massachusetts

Are Rich Countries Fat Countries?

by Joe Satran on January 10, 2012

Huffington Post…

Usually, when people append the hashtag #firstworldproblems to their tweets, they’re invoking situations that are, when it comes down to it, lesser boons, or merely subjective problems. ( Prombles , some would say.) But a recent post at Food Service Warehouse reminds us that there is such a thing as a true First World problem. It focuses on a major drawback of largesse — namely, largeness. The author did some digging to find the 20 countries that eat the most and least calories, on average, per day, then compared that data to data on income. Here’s the ensuing visualization: Source: Food Service Warehouse The chart clearly demonstrates that the countries that eat a lot also spend relatively little of their incomes on food. Americans, the biggest eaters on the chart, munch on a whopping 3700 a day. The obvious takeaway here might be that people living in countries that spend the least money on food become fat because they buy mostly processed, unhealthy food . This line of thinking mirrors the prevalence, in America, of obesity in low-income populations. But it’s not quite as simple as that — because 6.9 percent of the average American’s per capita income of $46,000 is, at $3200, still far higher than 55% of the Eritrean per capita income of $683. America doesn’t spend less on food than other countries; it just spends a lot more on other things. That’s not to say that there’s nothing weird about America’s food habits, of course: recent research has supported the link between America’s macroeconomic stance and its obesity problem . But the idea that spending more will definitely lead to better health is a little misguided.

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Are Rich Countries Fat Countries?

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Janice Harper: What to Expect If You Sue Your Employer

by Janice Harper on January 10, 2012

Huffington Post…

In the last half century or so, workers in the U.S. have seen improved working conditions through policies and laws addressing discrimination, harassment, whistleblower protection and safety violations. But when these protective measures are disregarded, enforcing them falls on individual workers who must pursue their claims through arbitration, investigations by external agencies (such as the EEOC) or litigation. Whatever the reason a worker might consider taking such actions, before filing any internal or external complaint or lawsuit — or even threatening to do so — there are some things to keep in mind. And the first thing to keep in mind is that there are a lot of myths about what it means to sue an employer. The first myth is that the employer is afraid of a lawsuit. Employers do not like lawsuits, but they do not fear them. If they did, the worker never would have had a legal claim in the first place. Why? Because if the employer sincerely feared a lawsuit, they would have respected the law in the first place. And not only are managers who violate workplace laws unlikely to be held accountable for their actions, there are many ways they can benefit from a lawsuit, even one their own conduct brought on. They can benefit by finding a lawful reason to fire the complaining worker, or by providing witnesses against the complainant who are either “similarly situated” (such as members of the same protected group), or who work closely with them and are persuaded to testify against the worker. By courting these people, sympathizing with their conflicting emotions regarding the worker and providing opportunities and benefits previously withheld, the manager conditions the workforce to consider ways in which distancing from the worker, and aligning with the interests of management, are in their own interests. Once this step is taken, greater acts of distancing — through gossip, rumors, and shunning – make it easier for former allies and others to turn against the worker. When this happens, the manager who may have instigated the lawsuit in the first place is able to score points with higher management by demonstrating that it is “the difficult employee” — not the manager, who is the problem, and the manager who has provided a solution — witnesses to discredit the worker’s claims. The second myth is that once a lawsuit is filed, further adverse action will not be taken against the worker because that would be viewed as retaliation. Your employer can and will retaliate against you in a multitude of ways, many of them legal. Federal laws protect against retaliation for certain protected acts, such as reporting sexual harassment, discrimination, and some types of “whistle blowing.” But federal law also permits employers to fire such employees for legitimate reasons — such as theft, making threats, or acts of violence. No matter how law-abiding a worker might be, once involved in litigation against an employer, accusations of wrongdoing are likely to commence, and escalate. For that reason, by encouraging the workforce to view the litigating worker as a threat to their own livelihoods, chronically unhappy and complaining, and mentally unstable, it takes little time before gossip escalates to accusation, and the worker is accused of an escalating series of “inappropriate” behaviors and often, crimes. Should the worker express any anger or outrage at the mistreatment they receive, that anger will be viewed as a threat. Increasingly, employers are using the slightest pretext of “threats” or accusations of theft to bring in the police and have employees publicly escorted off the premises — a humiliating tactic that is sure to instill fear in the workforce and further erode the worker’s support and reputation, regardless of whether or not there was any basis to the accusation. (And while it remains unlawful to terminate an employee for false pretext, proving pretext is difficult and the damage will have already been done.) The third myth is that once an employer realizes they could be sued for their actions, they will obey the law. If a worker threatens to sue, or an employer receives a letter from a worker’s attorney, they may well clean up their act. But chances are, every level of higher management will be alerted and go on the defense, which to their legal team will mean an offense. They will immediately notify all coworkers that a lawsuit is pending and not to destroy any emails or other correspondence about, to or from the worker, and not to discuss the case with the worker. And when they get those memos informing them that their (potentially embarrassing) emails will end up in the hands of their bosses, those coworkers are not going to resent their bosses, they are going to resent the worker whose legal action brought it on. At this stage, the workforce, not management, will fuel the aggression aimed at the worker. Management will encourage the workforce to keep a close eye on the worker, and document any detail, no matter how seemingly benign, that shows the worker is unstable, unproductive, or ineffective. As the workforce takes note of the severe toll on the worker who filed the complaint, they will not only alter their perceptions of the worker to justify avoiding and testifying against them, but they will also be far less likely to ever voice a similar complaint of their own in the future — in other words, the more severe the punishment, the less likely management will have to fear future workers coming forward with similar complaints. The fourth myth is that if a worker does sue, they can win big money, and be vindicated. If a worker does sue, and does win, they will be very, very happy. Why? Because by the time an employment case gets to the point of “winning,” the worker will have spent years fighting. They will be emotionally and financially exhausted. They will have gone into great debt to pay legal costs; even if their case was litigated on a contingency fee basis, they will have had to pay a costly retainer, costs of mediations, investigations, depositions and travel expenses. And the worker will have had one heck of a time finding work, because not only will s/he be exhausted by legal battles, they will have had little time or strength to be productive in the process. They will also be stained by no references, a record of suing an employer — which no potential employer wants to see — and a reputation that has been severely damaged through rumors. And as for that big money verdict? There are caps on what a worker can get and juries are often very conservative — many a career has been valued at less than a whiplash, because jurors like to think they would never find themselves in such a mess, and that no one should receive big money for not being able to work, when the juror may well work a lifetime for less. And anything over $150,000 is currently taxed at one-third; a whiplash settlement, however, is currently not taxed. The fifth myth is that the case will never get to trial and will settle out of court. Most cases do settle out of court, and when they do, they either settle fairly early in the game, or right before trial. In the meantime, the employer’s legal team will bank on delays to wear the worker out. Until that time, efforts to resolve the matter will be in vein — the only early resolution once a suit is filed will likely be at terms favorable to the employer. In the meantime, the worker’s work and even home computers will be subpoenaed, along with their medical records. Investigators may have monitored the worker, and contacted past employers — who will have been told all kinds of unsavory things about their former employee — even family members, friends and neighbors may be questioned, scrutinized and had their own reputations slandered. Suing an employer is the last thing a worker should ever do if the aim is a successful career. But sometimes an employer goes so far, breaches so many laws and causes so much damage that a worker cannot possibly recover without a legal remedy. And if that happens, the worker must be prepared. They must safeguard against the assured betrayals from close friends and colleagues, the adversarial scrutiny of their lives and communications, and an avalanche of accusations and smears upon their professional and personal lives. And for the employer facing potential litigation, it is far easier to resolve a conflict with a worker than it is to close ranks and destroy them. Rare is the lawsuit that an effective manager can’t prevent by acting with integrity in the first place, and rare is the lawsuit that an effective employee can’t prevent, by knowing when the management is just no good and it’s best to walk away.

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Janice Harper: What to Expect If You Sue Your Employer

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CNN Host Talks New Show, GOP Candidates

January 10, 2012

Hosting a cable news show could be considered a taxing job in and of itself. For CNN’s Ali Velshi, it only takes up one of the 24 hours available to him in a given day. As CNN’s chief business correspondent, Velshi has been tapped to wear multiple hats for the network. His latest role? Hosting CNN International’s daily one-hour program, “World Business Today.” That’s in addition to his already demanding schedule at CNN’s American branch, where he reports every day and hosts “Your Money” on the weekends. Velshi served as an interim host for CNN’s former morning show, “American Morning,” before the network announced it would be dismantling the show at the end of 2011. CNN’s morning show ratings had been floundering for months, falling behind MSNBC’s “Morning Joe,” and Fox News’ dominent morning program, “Fox and Friends.” While Velshi served as co-host, the network decided to bring back former “American Morning” anchor Soledad O’Brien, and completely overhaul its morning programming. Velshi was given the CNN International show instead. In an interview with The Huffington Post, Velshi said that his new show has awarded him “a lot of real estate” across CNN’s platforms. In addition to the U.S., Velshi will now reach prime time audiences in India, China, and Japan. But while Velshi can boast a broader reach among CNN’s worldwide audiences, there’s still an elephant in the room: CNN International is not as high profile as the network’s American wing, and a morning slot is a coveted one at most networks. So does Velshi’s new role really work better for him? “I’m always game…If they need to fill a spot for a little while, I’m happy to do it,” Velshi said. “I didn’t dislike doing ‘American Morning’. I really enjoyed it, but this is probably more suited to the kind of personality I am.” While acknowledging that the schedule was challenging, he described his new gig as a dream situation for a business journalist. Velshi said he has the opportunity to go from discussing global financial issues in the morning on CNN International, to dealing with economic questions related to the 2012 presidential election during prime time. When asked which of the GOP candidates most effectively communicated international business issues to voters, Velshi had some surprising words about Jon Huntsmen. Velshi called his economic plan “the most solid,” and gave it a fair amount of praise. “Just evaluating [candidates] on their understanding of economics and globalization…Jon Huntsman has the greatest rap,” Velshi said, highlighting the candidate’s connection to China . Huntsman’s plan “has been evaluated…and endorsed by a lot of people.” Unfortunately for Huntsman, Velshi added that the candidate’s plan consists of “fairly sophisticated economic ideas, and that doesn’t make for good campaign signs or television ads.” While he follows the economic proposals set forth by the candidates, Velshi said his job was to point out when those plans contain false promises. Velshi said that both Democrat and Republican candidates are guilty of making claims about economic reform that are not grounded in reality. “I get frustrated by some of the things that candidates say when they’re running, but I think we’re all smart enough to know…that candidates say things while they’re running [for office] that won’t actually come to fruition. I wish they didn’t, but that’s part of my job at CNN – to continually point out, ‘This is not feasible. It’s not partisan, it’s just not feasible.’”

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Greek Retailers See Worst Holiday Season In Decades

December 27, 2011

ATHENS (Reuters) – Greece’s stores had their worst Christmas in decades, with retail sales dropping by 30 percent compared with the same period last year as the economic crisis shattered consumer confidence, the ESEE retail federation said on Tuesday. “Nine out of 10 Greeks are less generous, not out of choice but out of necessity,” ESEE said. “Retailers endured a Christmas gloom that chipped away any optimism they had before the holidays.” The sharp drop in sales came despite widespread discounts by retailers in the run-up to Christmas. Greeks have been suffering wage and pension cuts, rising inflation and a recession now into its fourth year, which has slashed living standards and forced them to cut spending. Clothing and footwear sales dropped 40 percent, electrical goods by 30 percent, and sales in the food and drinks sector by 15 percent compared with the same period last year, ESEE said. (Reporting by Karolina Tagaris, editing by Jane Baird) Copyright 2011 Thomson Reuters. Click for Restrictions .

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After AG Lawsuit, Lender To Stop Buying New Mortgages In Massachusetts

December 2, 2011

NEW YORK — One day after it was among five major banks sued by Massachusetts over deceptive foreclosure practices, GMAC Mortgage said Friday that it will stop purchasing new mortgage loans written by third parties in the state. The mortgage origination and servicing arm of Ally Financial Inc. said it will honor all commitments with correspondent lenders and wholesale brokers through Monday. The bank, formerly known as General Motors Acceptance Corp., is 74 percent owned by the U.S. government, GMAC Mortgage will continue to lend directly to homeowners in Massachusetts. A spokeswoman said most of its business in the state is done through third parties like community banks, which originate loans and sell them to GMAC. GMAC then handles the loan servicing, or collecting homeowner payments. The spokeswoman could not provide a breakdown specifically for Massachusetts, but said the correspondent and brokerage business represents 84 percent of GMAC Mortgage business nationwide. Industry figures show GMAC was the fourth largest mortgage lender in the state in the third quarter. In a statement GMAC said it “has taken this action because recent developments have led mortgage lending in Massachusetts to no longer be viable.” Massachusetts Attorney General Martha Coakley said in a statement that GMAC has to follow the law before foreclosing on homeowners in order to do business in the state. “With today’s action, it appears GMAC has acknowledged it has a problem following those laws and being held accountable for doing so.” The suit filed Thursday by Coakley claims GMAC and other banks violated Massachusetts law with “unlawful and deceptive” conduct, including unlawful foreclosures, false documentation, robo-signing, and deceptive practices related to loan modifications. Robo-signing involves a bank official signing numerous documents without verifying the information they contain. The lawsuit also named Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., and Citigroup Inc., along with Mortgage Electronic Registration System, Inc. and its parent company as defendants. The company, a mortgage registry database, has been accused of shoddy record-keeping in large numbers of foreclosure proceedings. The lawsuit was filed as talks have been dragging on for more than a year between major banks and the attorneys general from all 50 states over fraudulent foreclosure practices that drove millions of Americans from their homes after the housing bubble burst.

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Police Arrest 5 At Occupy Atlanta Protest [LATEST UPDATES]

