Association announced it is utilizing the benefits of virtual training to disseminate training and solutions to their 15,000 members. The keys to building a successful virtual training program and ensuring usage: 1) Short Segments 3-5 minutes in length validated with testing 2) Current relevant content that solves the challenges of the current scene 3) Presenter must be respected, believable and likable by the user 4) Access to solutions in real time 5) Automated accountability Connecting innovative solutions with real-world challenges, making training interactive, interesting and creating a delivery system for relevant information is what virtual training is all about. The bottom line – virtual training increases productivity, is a cost effective way and is available 24/7 when the client needs it to improve the skill sets of employees, solve problems and…improve the bottom line. Grant Cardone, New York Times Best Selling Author, If You’re Not First, You’re Last.

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Grant Cardone: Double-Dip Recession Self-Imposed

June 25, 2010

Worsening economy and possible double-dip recession will be self imposed not just economically driven. Clearly the economy continues to be soft at best, validated by record low home sales, but the reality is individuals and companies are just not making the necessary adjustments to make the most of every opportunity that exist. Tax incentives disappear for first time home buyers and housing sales slump. Real estate agents and brokers complain about inventory levels, sellers that are not realistic, banks that won’t lend and buyers that are bottom feeders. While all of that may be true it won’t increase production. When is the last time a real estate agent called you to talk about listing your house? Doesn’t happen. What happens cause the agent to be at ‘effect’, waiting for something to happen to them rather than making something happen because of something they did. Entire real estate industry is waiting for the the government to continue incentives, the banks to free up lending, the seller to call the broker or the buyer to raise their offer. Nothing comes to those that wait except pain! And its not just the real estate business– same issue for autos, furniture, electronics, service industries –you name it and businesses that are still suffering have not yet made the necessary adjustments to survive and prosper in this environment. You can not wait on conditions to change you must change! You can’t wait for your clients to get reasonable or to come to see you or to finally make a decision or to be rational or anything. This is the kind of economy where you have to go to your client base and create transactions. This is a time where you must become completely unreasonable with how to get things done and never wait or make excuses. I was recently trying to make a purchase of a luxury product for my wife who is having a birthday this weekend. I have been mishandled by two companies that sell the very product that I want to buy for her. One is located 3 blocks from me and the other 12 blocks from me. Both were nice but neither did what was necessary to get in front of me and truly service me to a ‘done-deal’. I then found myself on the internet searching information and asking for input on Facebook when a sales person with a company 80 miles from where I live discovers I am in the market and offers to bring me what I want. This is what it takes today. Responsibility to change your conditions and do what ever is necessary. The government can not bail out individuals. Your manufacturer can only make the product so good, so cheap and only offer incentives for so long. Today it takes an attitude of advance and conquer not retreat and wait for things to change. You must be first in the consumers mind today or you will end up last. And when you get there do everything right. While the violent shift in the economy 18 months ago cause many business those the failures that continue from here on out will be mostly self imposed. Anyone that use yesterday’s think and/or approaches will continue to suffer long after this economy recovers. The only way to ensure you don’t experience a self imposed double dip is; 1) decide to expand into the market and take market share 2) do anything and everything that your competitors will not do 3) keep every individual focused on the solution not the problem! Grant Cardone, International Business Consultant and NY TImes Best Selling Author

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David Isenberg: A Blackwater by Any Other Name Is Still a Blackwater