November 7, 2011

ATLANTA – Atlanta protesters aren’t going quietly, despite warnings from police and the mayor. In the latest act of defiance, five people were arrested early Monday at or near a downtown park that has been an off-and-on site of Wall Street protests similar to the ones being held in other U.S. cities. (CLICK HERE OR SCROLL DOWN FOR LATEST UPDATES) The developments came a day after 19 demonstrators were taken to jail by officers in riot gear when a rally spilled into the streets. Atlanta police said one protester draped in an American flag inside Woodruff Park was arrested after refusing to leave by a Sunday night curfew, and four other people on bicycles were arrested near the park – three for traffic violations and one for obstruction of a law enforcement officer. The 23-year-old woman in the park was warned three times in English and Spanish to leave before she was arrested, police spokesman Carlos Campos said. At the time, dozens more demonstrators chanting slogans like “We’re hungry! We’re poor! What are you wasting our money for?” stood behind barricades surrounding the park, where police had warned they would enforce an 11 p.m. curfew. Occupy Atlanta organizer Tim Franzen said having one person protesting was just as powerful as several. Atlanta police have arrested protesters several times since Mayor Kasim Reed revoked an executive order permitting the demonstrators to sleep in the park overnight. The protest group held its general assembly meeting earlier in the evening, then marched back to Woodruff Park. Campos said officers were watching and warned people to stay out of the park. Most complied. Occupy Atlanta organizers earlier said they planned to again camp at the park, setting up yet another showdown with police and the mayor. There have been other arrests at similar protests across the country in recent weeks, most for curfew violations. Some of the most intense confrontations between demonstrators and police have been in Oakland, Calif., where two Iraq War veterans have been hurt in separate clashes with officers. Over the weekend in Atlanta, 19 people were arrested on charges they refused to leave the park after curfew or blocked city roads, police said. Franzen said most got out of jail Sunday, while one person charged with aggravated assault and obstruction likely won’t be bailed out until sometime this week. Before Saturday’s 11 p.m. curfew, a crowd of several hundred protesters had set up tents at Woodruff Park, the scene of about 50 arrests of demonstrators last month. As the deadline approached, protesters began decamping peacefully. Dozens of officers were on hand, herding protesters away from the park’s entrances and installing barricades around it. A police helicopter flew overhead. While most protesters left the park, a few people stayed behind. Many spilled onto Peachtree Street, blocking roads. An officer on a motorcycle, with its lights and siren turned on, drove into a crowd marching on the street. Video of the incident appears to show two people pushing against the front of the motorcycle as the engine revs. A scuffle ensues when a third person intervenes, which leads to a sometimes tense confrontation between protesters and officers. Police officers in riot gear and on horseback filled the street, warning protesters to stay on the sidewalk. The protesters shouted at the officers, chanting slogans such as, “Shame! Shame!” and “What about your pensions?” A small group yelled more insulting things like, “Put the pigs back in their sty, we the people occupy.” Protesters began camping out in Woodruff Park on Oct. 7. Reed initially issued an executive order allowing them to stay overnight, but later revoked it after he said there were increasing security concerns. “Mayor Reed was clear earlier this week in his public statements that the City of Atlanta would arrest any persons who violated the law,” Police Chief George Turner said. —- Associated Press writer Kate Brumback contributed to this report from Atlanta. Atlanta police said one protester draped in an American flag inside Woodruff Park was arrested after refusing to leave by a Sunday night curfew, and four other people on bicycles were arrested near the park – three for traffic violations and one for obstruction of a law enforcement officer. The 23-year-old woman in the park was warned three times in English and Spanish to leave before she was arrested, police spokesman Carlos Campos said. At the time, dozens more demonstrators chanting slogans like “We’re hungry! We’re poor! What are you wasting our money for?” stood behind barricades surrounding the park, where police had warned they would enforce an 11 p.m. curfew. Occupy Atlanta organizer Tim Franzen said having one person protesting was just as powerful as several. Atlanta police have arrested protesters several times since Mayor Kasim Reed revoked an executive order permitting the demonstrators to sleep in the park overnight. The protest group held its general assembly meeting earlier in the evening, then marched back to Woodruff Park. Campos said officers were watching and warned people to stay out of the park. Most complied. Occupy Atlanta organizers earlier said they planned to again camp at the park, setting up yet another showdown with police and the mayor. There have been other arrests at similar protests across the country in recent weeks, most for curfew violations. Some of the most intense confrontations between demonstrators and police have been in Oakland, Calif., where two Iraq War veterans have been hurt in separate clashes with officers. Over the weekend in Atlanta, 19 people were arrested on charges they refused to leave the park after curfew or blocked city roads, police said. Franzen said most got out of jail Sunday, while one person charged with aggravated assault and obstruction likely won’t be bailed out until sometime this week. Before Saturday’s 11 p.m. curfew, a crowd of several hundred protesters had set up tents at Woodruff Park, the scene of about 50 arrests of demonstrators last month. As the deadline approached, protesters began decamping peacefully. Dozens of officers were on hand, herding protesters away from the park’s entrances and installing barricades around it. A police helicopter flew overhead. While most protesters left the park, a few people stayed behind. Many spilled onto Peachtree Street, blocking roads. An officer on a motorcycle, with its lights and siren turned on, drove into a crowd marching on the street. Video of the incident appears to show two people pushing against the front of the motorcycle as the engine revs. A scuffle ensues when a third person intervenes, which leads to a sometimes tense confrontation between protesters and officers. Police officers in riot gear and on horseback filled the street, warning protesters to stay on the sidewalk. The protesters shouted at the officers, chanting slogans such as, “Shame! Shame!” and “What about your pensions?” A small group yelled more insulting things like, “Put the pigs back in their sty, we the people occupy.” Protesters began camping out in Woodruff Park on Oct. 7. Reed initially issued an executive order allowing them to stay overnight, but later revoked it after he said there were increasing security concerns. “Mayor Reed was clear earlier this week in his public statements that the City of Atlanta would arrest any persons who violated the law,” Police Chief George Turner said. ___ Associated Press writer Kate Brumback contributed to this report from Atlanta.

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Americans Favor Protesters Over Wall Street, Washington

November 7, 2011

LOWELL, Mass. — A new national poll released Sunday shows neither Wall Street nor Occupy Wall Street conjuring up strong favorable impressions among the American public. But protesters fared better than their wealthy corporate targets in the poll conducted for the University of Massachusetts at Lowell and the Boston Herald. Among 1,005 adults surveyed, 35 percent had a favorable impression of the protest movement that began in New York City and gained support worldwide. Only 16 percent could say the same for Wall Street and large corporations. Twenty-nine percent had a favorable impression of the tea party movement and 21 percent of government in Washington. Knowledge Networks conducted the survey, asking participants their impressions of the four groups. Wall Street and large corporations tied with Washington government in unpopularity, with 71 percent of those polled saying they had an unfavorable impression of big business and Washington. The tea party got a 50 percent unfavorable response and Occupy Wall Street 40 percent. The group surveyed was selected randomly and the poll conducted online from Oct. 28 through Nov. 1. It had a margin of error of 3.8 percentage points, meaning the results could go up or down by that amount. Last month, an Associated Press-GfK poll showed some 37 percent supported the Wall Street protesters. Fifty-eight percent said they were furious about America’s politics, up from 49 percent in January.

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Al Norman: Dancing on Wal-Mart’s Grave

August 20, 2011

In less than 11 months, Wal-Mart will turn fifty. No longer a company in its adolescent growth spurt, the giant retailer is showing its advancing age. In fiscal year 2011, Wal-Mart’s U.S. store count grew by only 49 units, or 1.3%. In 2010 by only 52 stores, or 1.4%. For some companies that would seem like an enormous expansion — but for Wal-Mart, it’s definitely a powering down mode. Ten years ago, Wal-Mart ‘s U.S. stores division opened 220 new stores — 4.5 times as many units as today. In his August 16th earnings report, Wal-Mart U.S. President Bill Simon admitted that his company was feeling the recession. “We remain concerned about the economic pressure on our customers and the uncertain impact it can have on their shopping behavior.” Some analysts have claimed that the recession was forcing shoppers into the waiting arms of Wal-Mart — but the disappointing comp store sales from the past nine quarters tell a very different story. If you go back to May of 2009 , Wal-Mart’s Chief Financial Officer proclaimed that his company was “in a great financial position.” But even then Wal-Mart was forecasting flat same store sales. But things got worse. By the following quarter , Wal-Mart admitted the sales environment was “more difficult than we expected.” The third quarter “continued to be difficult,” and by the end of fiscal 2010, the company told investors “U.S. sales will be more challenging” in the coming year. By February of 2011 , Wal-Mart was resigned to the reality that “it will take some time to see positive comparable store sales.” Some of Wal-Mart’s woes have been self-inflicted. For many years Wal-Mart has been over-building superstores, packing them in as close as three miles apart. The Ozark-based retailer was cannibalizing its own sales. ‘Old’ stores — sometimes built as recently as the mid-1990s — were being abandoned to build a bigger store down the street. This pattern is still happening today. In Seekonk, Massachusetts , for example, Wal-Mart is proposing a 156,000 s.f. superstore just half a mile from an existing Wal-Mart discount store of almost the same size. This “parking lot hopscotch” is wasteful, and an embarrassment for a company that prides itself on “sustainability.” No surprise then that Wal-Mart Realty currently has 145 empty buildings on its hands — what they call “excess property,” totaling a staggering 12.6 million square feet of dead stores. That’s the equivalent of 217 empty football fields. Based on new store openings in 2011, if Wal-Mart retrofitted the 145 stores it has for sale or lease, it would have enough room to grow in the United States for the next three years — without having to do any new building or engage in ugly site fights with angry neighbors. The other remarkable fact about Wal-Mart as it nears fifty, is that its U.S. division is rapidly shrinking in importance to the overall economic vitality of the company. In 1999 , Wal-Mart’s International segment accounted for only 1.6% of the company’s total net sales. Today, net sales from International stores represents 26% of the company’s total sales. In the past ten years, net sales at Wal-Mart U.S. have doubled — adding $138 billion. But International sales have more than tripled, adding $77 billion. Stores outside of the U.S. have become the beacon for the future of Wal-Mart. While Wal-Mart U.S. sales grew only by .1% in 2011, International sales grew by 12.1%. During the same stores sales slump of the past two years in America, Wal-Mart International has been described by CEO Mike Duke as “an impressive growth engine.” If this International growth is trended forward another ten years, the dominant economic focus for Wal-Mart will have shifted from America to the giant emerging markets of Africa, China and India. The power center will incrementally shift from Bentonville to Beijing. Right before our eyes, Wal-Mart, the erstwhile “Made in America” icon, is year-by-year morphing into China-Mart. As Wal-Mart’s U.S. operation loses momentum, and lack-luster same store sales performance from its overbuilt domestic inventory continues to disappoint, shareholders will suffer from Wal-Mart fatigue, and look for more nimble, faster-growing competitors. At that point in the not too distant future, there will be plenty of people ready to dance on Wal-Mart’s grave. Al Norman is the author of ‘The Case Against Wal-Mart.’ He has been helping communities fight big box stores since 1993. His website is http://www.sprawl-busters.com .

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Court Rules Key Health Care Law Provision Unconstitutional

August 12, 2011

ATLANTA — A federal appeals court panel on Friday struck down the requirement in President Barack Obama’s health care overhaul package that virtually all Americans must carry health insurance or face penalties. The divided three-judge panel of the 11th Circuit Court of Appeals struck down the so-called individual mandate, siding with 26 states that had sued to block the law. But the panel didn’t go as far as a lower court that had invalidated the entire overhaul as unconstitutional. The states and other critics argued the law violates people’s rights, while the Justice Department countered that the legislative branch was exercising a “quintessential” power. The decision, penned by Chief Judge Joel Dubina and Circuit Judge Frank Hull, found that “the individual mandate contained in the Act exceeds Congress’s enumerated commerce power.” “What Congress cannot do under the Commerce Clause is mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die,” the opinion said. Circuit Judge Stanley Marcus disagreed in a dissent. The 11th Circuit isn’t the first appeals court to weigh in on the issue. The federal appeals court in Cincinnati upheld the government’s new requirement that most Americans buy health insurance, and an appeals court in Richmond has heard similar legal constitutional challenges to the law. But the Atlanta-based court is considered by many observers to be the most pivotal legal battleground yet because it reviewed a sweeping ruling by a Florida judge. U.S. District Judge Roger Vinson’s ruling not only struck down a requirement that nearly all Americans carry health insurance, but he also threw out other provisions ranging from Medicare discounts for some seniors to a change that allows adult children up to age 26 to remain on their parents’ coverage. The states urged the 11th Circuit to uphold Vinson’s ruling, saying in a court filing that letting the law stand would set a troubling precedent that “would imperil individual liberty, render Congress’s other enumerated powers superfluous, and allow Congress to usurp the general police power reserved to the states.” The Justice Department countered that Congress had the power to require most people to buy health insurance or face tax penalties because Congress has the authority to regulate interstate business. It said the legislative branch was exercising its “quintessential” rights when it adopted the new law. During oral arguments in June, the three-judge panel repeatedly raised questions about the overhaul and expressed unease with the insurance requirement. Each of the three worried aloud if upholding the landmark law could open the door to Congress adopting other sweeping economic mandates. The arguments unfolded in what’s considered one of the nation’s most conservative appeals courts. But the randomly selected panel represents different judicial perspectives. None of the three is considered either a stalwart conservative or an unfaltering liberal. Dubina, an appointee of President George H.W. Bush, is not considered to be as reflexively conservative as some of his colleagues. But he’s been under particular scrutiny because of his daughter’s outspoken opposition to the health care overhaul. U.S. Rep. Martha Dubina Roby, a Montgomery, Ala., Republican elected in November, voted to repeal the health care law. Marcus and Hull were both tapped by President Bill Clinton to join the court. But Marcus was also previously appointed by Republican President Ronald Reagan to serve on the Florida bench after several years as Miami’s lead federal prosecutor. And Hull, a former county judge in Atlanta, is known for subjecting both sides of the counsel table to challenging questions. ___ Bluestein can be reached at http://www.twitter.com/bluestein

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Mitt Romney’s S&P Pitch Played Up Taxes

August 11, 2011

Gov. Mitt Romney lobbied the credit ratings agency Standard & Poor’s in 2004 to raise his state’s credit rating in part because Massachusetts had raised taxes during an economic downturn two years earlier.

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Richard Zombeck: Mass Register John O’Brien’s Presentation Draws Crowd of Recorders in Atlantic City

July 5, 2011

Registers, registrars and recorders from across the country gathered in Atlantic City on Tuesday for the Annual Conference of The International Association of Clerks, Recorders, Election Officials and Treasurers (IACREOT). Several of those attending made the trip specifically to see Massachusetts Register John O’Brien’s presentation on his findings of massive fraud he and Marie McDonnell of McDonnell Property Analytics , uncovered at the Massachusetts Southern Essex County Registry of Deeds According to O’Brien, McDonnell discovered that 75 percent of the assignments in the registry are fraudulent. The audit examined assignments of mortgage recorded in the Essex Southern District Registry of Deeds issued to and from JPMorgan Chase Bank, Wells Fargo Bank, and Bank of America during 2010. In total, 565 assignments related to 473 unique mortgages were analyzed. McDonnell’s Report includes the following key findings: Only 16% of assignments of mortgage are valid 75% of assignments of mortgage are invalid. 9% of assignments of mortgage are questionable 27% of the invalid assignments are fraudulent, 35% are “robo-signed” and 10% violate the Massachusetts Mortgage Fraud Statute. The identity of financial institutions that are current owners of the mortgages could only be determined for 287 out of 473 (60%) There are 683 missing assignments for the 287 traced mortgages, representing approximately180,000 in lost recording fees per 1,000 mortgages whose current ownership can be traced. You can Download the PDF of the report at http://www.homepreservationnetwork.com/cat_view/132-press-releases-and-memos or request a copy at www.mcdonnellanalytics.com “My registry is a crime scene as evidenced by this forensic examination,” O’Brien said. “This evidence has made it clear to me that the only way we can ever determine the total economic loss and the amount damage done to the taxpayers is by conducting a full forensic audit of all registry of deeds in Massachusetts. I suspect that at the end of the day we are going to find that the taxpayers have been bilked in this state alone of over 400 million dollars not including the accrued interest plus costs and penalties. ” After the presentation O’Brien was inundated by nearly 150 recorders asking questions and wanting to conduct investigations of their own. “I’m a hard person to please,” said Kevin Harvey, O’Brien’s first Assistant. “This was nothing short of extraordinary.” Jeff Thigpen, the register of deeds for Guilford County, North Carolina is another early trail blazer in this effort. While he did not attend the conference, I spoke with him on Wednesday. “What [O'Brien] is pointing out in a fundamental way is that the assignments are fraudulent and people need to look at the findings. It goes to the heart of where we are in all this, Thigpen said, “These institutions were once transparent and trusted, we now have a system that stacks the deck in favor of the financial services industry.” The report, along with the overwhelming response to it, comes in the midst of settlement talks with banks by the 50 attorney’s general . A settlement that to many homeowner advocates is unacceptable and premature based on how little is actually known about the overall depth and impact of the fraud. New York Attorney General Eric Schneiderman is expected to lead opposition to what he called a “quick, cheap settlement” of the 50-state investigation into foreclosure practices. Schneiderman launched his own investigation in April and has found the problem is much deeper. He said he was “stunned” to find the multi-state probe so lacking that no documents or witness depositions had been obtained. “We have no leverage,” Schneiderman said in an interview with the Democrat and Chronicle . O’Brien’s report could represent the catalyst to gaining that leverage. Earlier this month O’Brien vowed not to record fraudulent documents , so the banks started submitting replacement documents, including five from Bank of America, all with new signature and notaries. An obvious and sloppy whitewash of the documents O’Brien initially refused. “These lenders chose not to sign my affidavit, but rather to submit completely new documents,” O’Brien said. “I believe the Bank’s actions speak louder than words and show their consciousness of guilt.” O’Brien also told homeowners in his district to check the records at his website to see if their home mortgage documentation has been robo-signed. He’s facilitating consumer protection complaints through the Massachusetts AG. He has provided letters that homeowners can print out and send to their servicers, demanding their full chain of title pursuant to federal law. In an article today in the Boston Herald Edward Bloom of the Massachusetts Real Estate Bar Association said it’s not clear that robo-signed documents are invalid — or that O’Brien can legally reject them. “Mr. O’Brien is grinding the real estate business to a halt and he doesn’t have any right to do that,” Bloom said. But according to Nantucket attorney Jamie Ranney, points out in 15 page memo citing Massachusetts law , O’Brien not only has every right to refuse fraudulent assignments, he has a duty to his constituents to do so. It is without question that a Register of Deeds has an important and fiduciary relationship and responsibility — especially in the Commonwealth where his position is elected — to all of his constituents, as well as to the public at large, all of whom rely and who should be able to rely on the Register’s efforts, supervision, and oversight in assuring, maintaining and promoting the integrity, transparency, accuracy, and consistency of a County’s land records. The Register’s work and supervision of his registry most often revolves around tasks and responsibilities that are generally ministerial in nature. The Register is typically concerned with the daily task of recording of legal document(s) and/or instrument(s) affecting real property where such document(s) and/or instrument(s) are properly presented to the registry for recording on the public land records. However, the Register’s fiduciary duty goes well beyond these usual ministerial acts in circumstances where the Register has actual knowledge or a subjective good-faith belief/basis for believing that document(s) and/or instrument(s) being presented for recording or registration in the registry for which he has responsibility are fraudulent or otherwise not executed or acknowledged under applicable law. In such cases the Register may lawfully refuse to record such document(s) and/or instrument(s). O’Brien is calling on the Massachusetts Attorney General to look into his finding and many of the attendees at last weeks conference are planning to do the same. In a press release Wednesday, O’Brien said: Once again I am asking Attorney General Martha Coakley and the other state Attorney’s General to follow the lead of New York Attorney General Eric Schneiderman and stop any settlement talks with the banks. The results of this report are only for my registry, but I can assure you that this type of criminal fraud is rampant across the nation. This leaves me to question why anyone would consider settling with these banks until we know the full extent of the damage that they have caused to the homeowners chain of title across this country and the amount of money they have bilked the taxpayers for their failure to pay recording fees. Fortunately, as Georgetown Law Professor Adam Levetin points out in a recent piece at Credit Slips Massachusetts AG Martha Coakley has no problem going after banks and mortgage servicers. In fact Levetin says, “These settlements have received very little notice in the press, but I think they provide a real template for future AG settlements and are worth examining.” As with any settlement, one has to be a bit a skeptical when multi-billion dollar industries are willing to part with substantial chunks of change. And since the settlement with the AGs looks like it would release lenders from future claims and hinder law suits on the part of the individual states, O’ Brien’s and Thigpen’s efforts in raising the awareness of this to the other recorders across the country couldn’t come at a better time. Much like the $8.5 billion settlement with investors Bank of America is willing to part with that doesn’t really settle anything, whatever amount they’re willing to pay the AGs doesn’t look like it’s going to come near what’s really owed to the counties, states, and certainly not to the American people. “I am stunned and appalled by the fact that America’s biggest banks have played fast and loose with people’s biggest asset — their homes. This is disgusting, and this is criminal,” O’Brien said. ——- Join us at www.homepreservationnetwork.com – Homeowners, attorneys, advocates and foreclosure experts working together

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Hawaii’s Extensive Foreclosure Law Clogging Courts, Housing Market

July 5, 2011

HONOLULU — When Hawaii passed a new law with extensive protections to prevent residents from losing their homes, it was hailed as the nation’s strongest foreclosure law – maybe too strong, many warn. In response to the law, mortgage giant Fannie Mae directed its lenders three weeks ago to move all of its Hawaii foreclosures into the courts rather than use a mediation system the law created. The courts say they’ll struggle to handle the load, with foreclosure cases already taking 12 to 14 months to resolve. Lenders are warning lawmakers that they don’t intend to use mediation at all. The likely result will be further delays in getting foreclosed homes back on the market, prolonging the slow housing recovery at the root of the country’s enduring economic troubles. The 102-page law, signed by Gov. Neil Abercrombie in May, requires lenders to show mediators evidence of legal authority to foreclose, and they can be sued for deceptive practices for missteps in following the law’s process. The law also prohibits lenders from seeking deficiency judgments, which mean the homeowner still owes the remaining mortgage debt that’s not satisfied by a foreclosure sale. Such judgments are an option that’s still available if lenders instead pursue the court-run foreclosure process. The law arose from homeowner complaints that out-of-state lenders often rushed the more common foreclosure process that doesn’t involve the courts. Residents said the banks didn’t have proper documentation or proof that the action was justified, and attempts to work toward payment plans and loan modifications were denied, even though those efforts would ensure banks got paid and property owners could keep their homes. The law “closed the loophole in Hawaii foreclosure law that allowed lenders across the country to foreclose quickly … without our local families having a chance of any accountability, and without our families having a chance to explain their side of the story,” said Kim Harman, policy director for advocacy group Faith Action for Community Equity. Fannie Mae decided to seek foreclosures in the judicial system rather than wait for the mediation process to be set up by Oct. 1. In the meantime, Hawaii is operating under what amounts to a moratorium on nonjudicial foreclosures. Once established, the mediation system is expected to have a foreclosure turnaround time of four or five months – faster than the court process. “Currently, nonjudicial foreclosures cannot be pursued in Hawaii. The judicial foreclosure process allows homeowners to raise any challenges to the foreclosure in court,” said Fannie Mae spokeswoman Amy Bonitatibus in a statement. Fannie Mae didn’t expand on its reasons for moving its foreclosures to the courts, and it hasn’t revealed how many foreclosures it owns in Hawaii, a fact that many of its homeowners don’t even know. “Shifting these cases to the Judiciary … will result in a similarly frustrating situation of a backlog of thousands of cases and further frustration and delay, prolonging an already stressful situation for borrowers and all those involved,” said Rodney Maile, administrative director of the courts, in written testimony to the Legislature. Foreclosure filings were up slightly last month through June 27, to 166 compared with 109 in all of June last year, according to figures the Hawaii State Judiciary provided to The Associated Press. It’s unclear how much of the increase can be attributed to Fannie Mae. But a surge in court filings may be coming soon, both from Fannie Mae and other lenders that follow suit, said Ron Margolis of Hawaii Life Real Estate Brokers. “Fannie Mae is just the beginning,” he told lawmakers at a briefing last week. “We need to make the legislation not so rigid.” Hawaii had the nation’s 11th highest foreclosure rate last year, with 12,425 foreclosure cases, according to real estate research firm RealtyTrac Inc. Only about 10 percent of those foreclosures were handled by state courts, a figure that would greatly increase if lenders opt out of mediation. A lengthy, drawn-out foreclosure process in the courts will not only hinder the time before homes can be resold and lived in again, it also burdens other residents across the country who have nothing to do with the housing crisis, said Gary Fujitani, executive director for the Hawaii Bankers Association, whose members include the nine Hawaii-based banks. “The more losses Fannie Mae takes, it comes indirectly from the taxpayers’ pocket if they don’t collect on a timely basis,” Fujitani said. “Everybody’s looking at Fannie as a private entity, but this is a government-owned enterprise now.” Even if all these foreclosures end up overseen by the courts, the law’s defenders argue that judges can require lenders to provide the same documentation that would have been needed in mediation. A slower foreclosure process would at least give residents every opportunity to fight for their homes and try to agree on a payment plan, said House Consumer Protection and Commerce Committee Chairman Bob Herkes. Delays are also a gift to homeowners behind on their mortgages who can continue living in their houses during the foreclosure process. “If we erred on this bill, we erred on the side of the homeowner, not the lender,” Herkes said. Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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CA Loses $200 Million Per Year In Untaxed Internet Sales

June 20, 2011

AUSTIN, Texas — State governments across the country are laying off teachers, closing public libraries and parks, and reducing health care services, but there is one place they could get $23 billion a year if they could only agree how to do it: Internet retailers such as Amazon.com. That’s enough to pay for the salaries of more than 46,000 teachers, according to the U.S. Bureau of Labor Statistics. In California, the amount of uncollected taxes from Amazon sales alone is roughly the same amount cut from child welfare services in the current state budget. But collecting those taxes from major online retailers is difficult. Internet retailers are required to collect sales tax only when they sell to customers living in a state where they have a physical presence, such as a store or office. When consumers order from out-of-state retailers, they are required under state law to pay the tax. But it’s difficult to enforce and rarely happens. That means under the current system the seller is absolved of responsibility, buyers save 3 percent to 9 percent because they rarely volunteer to pay the sales tax, and the state loses revenue. With sales tax revenue slumping more than 30 percent in most states between 2007 and 2010, lawmakers across the country are grasping for ways to collect those unpaid taxes. Retailers and lawmakers in several states have proposed ways to solve the problem, some with more support than others. “The problem is that some out-of-state e-retailers openly flaunt the law, arguing that it doesn’t apply to them,” said Texas state Democratic Rep. Elliot Naishtat, who has offered a bill to require more Internet sellers to collect Texas sales tax. “It’s about potentially generating hundreds of millions of dollars for our state.” Texas cut $24 billion in state services to cover its revenue shortfall. That included decisions not to fund the expected growth in the number of public school students and the expected growth in the caseload for Medicaid, the health care program for the poor and disabled. Internet retailers cite a 1992 U.S. Supreme Court decision involving catalog sales, Quill Corp. v. North Dakota, which ruled that states could require only companies that had a physical presence within the state to act as tax collector. To get around the ruling, some states are expanding what it means to be physically present. For example, an online retailer hiring a marketing firm or owning a subsidiary inside the state would qualify under definitions adopted in some states. In February, the Texas comptroller demanded that Amazon.com pay $269 million in back sales taxes because a subsidiary operated a warehouse near Dallas. Amazon is appealing the order. Last year, New York enacted a law that said Internet retailers’ practice of paying commissions to marketing agents based within the state constituted a presence. Arkansas, Colorado, Illinois, Rhode Island and North Carolina quickly followed with similar laws. Bills are pending in Arizona, California, Florida, Hawaii, Massachusetts, Minnesota and Pennsylvania. Texas lawmakers passed such a measure, but Gov. Rick Perry vetoed it. Now legislators are trying to resurrect the bill by attaching it to a larger budget measure. The matter is now before a conference committee. California estimates it loses at least $200 million a year in uncollected tax from online sales, $83 million from Amazon.com alone. A bill that has passed the state Legislature would force Seattle-based Amazon and others to collect that tax from California residents. Amazon, Overstock.com and other big Internet retailers cite the Quill decision as their primary defense against collecting sales taxes, but they also argue that collecting tax in the District of Columbia and the 45 states where a sales tax exists would be extremely complex and expensive. “There are over 8,000 taxing jurisdictions in the United States,” said Jonathan Johnson, president of Overstock.com, which has offices only in Utah. “We think it’s wrong that states are trying to cause out-of-state retailers to be their tax collectors.” After all, Johnson said, these retailers do not use any state services where they don’t have offices. To avoid having to collect sales tax, Amazon threatened to close its warehouse in Texas, cut off marketing affiliates in Illinois and North Carolina and sued New York claiming the law there is unconstitutional. Earlier this month, Amazon severed ties with website affiliates in Connecticut after the governor signed into law a state tax on online purchases that is expected to raise $9.4 million. The movement by states to force online retailers to collect sales taxes is more than just an attempt by government to get more money. It also highlights a rift in the business community. Traditional retailers are complaining loudly to their elected officials, saying the current structure creates an unfair playing field. Wal-Mart, Target, Best Buy, J.C. Penney, Sears and other traditional retailers have formed The Alliance for Main Street Fairness to push for more stringent tax laws on Internet retailers. Brick-and-mortar stores saw sales plunge 9.1 percent between 2007-2009, while online merchants saw sales rise 4.8 percent, according to the latest data available from the U.S. Census Bureau. Wal-Mart’s comparable store sales were down nearly 1 percent in 2010. The alliance is pushing to expand the definition of physical presence, state-by-state, to force big online retailers to collect state sales tax. When Texas lawmakers took up such a bill, most of the testimony came from owners of small businesses. Gregg Burger, the general manager of Austin’s Precision Camera, complained that customers come into his store to inspect the products, but then go online to buy them to avoid the sales tax. “We get people all the time who come in, talk to a salesman for 15 minutes to half an hour … and then go, and we know they are going to buy it online because they can save money. In theory, they are stealing our time,” Burger said. “We’re losing at least 15 percent to online, out-of-state, so we’re losing anywhere between $3 million and $5 million a year in business.” While state laws would help, Burger said he would like to see a national solution. “We should be picking on everyone who ships into every state,” he said. But local Internet marketers that link to major Internet retailers complain the laws would hurt them. In Illinois and other states where such laws have passed, Internet retailers cut their ties with local web sites. Johnson, of Overstock, said the traditional retail giants are just getting a taste of their own medicine. “Local retailers complained that the big-box stores were coming in and taking their business, and the Wal-Marts of the world said they had a better business model and the world has changed,” Johnson said. “Today, the business model has changed and we can take cost out of the supply chain by doing business the way we do on the Internet. And for Wal-Mart, of all people, to be saying it’s not fair that Amazon and Overstock can’t be forced to be tax collectors is ironic.” Representatives for Wal-Mart and Target declined to comment for this story. While the U.S. Supreme Court sided with online retailers in its Quill decision, the ruling also said Congress should pass a law standardizing sales tax collection under the Interstate Commerce Clause. Perry, the pro-business and states-rights Texas governor, said in his veto message that a national solution is the only way to settle the issue. Traditional retailers have lobbied for the Main Street Fairness Act, which was reintroduced in Congress this spring by Sen. Dick Durbin, D-Illinois. The act would be “a helping hand to state and local governments at a time that they need it the most,” he said. While few think the Republican-controlled House of Representatives will pass a bill that critics have called “a tax on the Internet,” the sudden flurry of action in state legislatures and lobbying by big retailers could provide a boost to efforts to pass such a law, even among conservatives. Those lawmakers find themselves in a bind between opposing taxes and supporting traditional businesses. “Republicans and Democrats alike recognize that there is an inequity here,” said Danny Diaz, a spokesman for the Alliance for Main Street Fairness. A component of the proposed federal law is a requirement for states to adopt the Streamlined Sales and Use Tax Agreement, which would standardize sales tax laws and filing requirements for Internet retailers. To sweeten the pot, states would reimburse companies for any additional costs involved in collecting it. Already, 24 states have adopted the streamlined sales tax, while 1,500 companies have voluntarily collected $700 million in sales tax revenue since 2005 using the system, said Scott Peterson, executive director of the Streamlined Sales Tax Governing Board. The volunteer retailers represent only a fraction of online sales. Overstock’s Johnson and Paul Misener, vice president for global public policy at Amazon, said they would support a national standard using the Streamlined Sales and Use Tax Agreement. “We’ve long supported a truly simple, national approach, evenhandedly applied,” Misener said. “This is federalism at work, and many states are making the right decision to seek a federal solution.”

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IMF Cuts U.S. Growth Forecast, Warns Against ‘Playing With Fire’

June 17, 2011

SAO PAULO (Luciana Lopez) – The International Monetary Fund cut its forecast for U.S. economic growth on Friday and warned Washington and debt-ridden European countries that they are “playing with fire” unless they take immediate steps to reduce their budget deficits. The IMF, in its regular assessment of global economic prospects, said that bigger threats to growth had emerged since its previous report in April, citing the euro zone debt crisis and signs of overheating in emerging market economies. The global lender forecast that U.S. gross domestic product would grow an anemic 2.5 percent this year and 2.7 percent in 2012. In its forecast just two months ago, it had expected 2.8 percent and 2.9 percent growth, respectively. The outlook elsewhere was mixed. The IMF said it was slightly more optimistic about the euro area’s growth prospects this year, but a lack of political leadership in dealing with that crisis and the budget showdown in the United States could create major financial volatility in coming months. “You cannot afford to have a world economy where these important decisions are postponed because you’re really playing with fire,” said Jose Vinals, director of the IMF’s monetary and capital markets department. “We have now entered very clearly into a new phase of the (global) crisis, which is, I would say, the political phase of the crisis,” he said in an interview in Sao Paulo, where the forecast was published. In the United States, the political problems include a fight over raising the debt ceiling. Fears that the world’s biggest economy could default, even briefly, have rattled markets, with Fitch Ratings saying even a “technical” default would jeopardize the country’s AAA rating. Meanwhile, Greece has edged closer to default as euro zone officials disagree on a possible second aid package for the indebted country. With strikes and protests around the country, political turmoil has added to uncertainty, stoking fears that the government will not be able to tighten its belt enough to reduce crippling deficits. “If you make a list of the countries in the world that have the biggest homework in restoring their public finances to a reasonable situation in terms of debt levels, you find four countries: Greece, Ireland, Japan and the United States,” Vinals said. EMERGING MARKETS OVERHEATING? Fears of contagion in the euro zone have driven global markets lower in recent sessions, with other vulnerable countries such as Ireland and Portugal feeling pressured. The IMF raised its growth view for the euro area in 2011 to 2 percent from 1.6 percent. For 2012, the IMF saw growth at 1.7 percent, nearly stable from its previous 1.8 percent. It raised its forecast for Germany, the powerhouse of the euro zone, to 3.2 percent from 2.5 percent, with growth moderating to 2 percent in 2012. Forecasts for large emerging markets remained stable or slipped. While China’s GDP view stayed at 9.6 percent this year, the IMF lowered its forecast for Brazil to 4.1 percent from 4.5 percent in April. Those countries, along with Russia, India and South Africa, make up the fast-growing BRICS, a group of emerging economies whose brisk expansion has outstripped that of developed markets recently. Robust growth has caused emerging economies to tighten monetary policy, with higher interest rates and reserve requirements, even as many developed nations keep policy ultra-loose to try to boost anemic growth. The IMF warned that many emerging markets still need more tightening. In China, for example, the high inflation rate means negative real interest rates. Some emerging markets have been reluctant to tighten too far, fearful of derailing growth or attracting speculative flows that could pressure currencies ever higher. (Editing by Brian Winter and Leslie Adler) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Global Food Prices Only Getting Higher This Decade: Report