June 9, 2010

Yesterday’s news, announced initially in a report from the Associated Press, that Xe Services, formerly known as Blackwater, is being put up for sale tempts me to modify the old cliché, when the going gets tough, the tough sell out. Of course, I don’t really believe that. In fact, it would be grossly unfair. There is a lot to be said about Blackwater and yes, much of it is unflattering, and a fair amount of that is true. But it is also true that over the years that much of what has been said and written about Blackwater and other private security contractors is grossly inaccurate, biased, misleading, and legally libelous, i.e. jackbooted thugs, mercenaries, Christian crusaders, et cetera. Someday, a dispassionate and objective reporter or academic will sift through the mountains of paperwork that are doubtlessly stored in various government archives and give us a real history of how Blackwater operated, what contracts it had, who it worked for, what its people did right and wrong. To date we don’t have this; only hysterical screeds masquerading as investigative reporting. At this point a lot of questions remain unanswered. It’s not clear if all of Blackwater’s branches are up for sale or just its security and training business. One of the most lucrative parts, Presidential Airways, was sold earlier this year for $200 million. Also unknown is what will happen to Blackwater’s contracts for the CIA and the Joint Special Operations Command. Jeremy Scahill of The Nation writes that, “Prince has shifted some of Blackwater’s clandestine work to companies he does not own but which are run by former Blackwater executives or allies. Among these are Blackbird Technologies, which now employs former Blackwater executive J. Cofer Black (former head of the CIA’s Counterterrorism Center) and Constellation Consulting, which is run by former Blackwater executive Enrique “Ric” Prado, a veteran of the CIA’s paramilitary division, the Special Operations Group.” And it unclear whether Blackwater will seek to sell its remaining parts as a package or a la carte. Another interesting question is who might buy Blackwater? CNN reports that: With most of Xe’s revenue dependent upon a few large public entities that are subject to public pressure, its future contracts and revenues can easily be threatened, notes Aswath Damodaran, a professor of finance at NYU’s Stern School of Business. “If I ran a public company, I would not touch Blackwater with a ten-foot pole,” he said. “The danger to my other businesses from contamination would be way too high. One exception would be a large strategic buyer that is engaged in similar high-risk fields and that could find value in subsuming Xe Services into its ranks. For instance, DynCorp (DCP), which had over $3 billion in revenue in 2009 and just reported more than $1 billion in quarterly revenue, is an active competitor in Xe Services’ main business areas. Buying Xe Services would further increase DynCorp’s manpower and give the company access to additional contracts, such as the lucrative DOD narcotics intervention contract, for which it was not pre-qualified. … The Carlyle Group, which owns several defense contractors, including United Defense Industries, could be a buyer. But Cerberus [see below for more on Cerberus], with $23 billion under management, seems to fit the bill especially nicely. Since it plans to take control of DynCorp, and already runs IAP Worldwide, which provides logistical support for the Pentagon, Cerberus will have a deep bench of capable management at its disposal. What can we learn from the news? For starters, like it or not, dealing with the media is a critical part of your work. Companies that don’t answer questions quickly and fully allow critics to get away with making all sorts of wild charges which are endlessly repeated in the echo chamber known as the Internet. Admittedly, this is not always the fault of the companies. Many contracts stipulate that queries about a company’s work can only be answered by the client, which is often the U.S. government, and it is not anxious to answer questions. Still, the no comment policy only hurts companies and they need to be far more active in engaging with the media. As an example of why this is important consider, as MarketWatch reported that two years ago, Cerberus Capital Management turned down a chance to invest in the company when it was still called Blackwater. Though no reason was given, it was speculated that the reclusive private-equity firm shied away from the unwanted attention that would have come with such a purchase. Given that Cerberus is now in the process of acquiring DynCorp International, another private military and security contractor, it couldn’t have been the prospect of acquiring such a firm in and of itself that bothered Cerberus. Rather it was Blackwater’s reputation. A corollary to this is that rebranding doesn’t work. As we all know Blackwater changed its name in the aftermath of the September 2007 incident in which Blackwater contractors killed 17 Iraqi civilians at Nisoor Square in Baghdad during a firefight. By that time, rightly or wrongly, Blackwater was widely viewed as a sort of corporate pig. The name change was seen as putting lipstick on a swine. It did not help. Xe Services was still seen as Blackwater. Another lesson is that companies really need to have a business model from the very beginning. It was always a bit unclear what was Erik Prince’s [Blackwater's founder] real motivation was. Yes, to be sure, it was to make money. But he had scads of money to begin with. Many thought that he simply thought it was a cool thing to do. That may be fine for an Internet startup but when you are talking about a company involved in military issues, as in periodically killing people and destroying things, you need to be as serious as a heart attack. Finally, Blackwater/Xe Services or whatever it is called in the future is unlikely to be filing for Chapter 7 relief. It simply is too important to the U.S. government and holds too many contracts worth a lot of money. That alone guarantees someone will be buying it, even if the government has to provide an incentive.

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