June 17, 2011

PARIS (Gus Trompiz) – World commodity prices will keep up their relentless push higher this decade compared to previous years, supported by burgeoning demand for food and fuel as well as knock-on effects from energy costs, the FAO and OECD said. Prices of major farm commodities, however, should ease from highs seen in the past year as the recent spike spurs increased output, a report said ahead of a key summit next week where G20 agriculture ministers will grapple with volatile food prices. “Commodity prices should fall from the highs of early 2011, but in real terms are projected to average up to 20 percent higher for cereals (maize) and up to 30 percent for meats (poultry) over the 2011-20 period compared to the last decade,” the report said. World food prices hit a record high earlier this year, triggered mainly by bad weather, reviving memories of soaring prices in 2007-2008 that sparked riots in countries such as Egypt, Haiti and Cameroon. President Nicolas Sarkozy, head of the G20 leading economies, is gunning for a summit deal imposing tough new rules on speculators, whom he blames for the surge in food prices which have gained nearly 40 percent over the past 12 months. G20 agriculture ministers meet in Paris next week. Most food commodities were set to see increased average prices in real terms versus the past decade while all were expected to rise in nominal terms, the report by the United Nations’ Food and Agriculture Organization and the Organization for Economic Cooperation and Development said. A recovery in agricultural stocks after a drawdown that fueled high prices in 2010/11 will be limited by production constraints such as declining yield growth and rising input costs, the bodies said in their joint Agricultural Outlook 2011-2020 report published on Friday. Global agricultural output was projected to grow at 1.7 percent annually on average in the next 10 years, down from 2.6 percent in the previous decade, reflecting lower crop growth. “The global slowdown in projected yield improvements of important crops will continue to exert pressure on international prices,” the report said, adding this would be partly offset by productivity gains in emerging countries. The FAO warned in a separate report last week that a forecast rise in world grain output this year would not be enough to build up stocks and bring much lower prices, even if its world price index has eased from a record high in February. FEED, FUEL TO DRIVE MAIZE PRICES Rising costs of inputs like fertilizers and other farm chemicals sensitive to oil prices would also curb output by pressuring profitability, the joint FAO and OECD report said, estimating nominal maize prices would not increase in the period to 2020 when deflated for U.S. production costs. Like in their joint outlook last year, they pointed to growing use of grains in biofuels as contributing to price pressure by reinforcing a link with energy markets and by raising demand for foodstuffs like maize and vegetable oils. Together with other international organizations, they have called on the Group of 20 leading economies to end subsidies for biofuels in order to help rein in food costs, adding their voice to a fierce debate over biofuels that has been framed by critics as a question of “food versus fuel.” In their new report the FAO and OECD also reiterated their support for measures to improve productivity, market information, policy coordination and risk management in order to stem price volatility, themes that are set to be endorsed by G20 farm ministers at their meeting next week. Among cereals, the sharp rise in average prices for maize (corn), linked to robust demand for the crop in both ethanol fuel and animal feed, would outstrip stable wheat prices and cut the price spread between the two crops to close to 1.2 by 2020 versus 1.4 in the previous decade, the FAO and OECD report said. By 2020 biofuels were projected to absorb 13 percent of global production of coarse grains, primarily maize, 15 percent of vegetable oil and some 30 percent of sugar. Sugar prices were expected to remain higher on average to 2020 versus the previous decade, after coming off a recent 30-year peak, but will see cycles linked to government policies, notably in India, and conditions in top producer and exporter Brazil, the report said. Meat prices in real terms would also stay on a higher level, supported by growing demand in developing countries and as rising input costs limit price-driven herd expansion. (Reporting by Gus Trompiz; editing by Eric Onstad and Keiron Henderson) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Barry Silbert: The Great Disconnect: American Jobs, Global Competitiveness & The Stock Market

June 16, 2011

Last month, I was invited by Congress to testify at a hearing about capital formation. It was a terrific opportunity for me to discuss topics critical to the future of our country, and offer my thoughts on the regulatory hurdles facing private companies in this country. SEC Chairman Mary Schapiro also testified, and I was pleased to hear that the Commission is earnestly assessing the state of the public stock markets and the usefulness of decades-old rules governing capital formation. The hearing, convened by the Committee on Government Oversight and Reform, was a tangible step towards correcting outdated rules and regulations to assist American growth-stage companies. In fact, the House Financial Services Committee introduced a bill this week to revise one of the outdated rules. That’s the good news. The bad news is that many Americans are unaware that the U.S. public stock markets no longer support growth-stage companies. Systemic changes have caused companies to remain private far longer than in previous decades, potentially impacting job creation and American global competitiveness. This post is the first in a series where I will summarize my testimony and address three interconnected but distinct topics: (1) The Past: The Systemic Problems in the U.S. Public Stock Markets; (2) The Present: The Role of SecondMarket and the Private Company Stock Market; and (3) The Future: Proposed Regulatory Changes to Support Growth-Stage Companies. Part One – The Past For several decades, startup companies in the U.S. followed a familiar path — they raised angel capital, a few rounds of venture capital, and went public within five years. The vast majority of IPOs were for companies raising $50 million or less, even adjusted for inflation. Smaller public companies could thrive in the public markets, with equity research coverage and market makers driving investor interest in growth-stage companies. However, in recent years, the market structure changed and the public markets became inhospitable to smaller public companies. Quite frankly, prior to SecondMarket’s involvement with private company stock, I did not understand the breadth and depth of the problems facing public companies in America. After analyzing the topic over the past few years, including reviewing research findings from leading industry observers , I came to appreciate the broad impact of the systemic changes in the market. Several factors have been recognized as contributing to the problems in the American public stock markets : • Online Brokers – Although the introduction of online brokerages helped to make trading less expensive, these online brokers disintermediated retail brokers who helped buy, sell and market small-cap, under-the-radar public companies to investors. Stockbrokers collectively made hundreds of thousands of calls per day to their clients to discuss small-cap equity opportunities; they were not calling to recommend buying shares of IBM or Procter & Gamble. The proliferation of online brokerages decimated the profession and removed a critical marketing tool for the country’s small-cap companies. • Decimalization – Stock prices used to be quoted in fractions (e.g., the price of Company A was 10¼ or 10½). The difference between fractions created profit for firms providing market making, research and sales support. When the markets began quoting prices in decimals (e.g., now Company A is $10.25 or $10.26), trading spreads were reduced and profits were significantly cut. It became unprofitable to market small-cap equity because there was inadequate trading volume in the small-cap companies. In other words, the penny spreads were not adding up to support the traders and research analysts covering smaller companies. • Sarbanes-Oxley – The legislation is a popular punching bag in Washington and is often blamed for the lack of IPOs; however, many observers believe it is not the most significant factor in companies electing to remain private. Nonetheless, corporate compliance with the Sarbanes-Oxley Act has certainly increased costs for public companies. • Global Research Settlement – After decimalization began, in an effort to continue writing research reports, Wall Street began funding research with investment banking profits. Not surprisingly, once the practice began, conflicts of interest emerged and positive equity reports began to be written for undesirable companies. It’s difficult for research analysts to write objective reports about companies that are also investment banking clients! State attorneys general got involved, eventually leading to the global research settlement. The result was that research reports stopped being written for small-cap public companies and, consequently, a significant marketing mechanism for those companies was eliminated. • High-Frequency Trading – Although high-frequency traders bring significant liquidity to the public markets, they require the volume and velocity that can only be found in trading stock of larger public companies. A recent report stated that high-frequency traders conduct more than half of the trades in the U.S. equity market. High-frequency traders essentially ignore small-cap companies because there is insufficient liquidity in small companies to support high-frequency trading objectives. • Average Hold Period – Over the past forty years, the average time that a public market investor holds stock has dropped from approximately five years in 1970 to less than three months today. Investors now focus their attention on short-term earnings performance, rather than long-term, business-building initiatives. Virtually all of these developments emerged from either well-intentioned policy decisions or the natural evolution of the markets in an electronic age. Nonetheless, taken in the aggregate, these (and other) factors have made the public markets undesirable for many companies. Throughout the 1980s and 1990s, the regulatory environment and overall market structure actively supported high-growth private companies joining the public markets. From 1991 to 2000, there was an average of 520 IPOs per year, with a peak of 756 IPOs in 1996. Today, the lack of a properly functioning public market structure is strikingly obvious. Since 2001, the United States has averaged only 126 IPOs per year, with 38 in 2008, 61 in 2009 and 71 in 2010. Companies are electing to remain private longer than in previous decades, and the average time a company remains private has essentially doubled in recent years. Simply put, the lackluster IPO market is not providing the solution for investors and early employees who need liquidity. M&A is an alternative option for companies to obtain liquidity; however, acquisitions often result in job losses and stifled innovation. The growth market is a significant and vital part of the capital formation process, and the systemic failure of the US capital markets to support healthy IPOs inhibits our economy’s ability to create jobs, innovate and grow. Over the past few years, I have developed relationships with executives at numerous private companies. These executives are concerned that they are not ready or able to successfully navigate the public markets, which increasingly cater to traders, rather than investors. They are concerned about regulatory hurdles that restrict their ability to remain private. They are concerned about the proliferation of high-frequency trading and the casino-like atmosphere in the public markets. They are concerned that when traders own stock for weeks (or seconds), they don’t care about company fundamentals or long-term objectives. They are concerned about activist shareholders. They are concerned about managing to quarterly earnings when they’re trying to build something long-term. Clearly, a new growth market must emerge. In my next post, I’ll discuss how SecondMarket can be part of the solution.

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Romney’s ‘Unemployed’ Joke Sparks Democratic Backlash

June 16, 2011

TAMPA, Fla. — Republican presidential candidate Mitt Romney told a group of out-of-work Floridians Thursday that “I’m also unemployed,” quickly drawing criticism from Democrats who said it showed the former Massachusetts governor and multimillionaire was out of touch. Romney made the comment while criticizing President Barack Obama’s economic plan to a small group of business owners and unemployed workers at a Tampa coffee shop. The former equity firm CEO told the group that he did have his eye on one particular job, however. Florida Congresswoman Debbie Wasserman Schultz, the chair of the Democratic National Committee, issued a statement saying Romney’s comments were “inappropriate and insensitive to the millions of Americans looking for work.” “This comment shows that Mitt Romney – a man who wants for nothing and whose only occupation for more than four years has been to run for president – is incredibly out of touch with what’s going on in our country and around the dinner tables of those who are out of work,” she said. “Being unemployed, Mr. Romney, is not a joke.” Romney spokesman Eric Fehrnstrom called the Democratic criticism an “absurd distortion” of statement that what was clearly made in jest. “The person who doesn’t take the employment crisis seriously is President Obama, who has discontinued his daily economic briefing,” Fehrnstrom said. “If elected, Mitt Romney will reinstate the daily economic briefing and make job creation his number one priority.” At an appearance in Georgia later in the day, Romney attacked the Obama administration’s record on unemployment and said he was poking fun at himself. “I will always make light of myself,” Romney said during a tour of Kenny’s Great Pies in Smyrna, Ga. “Self-deprecating humor is a part of who I am.” “But the reality is we have a president who doesn’t understand the plight of the unemployed.” Florida’s April unemployment rate was 10.8 percent, higher than the national rate of 9 percent.

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Manisha Thakor : Are High Gas Prices Leaving You "Gas"-ping for Relief?

June 15, 2011

Recently a friend emailed me a photo from a gas station. It showed a $100 price tag for filling up the tank on his 2004 SUV. The message said:  “Holy Cow – I’ve never seen a bill like this before.” Welcome to the new normal in transportation. Millions of consumers who are already reeling from job losses, stagnant wages, and declining home prices now have a new life challenge to add to the list: the specter of $4/gallon gasoline. According to an Associated Press poll, a whopping 4 out of 10 Americans are experiencing financial hardship due to rising gas prices. With the average family spending $110 or more a month on gas than they were just six months ago, it’s no wonder many people are finding themselves “gas”-ping for relief. So what can you do to help ease the financial pain? Check with your employer to see if they offer a Commuter Account. This nifty employee benefit enables you to pay for commuting-related expenses, such as public transportation costs (think: bus, subway, train, ferry, bicycle and vanpool expenses), as well as parking (either near public transportation or at work)…with pre-tax dollars. Those last three words, “with pre-tax dollars,” contain the hidden treasure. In plain English, that phrase means you could save up to 40 percent on these qualified commuter-related costs. The reason is that, when you sign up for a Commuter Account, the money used to pay for those expenses comes right out of your paycheck before Uncle Sam takes his share , so you are not taxed on those dollars. Another neat feature of Commuter Accounts is that they are quite flexible. You can sign-up (or sign-off) on a monthly basis throughout the year. This monthly enrollment feature is in contrast to the other types of pre-tax benefits, like health care flexible spending accounts, which limit your ability to sign-up to just once a year during open enrollment period or when you experience a qualifying life event, such as the birth of a child. As luck would have it, around the corner on June 16th is ” Dump the Pump ” day. This is a nationwide celebration of the myriad of ways in which we can each rethink our transportation strategies. So if you are driving yourself to work each day and getting sick of the prices at the pump, this is a great time to think about switching to public transportation, as well as taking advantage of Commuter Accounts to pay for your qualified commuting expenses. Shockingly, only 1 in 5 workers eligible for Commuter Accounts takes advantage of this money-saving benefit. That’s why I’ve teamed up with WageWorks to help raise awareness around this cost savings opportunity. And given that signing up for this benefit is like getting a coupon for up to 40 percent off qualified expenses, you’ll want to run–not walk–to your benefits office to see if you are eligible. Last but not least–let’s talk bottom line. How much could you realistically expect to save by taking advantage of these types of programs? Well, each month participants can contribute up to $230 for public transportation and $230 for parking costs – if the parking lot is near the workplace or used to get to the workplace. (To get a sense of the cost savings for your specific situation, check out this online calculator ). Assuming full use of these benefits is made by a participant who is in the maximum tax bracket, annual savings can be in the $1,800 to $2,200 range. Now that’s something worth “gas”-ping about…but this time for joy. [This post originally appeared at ManishaThakor.com .] Manisha Thakor on Twitter at @ManishaThakor , sign up to get her email updates delivered right to your inbox here , and enroll in her innovative new online personal finance course called ” Money Rules .”]

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WATCH: Man Receives Foreclosure Notice For $0.00

June 8, 2011

Of all the foreclosure warnings issued during the housing crisis, perhaps oddest is the one demanding no money at all. Earlier this year, in Northampton, Massachusetts, a man, referred to in reports only as Mark, received a notice demanding that he pay $0.00 to his mortgage lender, Bank of America, or his home would be seized, according to local television network News 22 WWLP . The notice surprised Mark, who had consistently made his mortgage payments, yet it was indeed no joke, as Mark found his credit score had been downgraded. Despite the gravity of the situation, Mark understood the absurdity of it all. “It says, you owe us zero dollars, zero cents. I’m going to write a check to them for zero dollars and have it clear? I couldn’t help but laugh,” he told News 22 WWLP, who, in turn, informed Bank of America of the story after Mark himself had struggled to get in contact with the bank. Turns out, an electronic filing error caused Mark’s payments to end up in the wrong place. Bank of America made right after the mix-up, making sure Mark’s credit score was restored and, of course, allowing him to keep his home. For his trouble, he also got a little extra in the form $150 and a gift certificate. The story is only the latest in a string of bizarre foreclosure incidents. In Jacksonville, Florida, home flipper Perry Laspina ended up not having to pay the remainder of his mortgage on an investment property first purchased in 2006, AOL Real Estate reported in April. After the value of his investment plunged, the story goes, Laspina found no buyers or renters and so simply stopped making payments. His lender, Wells Fargo, was apparently not at odds with the idea, and the loan was written off, the house subsequently given to Laspina. Others have found success by taking more direct action against banks. Instead of being foreclosed upon, one couple in Naples, Florida actually foreclosed on Bank of America. After the bank failed to compensate Warren and Maureen Nyergers for legal fees leftover from a wrongful foreclosure lawsuit, the couple, with the help of their lawyer and two sheriff’s deputies, began legally seizing assets from the bank’s branch office. Then of course, there’s the Bank of America that foreclosed on itself in Charlotte, North Carolina. In that case, Bank of America has filed a foreclosure lawsuit against the owner of a building housing one of the bank’s own branches. Watch the News 22 WWLP news segment here: I-Team:Man gets a $0 foreclosure notice: wwlp.com

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To Keep His Job, Obama Needs More Jobs

June 4, 2011

WASHINGTON — President Barack Obama cannot escape one giant vulnerability as he bids to keep his job: Millions of voters still don’t have one. Suddenly, the snapshot of the American economy is depressing again. Job creation is down. So is consumer confidence. And homes sales, auto sales, construction spending, manufacturing expansion. The brutal month of May was a reminder of the economy’s fragility and the risks for an incumbent president. Nothing that Obama oversees, not even a success as dramatic as finding and killing Osama bin Laden, will matter as much as his handling of the economy. It is the dominant driver of voter behavior. People hold their president accountable if they can’t find work in the richest country in the world. The weakening recovery is testing the entire foundation of Obama’s optimistic economic message, that the nation is getting stronger all the time. As much as the White House says it never dwells on any single jobs report, and Obama never even mentioned the troubling one released Friday, the stakes get higher by the month. A finally forming field of Republican presidential competitors is maneuvering into the space for the public’s attention with this message: Obama has failed. Election Day 2012 is 17 months away, and Obama’s campaign knows incremental job growth won’t do. The unemployment rate is 9.1 percent. If it stays anywhere near there, Obama will face re-election with a higher jobless rate than any other post-war president. In his favor, Obama still has the loudest voice to sell his message that the longer term trends, including job growth every month, are good. Nearly halfway through a year dominated by foreign events mostly outside his control, he plans to build his next few months around economic events. So what comes next will be a summer when both sides select the economic facts that best suit their case. It will play against a backdrop of trying to cut a massive deficit while letting the nation borrow more so it doesn’t default. As Obama pushes his economic agenda, his re-election chances bank on more than job growth. They also depend on how well he can remind people that he inherited a recession and that compared with the early days of 2009, the country is in a better place. “This economy took a big hit,” Obama said Friday in Ohio, a pivotal 2012 state. “You know, it’s just like if you had a bad illness, if you got hit by a truck, it’s going to take a while for you to mend. And that’s what’s happened to our economy. It’s taking a while to mend.” Is progress enough to convince people that he deserves a second term? If so, he can’t afford many setbacks like the new jobs report. Employers in May added just 54,000 jobs, the fewest in eight months. Almost 14 million people are jobless. Analysts suggested the economy could improve this year, but the recovery could be weak for months. “There are always going to be bumps on the road to recovery,” Obama said. The Republicans hoping to unseat him pounced. _Former Massachusetts Gov. Mitt Romney: “President Obama has failed to pull us out of this economic downturn. _Former Minnesota Gov. Tim Pawlenty: “Obama’s failure to address the tough challenges” is clear. _Former House Speaker Newt Gingrich: “The administration’s policies are failing.” Obama’s political tendency is to take the longer view. An Associated Press-GfK poll less than a month ago, for example, showed rising public optimism about the economy and his stewardship. The election won’t be just a referendum on Obama and the unemployment rate. It also will offer a choice between his economic ideas and his opponent’s. Still, just as change worked for him last time, it can be used against him in 2012. Even 8 percent unemployment, a goal once promoted by the administration, is hard to see now. Presidents Jimmy Carter, Reagan and George H.W. Bush all faced unemployment rates higher than 7.5 percent in the final months of their re-election campaigns. Reagan won, and an important factor for him was that the jobless rate was declining at the time. Carter and Bush lost. Obama, for now, has no reason to engage the politicians trying to win his job. He instead presents himself as the workers’ champion who risked his own capital and their money in a successful bid to help Chrysler and General Motors survive and return to profitability. “I’ll tell you what. I’m going to keep betting on you,” Obama told workers at a Chrysler plant in Toledo, Ohio. And hope they’ll do the same for him. __ EDITOR’S NOTE – White House Correspondent Ben Feller has covered the Bush and Obama presidencies for The Associated Press.

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Video: Paul on Debt Ceiling, Spending: Political Capital With Al Hunt

June 4, 2011

June 3 (Bloomberg) — Republican presidential candidate Ron Paul talks with Bloomberg’s Al Hunt about the U.S. debt ceiling, U.S. troop withdrawals from Afghanistan, Pakistan and Libya, and Federal Reserve monetary policy. Bloomberg’s Rich Miller and Hans Nichols discuss the state of the U.S. economy and the Fed’s quantitative easing program. Julie Davis talks about the debate over the debt ceiling and a documentary on Sarah Palin to premiere in Iowa next month. Commentators Margaret Carlson and Amity Shlaes discuss the outlook for former Massachusetts Governor Mitt Romney as a Republican presidential nominee. (Source: Bloomberg)

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Mitt Romney’s Economic Claims vs. The Facts

June 3, 2011

WASHINGTON — In rhetorical excesses marking his entry in the presidential campaign, Mitt Romney said the economy worsened under President Barack Obama, when it actually improved, and criticized the president for issuing apologies to the world that were never made. A look at some of the statements by Romney on Thursday in announcing his bid for the Republican nomination and how they compare with the facts: ROMNEY: “When he took office, the economy was in recession. He made it worse. And he made it last longer.” THE FACTS: The gross domestic product, the prime measure of economic strength, shrank by a severe 6.8 percent annual rate before Obama became president. The declines eased after he took office and economic growth, however modest, resumed. The recession officially ended six months into his presidency. Unemployment, however, has worsened under Obama, going from 7.8 percent in January 2009 to 9.1 percent last month. It hit 10.1 percent in October 2009. A case can be made for and against the idea that Obama’s policies made the economy worse than it needed to be and that the recession lasted longer than it might have under another president. Such arguments are at the core of political debate. But Obama did not, as Romney alleged, make the economy worse than it was when he took office. ___ ROMNEY: “A few months into office, he traveled around the globe to apologize for America.” THE FACTS: Obama has not apologized for America. What he has done, in travels early in his presidency and since, is to make clear his belief that the U.S. is not beyond reproach. He has told foreigners that the U.S. at times acted “contrary to our traditions and ideals” in its treatment of terrorist suspects, that “America has too often been selective in its promotion of democracy,” that the U.S. “certainly shares blame” for international economic turmoil and has sometimes shown arrogance toward allies. Obama, whose criticisms of America’s past were typically balanced by praise, was in most cases taking issue with policies or the record of the previous administration, not an unusual approach for a new president – or a presidential candidate. Romney’s actual point seems to be that Obama has been too critical of his country. But there has been no formal – or informal – apology. No saying “sorry” on behalf of America. ___ ROMNEY: “Three years later, foreclosures are still at record levels. Three years later the prices of homes continue to fall.” THE FACTS: Although foreclosures remain high, the number of U.S. homes that were repossessed by lenders fell in April, compared with March and a year ago, according to the foreclosure listing service RealtyTrac Inc. Romney’s claim about home prices, though, is supported by the Standard & Poor’s/Case-Shiller 20-city monthly index. It found home prices in big metro areas have sunk to their lowest since 2002. Since the bubble burst in 2006, prices have fallen more than they did during the Great Depression. ___ ROMNEY: “Instead of encouraging entrepreneurs and employers, he raises their taxes, piles on record-breaking mounds of regulation and bureaucracy and gives more power to union bosses.” THE FACTS: Romney ignores ambitious tax-cutting pushed by Obama. The stimulus plan early in his presidency cut taxes broadly for the middle class and business. He more recently won a one-year tax cut for 2011 that reduced most workers’ Social Security payroll taxes by nearly a third. He also campaigned in support of extending the Bush-era tax cuts for all except the wealthy, whose taxes he wanted to raise. In office, he accepted a deal from Republicans extending the tax cuts for all. As for tax increases, Obama won congressional approval to raise them on tobacco and tanning salons. The penalty for those who don’t buy health insurance, once coverage is mandatory, is a form of taxation. Several large tax increases in the health care law have not yet taken effect. ___ ROMNEY: “The expectation was that we’d have to raise taxes but I refused. I ordered a review of all state spending, made tough choices and balanced the budget without raising taxes.” THE FACTS: Romney largely held the line on tax increases when he was Massachusetts governor but that’s only part of the revenue story. The state raised business taxes by $140 million in one year with measures branded “loophole closings,” the vast majority recommended by Romney. Moreover, the Republican governor and Democratic lawmakers raised hundreds of millions of dollars from higher fees and fines, taxation by another name. Romney himself proposed creating 33 new fees and increasing 57 others – enough to raise $59 million. Anti-tax groups were split on his performance. The Club for Growth called the fee increases and business taxes troubling. Citizens for Limited Taxation praised him for being steadfast in supporting an income tax rollback. ___ Associated Press writers Steve LeBlanc in Boston and Jim Drinkard in Washington contributed to this report.

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Bringing Solar Energy To The Masses

May 16, 2011

The California-based solar leasing firm Sungevity announced a deal on Monday with home improvement giant Lowe’s that could make obtaining a personalized estimate for installing solar panels a push-button affair at Lowe’s outlets. The deal gives Lowe’s just under a 20 percent stake in Sungevity, according to a solar industry source, though neither company would discuss specific dollar figures. Under the agreement, scheduled to launch in 30 Lowe’s stores in California in July, customers will be able to access kiosks equipped with Sugevity’s iQuote system , a Web-based application that allows homeowners to simply enter their address and receive a firm installation estimate within 24 hours, eliminating the expense of an on-site visit. The system combines aerial and satellite image analysis with research by Sungevity engineers at the company’s Oakland headquarters to assess the geometry of a home’s rooftop, its disposition to the sun at different times of day and year and any potential occlusions presented by nearby vegetation or built objects. In addition to an installation estimate, customers can also get a visual rendering of their home with solar panels installed. And if interested parties provide information on typical power usage, such as an account number or past electric bills, the iQuote system can estimate potential savings expected from using the equipment. The iQuote system can already be used online , and the company’s founder, Danny Kennedy, estimated that roughly 25,000 users had taken it for a test drive, though only about 1,500 of those had been converted to sales. The deal with Lowe’s, Kennedy said, could help Sungevity — a petite player in the solar leasing market compared to bigger players like SolarCity of San Mateo, Calif., or San Francisco-based SunRun, which raised $200 million in financing earlier this month — significantly expand its reach. “This will help us to get in front of thousands more customers, in front of middle America,” Kennedy told The Huffington Post. “We’ll be taking it to the ‘burbs, as it were.” Despite tough economic times and often uncertain economic incentives, a number of analyses predict a boom year for solar power in 2011. A report published in December by IDC Energy Insights, a market research firm based in Framingham, Mass., estimated following a healthy 2010, the solar market in North America could well see two gigawatts of solar power installations this year. Jay Holman, the report’s lead analyst, told The Huffington Post that those numbers had been revised somewhat, but that 2011 was still expected to bring in 1.6 gigawatts of new solar installations, roughly double the 2010 total. Part of the reason for America’s interest in solar energy may be a decline in the robust incentives the once drew a deluge of equipment and installations to the European market, particularly countries like Germany, the Czech Republic and Italy, Holman said. Those countries have begun to scale back their subsidies, forcing companies to look to other markets. Meanwhile, federal tax incentives, including a 30 percent tax cash grant extended through the end of 2011, have helped keep solar alive. Several states have healthy incentives in place as well, including the eight states where the Sungevity/Lowes deal will eventually be rolled out: Arizona, California, Colorado, Delaware, Maryland, Massachusetts, New Jersey and New York. Holman also said solar leasing companies like Sugevity, SunRun and Solar City, which retain ownership of the equipment while reducing or, in many cases, eliminating the up-front installation costs, also help drive the expansion of solar power. “Obviously, we’re obsessed with being customer-focused,” said Kennedy. “We hope that this deal will make going solar as easy as shopping for light bulbs.”

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Health Care For All Nears Reality In One State

May 11, 2011

MONTPELIER, Vt. — Accustomed to being the first to dip its toe into hot-button issues, Vermont is preparing to provide public health care to all residents regardless of income, moving toward a government-run system that will take it as close to Canada philosophically as it is geographically. Gov. Peter Shumlin is expected to sign legislation this month marking the first step on the path to phasing out most private insurance. The effort puts Vermont well in front of last year’s federal health care overhaul. The ultimate goal, Shumlin said recently, is a Canadian-style system “where health care is a right and not a privilege.” But it’s not clear yet how Vermont – the first state to ban slavery in its constitution and to give marriage-like rights to same-sex couples – will achieve universal health care. The legislation places responsibility for the details of the new system, including how to pay for it, in the hands of a powerful new state board. Vermont’s turn toward universal care comes as more than two dozen states have gone in the opposite direction, suing to overturn the federal law. The U.S. House last week voted to strip federal funding from key parts of it, though that move is expected to die in the Senate. While the federal law requires people to have health insurance and offers subsidies to help low- and moderate-income people buy it, Vermont would go further. It would change the way doctors and hospitals are paid and streamline the processing of insurance claims. The federal law was modeled in part on Massachusetts’ groundbreaking 2006 system that required all residents to have health insurance; unlike the Vermont plan, the Massachusetts program does not provide health care to all but does offer subsidized insurance to those can’t otherwise afford it. The Vermont bill sets up a five-member board which, in consultation with the executive branch and Legislature, is to answer the big unanswered questions in this year’s bill. Those include how the system will be paid for – some have suggested a payroll tax on employers and workers; what benefits will be covered; what copays and deductibles it would include; and other details. “Vermont is leading the way in having an authentic discussion about what a universal health care system would look like in the state,” said Katie Robbins of Healthcare NOW. The Philadelphia-based group supports single-payer health care, under which everyone gets coverage from the same government-run system, similar to what military personnel have now. Despite the growing opposition to the federal law, Vermont, where liberal Democrats control the governor’s office and both houses of the Legislature, is undaunted in moving in the direction of Canada, which pays for its health care system through taxes. And supporters say the state has built-in advantages. Vermont, with a small population of about 620,000, is often ranked as one of the healthiest states. It is well below the national average for infant mortality, childhood obesity, AIDS diagnoses and a range of other indicators of poor health, according to figures kept by the Kaiser Family Foundation. The Census Bureau reported that, in 2007, Vermont ranked sixth in the country in physicians per capita, with 374 per 100,000, versus a national average of 271 per 100,000. And about 90 percent of Vermonters have some form of health insurance already. But some of those with insurance say it falls far short of what they need. Heather Loughlin, 42, was working as a vice president at the Sugarbush ski resort when she was diagnosed 2 1/2 years ago with multiple sclerosis. Before long, she found herself no longer able to work and buying insurance with a subsidy from the state under a current program, but with a private insurer. A thick stack of coverage denial letters later, Loughlin said, she was back living with her parents in Ludlow, who were going into debt in their retirement to help her meet her medical costs. “It doesn’t matter if you’re paying $300 or $400 a month for insurance,” Loughlin said. “It’s a mirage.” She called the repeated coverage denial letters “mind-boggling and enraging. They just try to wear you down.” Advocates for changing the system brought hundreds of people with stories like that to hearings and rallies at the Statehouse last year and again this spring. James Haslam of the Vermont Workers Center, which spearheaded a campaign under the banner “Health Care Is A Human Right,” said the legislation wouldn’t have passed without the grass-roots support. “If other people want this in their states, they have to start organizing their neighbors,” he said. The bill indicates that the state would “maximize the receipt of federal funds” to help pay for the new health care system. But Vermont’s prospects of receiving federal money are uncertain amid efforts by Republicans in Congress to chip away at the federal overhaul. “The big hole in Vermont’s plan has always been its failure to specify a funding source,” said Shawn Shouldice of the National Federation of Independent Business, which opposes the legislation. “The only clearly defined funding element was the federal grant money … and now that could vanish, as well.” William Hsiao, a Harvard health care economist and consultant to the drafters of Vermont’s legislation, has called for a payroll tax shared by employers and workers. But lawmakers put off a decision on that, some saying they wanted a way to tax non-wage income to support the program as well. There are also doubts the bill really will move Vermont toward a genuine single-payer system. It leaves room for people to buy supplemental insurance, and among the big questions is whether workers at IBM and some of the major employers in the state, whose self-insurance systems are regulated under federal law, will be allowed to be absorbed into Vermont’s system. In a move crucial to the project’s success, backers say, the board will design and administer new cost-control measures, including “global budgeting” for hospitals and other health care providers. Instead of the traditional “fee-for-service” system in which doctors are paid by the patient visit or procedure performed, the new system will be designed to pay for providing necessary health care to a given population. A senior health researcher at the conservative Heritage Foundation in Washington warned, though, that Vermont may want to be careful in playing with the financial incentives that can influence how health care systems develop over time. In some other countries, Ed Haislmaier of Heritage said, the sort of “global budgeting” Vermont envisions ends up with less acutely ill patients with longer hospital stays. “Hospitals turn into nursing homes,” he said. The bill calls for maintaining and expanding the state’s Blueprint for Health program, which is designed to streamline and provide better preventive care to people with chronic conditions like heart disease and diabetes. Rep. Mark Larson, chairman of the Health Care Committee in the Vermont House and a key architect of the legislation, acknowledged that the bill is really a planning document and that its supporters have much left to prove. After the House gave the bill final approval 94-49 Thursday, he said, “I think today’s vote reflects people saying, ‘OK, you’ve made your case. Now show me.’”

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Andy Kroll: How the McEconomy Bombed the American Worker: The Hollowing Out of the Middle Class

May 9, 2011

Crossposted with TomDispatch.com Think of it as a parable for these grim economic times. On April 19th, McDonald’s launched its first-ever national hiring day, signing up 62,000 new workers at stores throughout the country. For some context, that’s more jobs created by one company in a single day than the net job creation of the entire U.S. economy in 2009. And if that boggles the mind, consider how many workers applied to local McDonald’s franchises that day and left empty-handed: 938,000 of them. With a 6.2% acceptance rate in its spring hiring blitz, McDonald’s was more selective than the Princeton, Stanford, or Yale University admission offices. It shouldn’t be surprising that a million souls flocked to McDonald’s hoping for a steady paycheck, when nearly 14 million Americans are out of work and nearly a million more are too discouraged even to look for a job. At this point, it apparently made no difference to them that the fast-food industry pays some of the lowest wages around: on average, $8.89 an hour, or barely half the $15.95 hourly average across all American industries. On an annual basis, the average fast-food worker takes home $20,800, less than half the national average of $43,400. McDonald’s appears to pay even worse, at least with its newest hires. In the press release for its national hiring day, the multibillion-dollar company said it would spend $518 million on the newest round of hires, or $8,354 a head. Hence the Oxford English Dictionary’s definition of “McJob” as “a low-paying job that requires little skill and provides little opportunity for advancement.” Of course, if you read only the headlines, you might think that the jobs picture was improving. The economy added 1.3 million private-sector jobs between February 2010 and January 2011, and the headline unemployment rate edged downward , from 9.8% to 8.8%, between November of last year and March. It inched upward in April, to 9%, but tempering that increase was the news that the economy added 244,000 jobs last month ( not including those 62,000 McJobs ), beating economists’ expectations. Under this somewhat sunnier news, however, runs a far darker undercurrent. Yes, jobs are being created, but what kinds of jobs paying what kinds of wages?

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Donald Trump: ‘I Am Very Proud Of Myself’

April 28, 2011

DOVER, N.H. — After weeks of suggesting Barack Obama was born in Africa, Donald Trump hastened to boast that he had forced the Democratic president to release a detailed Hawaii birth certificate disproving that claim, painting an apparent setback as a victory within minutes of arriving in the first-in-the-nation primary state. The developer and reality TV show host, who is considering a White House run, again showed the difficulty establishment Republicans are having in controlling the early stages of their wide-open nominating contest. He also proved himself a nimble messenger, or spinner. “Today I am very proud of myself because I have accomplished something that nobody else has been able to accomplish,” Trump told reporters Wednesday shortly after his black and red helicopter, emblazoned “TRUMP” on the side, touched down in Portsmouth. He arrived not long after the White House released the president’s long-form birth certificate from Hawaii. He said he was honored “to have played such a big role in hopefully – hopefully – getting rid of this issue. Now, we have to look at it, we have to see, is it real.” Trump said he hoped the birth certificate “checks out beautifully,” but he used the opportunity before television cameras to again sharply criticize Obama on several fronts, including Libya policy and gasoline prices. He also raised questions anew about Obama’s educational record and how he got into college. But he again offered no proof of anything amiss. Trump’s blistering attacks on Obama, including raising widely debunked rumors that the president was born abroad, have piqued the interest of some Republican voters. He has seen his standing in some polls grow in the months since he first dangled a presidential candidacy before a GOP primary electorate looking for a leader to aggressively challenge the Democratic president. Many rank-and-file Republicans still dismiss Trump as a non-serious distraction. But as he easily grabs headlines, other potential candidates are playing a more cautious game, and most don’t seem eager to talk about him. They’ve been distancing themselves from the so-called “birther” claims in recent days, and most weren’t eager to weigh in Wednesday. Sarah Palin, the former Alaska governor, sent a brief tweet that said: “Media: admit it, Trump forced the issue. Now, don’t let the WH distract you w/the birth crt from what Bernanke says today. Stay focused, eh?” That was a reference to Federal Reserve Chairman Ben Bernanke’s news conference. And former Massachusetts Gov. Mitt Romney said on Twitter: “What President Obama should really be releasing is a jobs plan.” Less than a year before Iowa and New Hampshire Republicans become the first to vote in the race, the GOP field is far from set. There’s no true front-runner and no single establishment candidate. That leaves ample room for attention-getting events by less orthodox politicians such as Trump and third-term Rep. Michele Bachmann of Minnesota. Romney, who lost the nomination in 2008, former Minnesota Gov. Tim Pawlenty and former House Speaker Newt Gingrich all have taken initial steps toward full-fledged runs but none has emerged as the candidate to beat. Many Republicans expect Bachmann and former Sen. Rick Santorum to make their interest official. They also are waiting to hear from former Utah Gov. Jon Huntsman and Indiana Gov. Mitch Daniels. The 2008 vice presidential nominee, Palin, and the Iowa caucus winner, Mike Huckabee, have dropped hints they will not run, but Republican insiders say no one is sure. Mississippi Gov. Haley Barbour became the latest Republican to opt against a presidential run this week. “This is shaping up to be a wacky year,” said Scott Reed, who managed Republican nominee Bob Dole’s 1996 campaign and had been advising Barbour. It’s the most wide-open GOP primary in four decades, he said, and the eventual nominee conceivably could jump in as late as September. “There is still room for someone to emerge as the conservative alternative to Romney,” Reed said. Most veteran Republicans don’t believe that person will be Trump, the thrice-married, much-caricatured developer who has donated heavily to Democrats in past years and switched his stands on key issues such as abortion. Karl Rove, the top political adviser to President George W. Bush, calls Trump a “joke candidate.” Jennifer Horn, a 2008 Republican congressional nominee from New Hampshire, said in an op-ed column that Trump has flip-flopped on major issues and is not a credible candidate. If Republicans allow him to “hijack the primary process then they deserve exactly what they get,” she wrote. Over the years, Trump has given thousands of dollars to Democratic candidates, including New York Sens. Chuck Schumer and Kirsten Gillibrand and Senate Majority Leader Harry Reid of Nevada. Trump talked of running for president as a third-party candidate in 2000, and he made a brief splash with a 1988 New Hampshire speech that some took as a preliminary Republican candidacy. In New Hampshire on Wednesday, Trump breezily dismissed his critics. “I think I’m quite conservative as a Republican,” he told reporters in Portsmouth. In at least two instances, he said, “I’m leading the polls.” Forcing Obama “to finally come out and issue a birth certificate can only help,” he said. Trump said he has given campaign money to “many Republicans, many Democrats. And I think there’s something nice about that,” because it promotes bipartisanship. As for switching his stand on issues, he said, “My views change. … I tell people, you have to remain flexible because the world changes.” He also turned the conversation to Obama. “Nobody even knows what’s going on in Libya,” Trump said. He said Obama claims to have little control over gasoline prices, but “he does if he gets on the phone or gets off his basketball court or whatever he is doing at the time.” After holding court before reporters, Trump traveled to several other stops, all within a nine-mile radius of the Portsmouth airport. He spent a few minutes shaking hands at a Portsmouth diner but spent little time in conversation. Passing by a table of older men, he waved and said, “Why aren’t you at work?” “We’re retired!” answered the group of former workers at the Portsmouth Naval Shipyard. “Don’t touch Medicare, right?” Trump said, moving on without waiting for an answer. Joe Lovell, of Somersworth, said seeing Trump arrive by limo was a surprise in this state that values close contact with presidential hopefuls. Asked what he thought of Trump, he said, “Nice hair.”

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Obama’s Oil Market Fraud Squad May Miss Wall Street Abuses

April 22, 2011

WASHINGTON — On Thursday, President Obama unveiled a new working group to combat any fraud or manipulation in the oil and energy markets that may be contributing to near-record gas prices. But some economists and market experts worry that by focusing on criminal activity, Obama is shrugging off a much bigger problem: rampant Wall Street speculation in commodities markets that has helped drive up food and energy prices in the past. “If prices start moving quickly up, you can get a side effect … that people might try to play [fraudulent] games of one sort or another,” said Massachusetts Institute of Technology economist John Parsons. “But it wouldn’t be central to the price movement” currently being seen in the market, he said. Gas prices are approaching record levels set in 2008, when prices at the pump eclipsed $5 a gallon. While unrest in the Middle East is almost certainly playing a major role in boosting current prices, increased speculation in commodities markets is likely contributing to the near record prices. The number of speculative bets being placed on oil and gas now far exceeds that of the 2008 price swing , which many economists believe was driven by excess speculation. Moreover, on March 21, Goldman Sachs analyst David Greely advanced the argument that Wall Street speculation was helping drive up oil prices in a memo sent to the bank’s clients. But, if speculative excess is contributing to current sky-high gas prices, such activity may not be illegal, in part because the Commodities Futures Trading Commission has not yet issued key regulations intended to rein in Wall Street gambling on food and energy prices. Congress ordered the agency to crack down on excessive speculation with last year’s financial reform bill, but the CFTC has been slow to implement new rules in the face of intense lobbying from Wall Street bankers. Financiers are quick to note that commodities markets need speculation — a raw bet that the price of oil or food will move up or down — in order to function. But economists say that too much speculation can distort the market, leading to wild price swings. Even if so-called “fundamental” factors are driving prices, heavy speculation can cause prices to swing further than normal supply and demand forces would dictate. In January, the CFTC announced it would push back implementing ‘position limits’, a key regulatory tool that restricts the size of the bets investors can make on commodities, in order to collect more data. But many reform advocates and CFTC Commissioner Bart Chilton say that there is plenty of data available to implement new rules now. “What the administration and others should do, which they have the power to do quickly, is impose position limits, which would stop excessive speculation now,” said Dennis Kelleher, a former securities lawyer with Skadden, Arps, Slate, Meagher & Flom who now heads the financial reform advocacy group Better Markets. “An investigation into criminal acts is not likely to lead to much.” Attorney General Eric Holder, who is in charge of the new inter-agency taskforce, specifically instructed members of the new taskforce in a Thursday memo to look into “the role of speculators and index traders in oil futures markets” — something the CFTC is already required to do. Officials from the CFTC, the Federal Reserve, the Federal Trade Commission, the Department of Agriculture, the Deparment of Energy and state attorneys general will be part of the group. But Chilton, the CFTC’s strongest proponent of reining in commodity speculation, says that the task force may well do some good. “Seventy-five percent of the cases we send to the Justice Department for criminal prosecution are rejected,” Chilton told The Huffington Post. “But if we can work more closely with the DOJ folks, we may be able to put more people in jail.” Nevertheless, Chilton said the CFTC should be taking steps independent of the task force: “That doesn’t mean that the working group is a panacea for actions that can be taken by regulators right now. The position limits are something we can do right now. I don’t need a task force to tell me to do that.” Unlike the stock market and other capital markets, commodities markets are not designed to function as a forum for investment vehicles. Instead, commodity markets are supposed to allow farmers, manufacturers and other producers to hedge the risks of doing business. By taking out a futures contract, or similar bet in the derivatives markets, farmers can lock in a price for their crops, protecting themselves from price changes. Producers need someone to take the other side of their price bets, whether it be another producer or, as it more frequently is, a Wall Street trader. Commodities markets work well when around 30 percent of the market is dedicated to speculation, According to Kelleher. But since the mid-2000s, the share of speculators in commodity market activity has increased to about 70 percent, Kelleher says, in part driven by new commodities “index funds,” which allow investors to bet on the price of several commodities at once.The size of those funds expanded from about $15 billion in 2003 to $200 billion in 2008 , and are currently valued at over $400 billion , according to Barclays Capital. The explosion in the over-the-counter derivatives market has also contributed significantly to oil price increases, according to Kelleher, by allowing investors to place huge bets on commodities without either regulatory oversight or market scrutiny. The derivatives market for commodities grew from about $674 billion in 2001 to $13.2 trillion by June 2008 , according to the Bank for International Settlements. Last year’s financial overhaul gave the CFTC authority over that entire derivatives market — one vastly larger than the $5 trillion futures market that the agency had previously policed in isolation. Whatever new rules the CFTC writes, they will need funding additional funding to enforce them. “The CFTC’s current funding is far less than what is required to properly fulfill our significantly expanded mission,” CFTC Chairman Gary Gensler warned in April 12 testimony before the Senate Banking Committee . But Obama was willing to negotiate away additional funding for the agency during negotiations over the budget for the rest of 2011. Under the budget deal Obama struck with congressional Republicans earlier this month, the CFTC will receive a $34 million boost in funding for the remainder of the year. But, even with that additional cash, the agency will receive about $60 million less this year than the amount Obama requested for the agency under his 2011 budget. Calls to the White House were not returned. The Department of Justice declined to comment. Elise Foley contributed to this report.

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Missouri Unemployment Benefits Extension To Be Dropped

March 31, 2011

JEFFERSON CITY, Mo. — Thousands of people in Missouri who have been unemployed for more than a year soon will lose their jobless benefits, marking a significant victory for Republican fiscal hawks who are crusading against government spending. When eligibility ends Saturday, Missouri will become the only state to voluntarily quit a federal stimulus program that offers extended benefits. Michigan, Arkansas and Florida also recently took steps to cut back on money going to the unemployed, although they targeted state benefits instead. “We have to take a stand and say, `When is enough enough?’ and send a message to the federal government, and hopefully shame them into doing the right thing and quit spending money that they don’t have,” said state Sen. Jim Lembke, a Republican from St. Louis. Lembke has led a coalition of four filibustering senators who have blocked legislation necessary to reauthorize Missouri’s participation in a federal program offering long-term unemployment benefits. It’s been a stunning setback for a bill that had passed the Republican-led House 123-14 two months ago and had the support of GOP Senate leaders and Democratic Gov. Jay Nixon. As a result, more than 34,000 unemployed residents in Missouri could miss out on $105 million in benefits over the next nine months. Unlike some other stimulus programs, Missouri’s unclaimed money would not be redistributed by the federal government to other states. It simply would remain unspent. At issue is a provision in the 2009 federal stimulus act that allowed residents in states with high unemployment rates to receive up to 20 additional weeks of federally funded jobless benefits after exhausting the 79 weeks authorized under other federal laws. At least three dozen states, including Missouri, enacted laws to participate. Although their unemployment rates were high enough to qualify, seven other states – Arkansas, Louisiana, Maryland, Mississippi, Montana, Oklahoma and Utah – never passed laws to join in, according to the U.S. Department of Labor. Maryland is now pursuing participation, but many of the other states seem content to remain out of the program. Much like his Missouri counterparts, Utah Senate President Michael Waddoups said the states need to set an example of self-sufficiency. “Somebody has to start pulling back from the federal government somewhere,” said Waddoups, a Republican from Taylorsville. That federal backlash is particularly strong in Missouri, where voters were the first in the nation to pass a measure challenging the new federal health care mandate and where Republican senators also are holding up federal stimulus money for education. Missouri’s unemployment rate has remained above 9 percent for nearly two years. Yet it is poised to become the first state to take the additional federal unemployment money, then later voluntarily stop doing so, according to officials at the federal Labor Department and the National Employment Law Project, a New York-based advocacy group for employment rights that has been urging Missouri to remain in the program. Several other states could have been in the same situation. But the governors of Massachusetts, Michigan and Oregon all signed laws within the past week continuing participation. Michigan’s action came with catch, also cutting state jobless benefits from 26 to 20 weeks starting in 2012. The Florida House has passed a similar state benefits reduction. Arkansas’ legislature this week gave final approval to a bill shaving off one week of eligibility for state jobless benefits. In Missouri, about 10,000 people would immediately be cut off from additional jobless payments, according to the state department of labor. And extended unemployment benefits would be denied to about 24,000 additional residents who otherwise are projected to become eligible. St. Louis resident Peter Gordon, who has been unemployed for a little over a year, is among those who could miss out. A former patient care coordinator at a hearing aid company, Gordon has been searching for jobs over the Internet but said he can’t travel far because he can’t afford to license his car. He fears he could eventually be evicted from his apartment. “They can provide money for government programs to take care of the elite and rich,” Gordon said. “But when it comes to a small person like me – people who are just trying to make ends meet – it seems like the rights are being taken away.” Kimberly Clark, a laid off union organizer, says her post-tax unemployment benefit of $275 a week already is consumed by her rent, utility and phone bills. She’s been searching for work since November 2009, and she’s only a couple of months away from needing the extended benefits that Missouri is poised to reject. “The mentality is we’re just creating a bunch of lazy people, and that is not true,” said Clark, 48 of St. Louis. The National Employment Law Project says its supporters sent 15,000 emails in a roughly 24-hour period from Tuesday to Wednesday urging Missouri senators to allow a vote on the legislation reauthorizing the extended jobless benefits. But Sen. Brian Nieves, a Republican from Washington, Mo., who is popular among tea party activists, said he has no intention of compromising his position. “The people have been crystal clear for about the last two years in saying that they expect us to at least start the process of weaning ourselves off of the federal government,” Nieves said. ___ Associated Press writers Wes Duplantier in Jefferson City, Josh Loftin in Salt Lake City, Brian Witte in Annapolis, Md., Sean Murphy in Oklahoma City, Emily Wagster Pettus in Jackson, Miss., Nomaan Merchant in Little Rock, Ark., Melinda Deslatte in Baton Rouge, La., and Matt Gouras in Helena, Mont., contributed to this report.

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Poll Suggests Americans Growing Increasingly Pessimistic On Economy

March 30, 2011

WASHINGTON — For all the talk of recovery, Americans are growing increasingly pessimistic about the economy as soaring gas costs strain already-tight budgets. So far, people aren’t taking it out on President Barack Obama, a new Associated Press-GfK poll shows. Even so, the survey highlights a central challenge Obama will face in his campaign for re-election. The president will have to convince a lot of voters who are still feeling financial hardship that things are getting better. Obama’s approval ratings have held steady at around 50 percent over the past month. But the disconnect between negative perceptions of the economy and signs that a rebound are under way could provide an opening for Republicans at the outset of the 2012 campaign. In the survey, just a sliver of Americans – 15 percent – said they believed the economy had improved over the past month, compared with 30 percent who had thought that in January. Only a third were optimistic of better times ahead for the country, down from about half earlier this year. And 28 percent thought the economy would get worse, the largest of slice of people who have expressed that sentiment since the question was first asked in December 2009. “It’s in a poor state,” said Billy Shirley, 74, a Democrat from Commerce, Ga. “Everything’s going to the bad. Everyone’s spending more on gas, food, everything. The prices on everything are going up, and that’s hurting the nation.” Recent economic indicators paint a more positive picture: The unemployment rate, though still high at 8.9 percent, has been declining, and consumer spending and personal income were both up last month. The gross domestic product was growing at an annual rate of 3.1 percent as last year ended. Americans are acutely focused on their financial well-being, even as turmoil in the Middle East commands international attention. And the foreign unrest is directly affecting them by boosting oil prices. More Americans – 77 percent, up from 54 percent last fall – now say gas prices are highly important to them. Obama’s job-performance ratings haven’t suffered as people’s attitudes about the economy have shifted over the past month. Half still approve of how he’s doing his job, and half say he deserves to be re-elected. His rating on handling the economy was unchanged: 47 percent approved. In fact, twice as many people said Obama “understands the important issues the country will need to focus on during the next two years” as said that about Republicans in Congress. That’s not to say that Obama is escaping responsibility for the economic situation. Annale Iltis, 26, of Sarasota, Fla., faults big business, the federal government and, to a lesser extent, the president. “I do a bit,” she said, “but at the same time he has good ideas. He just doesn’t have the backers in the House and the Senate to get them done.” The self-described independent voter, who supported Obama in 2008 and says she would do so next year, is concerned that deep budget cuts that Congress is considering will hurt the fragile economic recovery. “It seems stable now but I fear it’s going to go downhill quickly,” she said. Henry Kugeler, 49, of Chicago, likened the situation to the fable about the crawling tortoise that wins the race against the speedy hare, saying: “Right now, the country is the tortoise. I don’t think the economy is getting worse. The recovery that’s happening is real, but it’s incredibly slow.” The Democrat doesn’t blame Obama or other politicians, saying: “They haven’t helped but I don’t know that they’ve hurt.” Obama inherited an economy in recession. Republicans angling for the chance to challenge him next fall have been blaming him for the slow recovery and arguing they could do better. Presidential advisers are hopeful that the positive economic trends continue, giving Obama an opportunity to make the case for keeping him in office rather than risk an economic backslide. As the slow-to-start GOP nomination fight starts in earnest this spring, the poll shows that candidates clearly have work to do. More than or nearly half of Republicans surveyed say they don’t know enough about the following potential contenders to even express an opinion about them: Mississippi Gov. Haley Barbour, Indiana Gov. Mitch Daniels, former Utah Gov. Jon Huntsman, former Minnesota Gov. Tim Pawlenty, former Pennsylvania Sen. Rick Santorum and Minnesota Rep. Michele Bachmann. Roughly two-thirds of Republicans expressed favorable views of former Arkansas Gov. Mike Huckabee and former Alaska Gov. Sarah Palin, while former House Speaker Newt Gingrich and former Massachusetts Gov. Mitt Romney got slightly lower marks. Even though many of the candidates aren’t well-known, about half of Republicans say they are satisfied with their choices. The poll comes just as Republicans and Democrats on Capitol Hill wrestle over the federal budget, and there could be a partial government shutdown without further action by Congress. The Republican-controlled House has approved some $60 billion in spending cuts. The Democratic Senate is looking at $33 billion. Without agreement, some Republicans say they won’t approve funding to keep the government operating. The issue of federal spending isn’t just something lawmakers talk about. It’s clearly weighing on the public. Roughly half in the survey said they expected enormous federal budget deficits to cause a major economic crisis for the country for the next decade, and most said they worry that mounting federal debt will hamper the financial future of their children and grandchildren. In the shorter term, people in the poll view everyone negatively when it comes to handling the deficit, but lawmakers get worse marks than the president. Only about a third of those surveyed approve of how Republicans and Democrats are dealing with the issue, while 41 percent approve of Obama on the matter. People also are evenly divided on which party would best handle the deficit. The Associated Press-GfK Poll was conducted March 24-28 by GfK Roper Public Affairs and Corporate Communications. It involved landline and cell phone interviews with 1,001 adults nationwide and had a margin of sampling error of plus or minus 4.2 percentage points. ___ Associated Press Polling Director Trevor Tompson, Deputy Polling Director Jennifer Agiesta and News Survey Specialist Dennis Junius contributed to this report. Online: http://ap-gfkpoll.com

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Maine Governor Taken To Task After Removal Of Labor Mural

March 29, 2011

PORTLAND, Maine — The president of Mount Holyoke (HOH’-lee-ohk) College in Massachusetts has sent a scathing letter to the governor of Maine for removing a mural from the Department of Labor headquarters that included an image of 1902 graduate and former U.S. Labor Secretary Frances Perkins. Lynn Pasquerella faxed a letter Tuesday outlining “grave concerns” about Gov. Paul LePage’s decision to remove the 36-foot mural from the lobby and to rename departmental conference rooms now named for labor leaders, including Perkins. Pasquerella was surprised to hear LePage was influenced by an anonymous letter comparing the mural to North Korean political propaganda. It depicts mill workers, shipbuilders, labor strikes and child laborers. Pasquerella said removing the mural “conjures thoughts of the rewriting of history prevalent in totalitarian regimes.” LePage says it’s biased in favor of organized labor.

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Les Leopold: Is Corruption on Wall Street All in the Eyes of the Beholder?

March 18, 2011

Japan’s Nikkei share average plunged 10.6 percent on Tuesday, posting the worst two-day rout since 1987, as hedge funds bailed out after reports of rising radiation near Tokyo. ~ Reuters, March 15, 2011 While it’s far too early to assess the full impact of the Japanese disaster on markets around the globe — let alone on the Japanese people — we do know that hedge funds are already busy trying to profit from the misery. They make no apologies for operating in an ethics-free zone. Their business is to rapidly move money in and out of distressed markets. That’s just what they do. But as we’re learning from the trial of billionaire Raj Rajaratnam , head of the Galleon hedge fund, an ethics-free zone can easily become a crime scene. The Raj is charged with enough counts of insider trading to spend 20 years in the hoosegow. And he’s not the only one on trial. As the case unfolds, Wall Street as a whole may find itself in the dock, facing the question it dreads most: Just how much of Wall Street’s wealth is built upon criminal activity? Of all the rich and worried people on Wall Street right now, the hedge fund managers are the richest and maybe the most worried. After all, they’ve got a lot to lose. A LOT. Just to name one example, in 2010, the top hedge fund manager, John Paulson, netted — for himself personally — $2.4 million an HOUR. Forbes reports that in 2009, Rajaratnam was the 236th richest American, with an estimated net worth of $1.8 billion. That’s more than 12,000 times the median US family’s net worth (which was $98,997 in 2009). Sebastian Mallaby, the financial author, offers a spirited defense of the hedge fund industry, arguing that, yes, there may be a few truly rotten apples, but insider trading is really no big deal. (See ” Hands Off Hedge Funds ” May 2007) An industry of around 9,000 hedge funds is indeed bound to harbor some criminals….Moreover, some of what politicians and journalists label ‘hedge-fund abuses’ involve leaks of inside information from investment banks rather than from hedge funds, making the hedge-fund managers who receive the leaks accomplices rather than the chief offenders. But federal prosecutors beg to differ: They say the Raj’s hedge fund is the prime mover of the insider conspiracy , not a lowly accomplice to the crime. “Greed and corruption — that’s what this case is all about,” said the the lead prosecutor in his opening statement. Rajaratnam “knew tomorrow’s business news today and traded on it. ….One crucial thing he didn’t know. He didn’t know the FBI was listening.” What goes on when the F.B.I. isn’t listening? The defense team, led by John Dowd, argues that the Raj is just a smart guy who made his fortune through “shoe-leather research, diligence and hard work” and who “conducted the best research in the business.” You see, says Dowd, the Raj used the “mosaic” method of investing: He collected from many sources a compendium of unconnected facts about a company to form a mosaic of its true worth. And that mosaic told him whether to go long, short, both, or stay away. Constructing these gorgeous mosaics turned the Raj into the billionaire he is today. Mosaic method? Okay, let’s give it a try. How about constructing a mosaic of hedge fund illegalities over the past decade or so? There are so many colorful tiles to choose from. Here are a few. Insider Trading : Hedge funds of all kinds rely on ” expert networks ” who link together consultants who gather information about companies. In the process, bits of illegal information find their way into and around the network and then into the bottom lines. The Raj investigation already has upended several hedge funds that benefited from this common phenomenon. Tax Evasion : Swiss banker Rudolf M. Elmer has blown the whistle on an international web of rich investors, banks and hedge funds that evade taxes by illegally shifting money to low-tax jurisdictions. There’s something extra-slimy about tax dodging by hedge funds, given that they already pay less taxes than anyone else. Due to an egregious IRS loophole , hedge fund managers pay a top tax rate of 15 percent instead of the 35 percent normal wealthy people are supposed to pay. That these under-taxed fat cats feel entitled to top it off by engaging in this blatantly illegal form of tax evasion is galling. These guys seem unable to resist piling up more money, even if it means taking the law into their own hands. Ponzi Schemes: When we think Ponzi, we think Bernie. Hedge funds like Madoff’s are ideally suited for this kind of scam since they are designed to evade so many disclosure regulations. But Bernie’s isn’t the only game in town. There’s a whole other kind of Ponzi scheme that has largely escaped media attention. You can find a description of this seriously twisted strategem buried deep in the bowels of the Financial Crisis Inquiry Commission Report . To construct and market exotic and highly profitable CDOs based on toxic subprime assets, investment banks had to be able sell the lower tranches (where a good deal of the junk assets lived). But that got harder towards the end of the housing boom. So to keep the production line going, the banks sold the junk to each other: Entity A sold to Entity B who then sold back to Entity A. This game of hot potato was even played by different departments within one large investment bank. Hedge funds were always there to suck up the lowest level, highest yield “equity” tranches — while often shorting other pieces. The potato toss had to continue or the entire game was lost. According to the Financial Crisis Inquiry Report , “heading into 2007 there was a Streetwide gentleman’s agreement: you buy my BBB tranch and I’ll buy yours.” (p. 278) This scheme would have gone nowhere without hundreds of hedge fund players lapping up the equity tranches and buying the credit default swaps that allowed the deals to be constructed in the first place. How many financial billionaires were minted in this process, I wonder? Front-running trades: With their high-speed trading computers and algorithms that sense market moves, the biggest hedge funds and banks are able to trade just a fraction of a second before the rest of us do. The SEC has been investigating this practice , known as front-running, for several years. The agency is worried that brokers leaked information about large trades by institutional investors to hedge funds so they could pull off the trade just a split second before the large trade took place thereby earning a quick, easy and illegal profit. Timing and Late Trading: When Eliot Spitzer was New York Attorney General (and earned the handle Sheriff of Wall Street), he uncovered how hedge funds were maneuvering around trading rules like a Ferrari speeding around the hapless shmoes stuck in midtown traffic. Hedge funds were allowed to jump in and out of mutual funds many more times than normal investors, enabling them to score high returns at the expense of regular mutual fund customers. They even got away with booking trades hours after the market closed for the day — a real perk, since market-moving announcements often are made right after closing. You don’t need to go to Wharton to make big bucks on this one: All you do is wait a few hours to judge the impact of the after-closing news, then book your trades at the 4 pm price. Spitzer forced the guilty parties to pay several billion dollars in fines. Accounting Irregularities: This is the catch-all biggie: Hedge funds and banks cook the books to avoid showing losses and to artificially inflate profits. Hedge funds are also deeply involved in helping other companies — like Enron and WorldCom — cook their books. According to a study by Bing Liang at the University of Massachusetts, as of 2004, 35 percent of all hedge funds cited no dates for their last audit. Hmmm. Setting up bets that can’t fail: Goldman Sachs had to pay $550 million for not telling its investors about its questionable deal with a hedge fund: The bank allowed the hedge fund to pick the most shaky underlying mortgage securities to be used in creating a synthetic CDO — so that the hedge fund could then turn around and bet against it. It was a winning bet for the hedge fund — it bagged a billion. Unfortunately, the investors lost a billion. Goldman Sachs did pretty well with its deal to pay only the $550 million SEC fine. After all, the company was bailed out by taxpayers to the tune of $12 billion: We paid them 100 cents on the dollar for credit default swap insurance that AIG could not pay. Incredibly, the hedge fund was in the clear. It couldn’t even be charged, since it neither bought nor sold the securities in question. At the moment, there’s no law against encouraging someone else to rig a bet for you — except at the racetrack. These are just a few of the many tiles for our hedge fund mosaic of cheating. As Neil Weinberg and Bernard Condon wrote in Forbes back in 2004 (” The Sleaziest Show On Earth “): Hedge funds exist in a lawless and risky realm, exempt from the rules governing mutual funds, equities and most other investments. Hedge funds aren’t even required to keep audited books — and many don’t. These risky funds often are guilty of inadequate disclosure of costs, overvaluation of holdings to goose reported performance and manager pay, and cozy ties between funds and brokers that often shortchange investors. Of course, none of this proves that any given hedge fund billionaire is a cheat or even ethically challenged. But it does offer an unflattering picture of an industry that is at this very moment trying to milk money from Japan’s roiling markets, once again profiting from the misery of others. There’s got to be a better way. Les Leopold is the author of The Looting of America: How Wall Street’s Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It Chelsea Green Publishing, June 2009. He is currently working on a new book, How to Earn a Million an HOUR: The Dubious Contribution of Wall Street Billionaires to the American Economy (hopefully to be published in 2011).

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Poll: Trump Boasts Higher Numbers Than Two Big Name Potential 2012 GOP Hopefuls

March 6, 2011

WASHINGTON — The predominant theme of the Republican presidential primary has been, so far, that there is no primary at all. Only a few individuals have formally declared their candidacies. They aren’t considered to be serious contenders. This past week, former House Speaker Newt Gingrich unveiled a website announcing an exploratory phase to consider a presidential run. He was widely ridiculed for tepid toe dipping. So what gives? Depending on whom you ask you get various explanations. On Sunday morning, Fox News correspondent Juan Williams suggested that each prospective candidate was fearful of the type of political machinery that President Obama would assemble for his reelection campaign. The thesis was met with howls, but former Arkansas Governor Mike Huckabee has said much the same, in explaining why he hasn’t announced yet. The landscape, at least currently, isn’t favorably disposed toward the Republican field and no one seems eager or poised to emerge from the larger pack. Underscoring the latter point, a Democratic source passed over this screen grab from Sunday’s edition of “State of the Union” on CNN, highlighting a little noticed nugget from the latest NBC/Wall Street Journal poll . Among major Republican figures polled, real estate magnate and reality TV show king Donald Trump had the highest “positive” rating at 26 percent. Former Massachusetts Governor Mitt Romney had a 25 percent positive rating. Former Minnesota Governor Tim Pawlenrty had a 10 percent positive rating. House Speaker John Boehner (not a prospective presidential candidate) had a 20 percent positive rating. To be sure, the field of those polled wasn’t limited strictly to Republicans (who will decide their own presidential candidate) and many of the respondents were more familiar with Trump’s name than with, certainly, Pawlenty’s. As such, the former has a much higher negative rating (29 percent) than the latter (nine percent). But that only goes to underscore the limited star power of the current GOP field and how great a deficit the eventual GOP nominee will suffer when going up against Obama.

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Eric Parker: Why We Need to Make It in America When We Build Our 21st Century Infrastructure

February 25, 2011

In his State of the Union address on January 25, President Obama said we must “out-build the rest of the world,” because without modern infrastructure, we cannot keep up in the 21st century. For us to “win the future,” we need to connect the dots between infrastructure and a national manufacturing strategy. Other countries, including Germany, China, India, the U.K., Brazil and Canada have one. Why don’t we? We cannot overlook the fact that we have been importing nearly all of our 21st century infrastructure in some key areas instead of building it ourselves – including light rail and high-speed rail. We should not have to buy our trains from Canada, France, Germany, Italy, Spain, Japan and other countries. It’s not just about pride – it’s about jobs, patents and corporate taxes. Auto assembly plants in the U.S. that are owned by foreign manufacturers are not the same as if they were part of the Big Three because their top executives’ incomes, innovations and sales income flow back to their countries instead of staying here. We need to keep those management, engineering and manufacturing jobs here, those patents here and the corporate taxes here. When Obama announced his plan for the FY 2012 budget, it included $53 billion over six years for intercity rail (including new high-speed rail and current Amtrak operations) and $30 billion to establish a National Infrastructure Bank. As he noted in the SOTU, we built the Transcontinental Railroad. However, Bombardier (Canada) and Alstom (France) build Amtrak’s Acela trains in a joint venture. And Amtrak is spending $466 million to buy 70 electric locomotives from Siemens (Germany) for its (non-Acela) Northeast Regional and Keystone routes. We cannot afford to have another missed opportunity to revive our railroad manufacturing industry. We need to get GE Transportation (whose CEO, Jeff Immelt, is the chairman of the White House’s Council on Jobs and Competitiveness) into the business of building high-speed rail engines and passenger cars. Let’s look at two cities I lived in (Boston and Washington) and one that I visit regularly (New York City). The New York City Subway – the most-used subway system in the U.S. and fifth in the world when it comes to ridership – currently gets its rolling stock from Alstom and Kawasaki (Japan). The Massachusetts Bay Transit Authority gets its subway cars from Bombardier, and the newer Green Line streetcars came from AnsaldoBreda (Italy). Washington, D.C.’s Metro purchases its trains from CAF (Spain). Three dozen metropolitan areas in the U.S. have been buying from companies headquartered in different countries, but because they all did so individually, we failed to notice that we have the “economies of scale” necessary to make it a viable revenue stream for an American manufacturer. If we fail to act soon, another 40 planned light rail projects will be purchasing their trains from abroad. There is a glimmer of hope when it comes to our cities’ mass transit systems in American light rail manufacturer United Streetcar LLC of Portland, Oregon, but it’s a small company that uses a Skoda (Czech Republic) design and Siemens motors. We need to convince Boeing (parent of McDonnell Douglas) that if Bombardier and Kawasaki can build jets, subway trains and streetcars, then it too can expand from being just an aerospace company to a transportation one. After all, when we invest taxpayer money in mass transit, we should have American companies up to the task – especially when we are spending tens of billions of dollars every year. Last summer, then-House Majority Leader Steny Hoyer (D-Md.) introduced the “Make It in America” agenda and Congressman Dan Lipinski’s (D-Ill.) National Manufacturing Strategy Act passed the House with overwhelming bipartisan support by 379-38, but the Senate did not vote on it before the end of the 111th Congress. Nearly four in five Americans support a national manufacturing strategy. If not for the Senate Republicans, we would have one. A few weeks ago, Congressman John Garamendi (D-Calif.) reintroduced legislation to encourage the domestic production of passenger rail equipment. However, the reality is that with the GOP controlling the House in the 112th Congress, it’s up to the White House and Senate to pick up the ball. We cannot win the future without 21st century infrastructure. We cannot win the future by buying our trains from foreign-owned companies. It’s time for our largest American companies to recall the words that Robert F. Kennedy (paraphrasing George Bernard Shaw) liked to close his speeches with, that “there are those who look at things the way they are, and ask why… I dream of things that never were and ask why not.” We can win the future. We will out-build the rest of the world. But when we do so, we must Make It in America. A D.C.-based public relations professional, Eric was the communications director for Rep. Betty Sutton (D-Ohio), a reporter for State Tax Notes and worked on the 2008 and 2004 coordinated presidential campaigns.

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Regulator Defends Millions In Fannie, Freddie Legal Fees

February 15, 2011

WASHINGTON — The federal regulator overseeing Fannie Mae and Freddie Mac stood by his approval of millions of taxpayer dollars for legal fees defending the housing giants and their executives after accounting scandals, telling angry House committee members on Tuesday that his agency was obligated to do so. Figures from the House Financial Services Committee’s oversight subcommittee show that since the government took over the two corporations in September 2008, taxpayers have provided $162 million defending them in civil lawsuits alleging fraud. That includes $24 million defending former Fannie Mae CEO Franklin Raines and two other Fannie executives, who left the company after accounting irregularities were revealed and were targets of civil suits. “I share the frustration” of lawmakers, said Edward J. DeMarco, head of the Federal Housing Finance Agency. But, he said, his agency was legally required to cover the payments. The hearing focused on a tiny portion of the $151 billion that Washington has used to prop up the two mortgage finance companies since taking them over as the housing market collapsed. Members of both parties are talking about scaling back or eliminating the two corporations, which have become symbols of squandered tax dollars at a time of mounting budget deficits. DeMarco did not rule out taxpayers eventually recovering the lawyers’ fees, should ongoing legal action result in a finding that the officials who were sued took actions that violated their duties to their company. But he said that at least for now, Fannie is required to cover the executives’ legal fees as long as their actions are considered reasonable. It is commonplace for companies to cover their executives’ legal expenses except in cases of wrongdoing. DeMarco said such coverage was necessary for Fannie to attract talented officials. Raines and the two others – former chief financial officer Timothy Howard and former controller Leanne Spencer – left Fannie and agreed to pay a $31.4 million settlement, but did not admit to wrongdoing. Fannie Mae paid a record $400 million settlement with federal regulators. “We’ve got a problem here,” Rep. Randy Neugebauer, R-Texas, chairman of the subcommittee, said of the federal expenditures. “We’re broke.” DeMarco and Fannie CEO Michael Williams, who also testified, said had Fannie withheld legal payments from the officials, they likely would have sued – which would have cost taxpayers additional legal expenses. “You guys don’t seem to get it,” said Massachusetts Rep. Michael Capuano, the subcommittee’s top Democrat, who told DeMarco his agency should have withheld the legal payments and risked a lawsuit. “The difference between this and everything else that’s ever happened is this is taxpayers’ money.” Ohio Attorney General Mike DeWine, leading the biggest of several lawsuits still pending against Fannie, said the company often brings 40 attorneys and paralegals to court sessions in a case that has dragged on for six years, with some lawyers earning over $600 per hour. Raines also uses numerous lawyers and 25 experts, he said. “What these defendants are doing is lawyering us to death” using taxpayers’ dollars, DeWine said.

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Obama’s Big Budget Cut Proposals Target The Poor

February 10, 2011

WASHINGTON — As Democrats and Republicans wrangle over fiscal austerity and the shape of the 2012 federal budget, the White House is targeting programs in the $4 trillion budget that benefit low-income Americans. It’s a sop to moderates and conservatives, and it’s likely to infuriate voters who put President Barack Obama in the White House. In the past week, the Obama administration has signaled that it will propose significant cuts to community service block grants and an energy assistance program that helps poor people stay warm in the winter and cool in the summer. A White House source familiar with the budget process told HuffPost that the president will propose cutting $2.5 billion from the Low Income Home Energy Assistance Program , or LIHEAP, which received $5.1 billion in federal funds in 2009. That program distributes money to states, which then distribute it to social service agencies to help families heat or cool their homes. The National Energy Assistance Directors’ Association , a group that represents state aid officials in Washington, said Wednesday that the bad economy has forced more low-income households to rely on LIHEAP. About 8.3 million households used it in fiscal 2010, up from 7.7 million and 5.8 million during the previous two years, and the association expects eligible applications to rise to 8.9 million this year. NEADA director Mark Wolfe told HuffPost that the administration’s proposal would cut off 3.5 million households. “It’s just a cruel proposal,” Wolfe said. “What this would do is take some of the most vulnerable families in the country off energy assistance.” HuffPost readers: Used LIHEAP to heat your home? Tell us about it — email arthur@huffingtonpost.com . Wolfe said he assumed the White House had “drawn a circle” around education-aid programs like Pell Grants and Head Start. “My guess is that the administration sees a course of programs they want to protect,” he said. “But why offer this up before the Republicans suggest cuts. Why volunteer us? Why volunteer LIHEAP?” The White House declined to address these concerns on the record, though a source noted that energy prices are lower now than when Congress increased LIHEAP funding for 2009. Although energy prices have indeed declined since then, Bob Greenstein, the director of the Center on Budget and Policy Priorities, a progressive think tank, pointed out that the overall economy hasn’t improved much since then. Price drops don’t offer much relief to people still looking for jobs. “The unemployment rate is higher and there are lot more people that have low incomes today than during fiscal 2008 when this was written,” Greenstein said. “I’m certainly surprised and disappointed at this cut.” And this isn’t the only program for low-income people that the White House has put on the chopping block, at a time when the administration and Congress chose to extend tax cuts for upper income and wealthy Americans. Community service block grants, which fund community organizers in poor neighborhoods, are also facing cuts. During the 2008 campaign, Obama emphasized that his own resume included a stint as a community organizer. White House budget director Jacob Lew said in a New York Times op-ed Sunday that Obama would propose cleaving block-grant allocations to $350 million from $700 million. “These are grassroots groups working in poor communities, dedicated to empowering those living there and helping them with some of life’s basic necessities,” Lew wrote. “These are the kinds of programs that President Obama worked with when he was a community organizer, so this cut is not easy for him.” David Bradley, director of the National Community Action Foundation, that works with Congress and local governments on behalf of programs for low-income people, said he was surprised that the president, a former community organizer, would go after programs that represent such a tiny part of the massive federal budget. “The question is why? Why pick on this program? It makes a statement, particularly when you’re able to say, ‘Here’s a program I really care about,’” Bradley said. “Once the Obama administration throws a poverty program in the water, it starts a feeding frenzy.” Bradley said the the White House has thrown chum into the waters swirling around the budget-cut debate. He said the Obama administration’s move simply emboldened Republicans to propose even deeper cuts to the same programs. In the wake of the White House proposal, Republicans said yesterday that they would seek $405 million in cuts to community service block grants as part of their proposed continuing resolution , a stopgap budget measure that would fund the federal government for the rest of the year. Even before word of the block grant and LIHEAP cuts, the National Law Center on Homelessness and Poverty worried that the White House will abandon a waning homeless prevention program created by the stimulus bill. The White House has also stepped on other programs for poor folks. In August, it pushed Congress to pass a child-nutrition bill — a priority of the First Lady’s — that was paid for in part with cuts to future funding for the Supplemental Nutrition Assistance Program, better known as “food stamps.” At the time, the Food Research and Action Center, a national anti-hunger organization that lobbies on behalf of food stamps and other programs, estimated that a family of four will receive $59 less per month starting in November 2013 as a result of the $2.2-billion cut, which came on the heels of another $11.9-billion cut to food stamps that was folded into a state-aid bill. More than 100 House Democrats protested and promised to block the child nutrition bill because of the cuts, but the White House persuaded them to fall in line. With mounting evidence that the White House is willing to sacrifice low-income assistance as it jockeys for position in budget and election battles, it may be hard this time around to convince congressional Democrats to support the proposed block grant or LIHEAP cuts. The 11 Democratic members of Congress from Massachusetts sent Obama a letter on Monday opposing cuts to the block grants. And one prominent Democrat has already voiced his displeasure with the LIHEAP proposal. “I understand that difficult cuts have to be made,” Sen. John Kerry (D-Mass.) wrote in a letter to the White House on Wednesday. “But in the middle of a brutal, even historic, New England winter, home heating assistance is more critical than ever to the health and welfare of millions of Americans, especially senior citizens. I request that the administration preserve LIHEAP funding at least to the Fiscal Year 2010 funding at $5.1 billion when it submits its FY12 budget proposal to Congress.” In Massachusetts, eligible applications to LIHEAP increased 21.1 percent in 2009, and that represents a population of voters likely to be as disgruntled about the White House’s proposal as Kerry.

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Richard Gaudreau: Foreclosure Sale — Buyer Beware!

February 8, 2011

Buyers of property at foreclosure are looking for a bargain, but that risk now must include the possibility that the title will be defective. One unsuspecting family purchased a home at foreclosure, intending to sell it to their daughter, only to have a title company question whether they acquired good title after they’d already invested $100,000 in renovations. ( Nightmare in Land Court, Mass. L.J. ) In the wacky world of securitized mortgages, who owns the mortgage is a ‘shell game’ worthy of the most accomplished back-street hustler. How securitized mortgages caused the collapse of the American economy is an oft-told tale that needn’t be repeated here. Suffice it to say that during the housing bubble lenders packaged thousands of mortgages together into each securitized trust, selling shares off to Wall Street investors much like selling shares of stock. Since banks no longer intended to hold their own mortgages, the incentive to avoid ‘bad mortgages’ gave way to greed because these now would be someone else’s problem. The days when your local bank owned your mortgage and had an incentive to work with you to save you both from a foreclosure are, by and large, over. Given the preference of lenders for foreclosures instead of loan modifications, one can only assume that lenders view a foreclosure as a cleansing process that purges a bad mortgage from the books and provides some sort of closure. The recent case of US Bank National Association v. Ibanez demonstrates that foreclosures aren’t the end of a bad loan, and that securitized mortgages can be as hard to kill as cockroaches in a rundown apartment. In Ibanez , Massachusetts’ highest court voided a foreclosure sale, finding that US Bank never owned the note and mortgage at the time it conducted the foreclosure sale, and, therefore, never acquired good title. The mortgage industry was so concerned about this type of problem that in the Fall of 2010 it took the extraordinary step of trying to ram through Congress a bill that would have validated foreclosures by ‘ rubber stamping ‘ the shoddy documentation behind securitized mortgages. President Obama vetoed that legislation. US Bank was supposed to have been assigned the Ibanez mortgage years earlier as trustee of a securitized trust, but amidst the thousands of mortgages changing hands every day, that little detail was overlooked. Realizing its chain of title was flawed, US Bank attempted to ‘paper over’ the problem by executing an assignment of the mortgage 14 months after the foreclosure sale. The Massachusetts Real Estate bar association filed an amicus brief, declaring the corrective assignment met local title standards, admitting this problem was in fact very common. While obviously intended to be helpful, one can only wonder at the arrogance of a position that attempts to justify an error by pointing out how often it occurs. The court remained unpersuaded, and the rejection of this title standard calls into question the legitimacy of innumerable other foreclosure sales. The Ibanez holding has left banks wondering whether it’s even possible to correct this type of problem, particularly if one of the assignors has filed bankruptcy. In my bankruptcy practice, it is not at all unusual to see lenders file a corrective assignment prior to commencing a foreclosure action trying to ‘paper over’ the problem. Indeed, the New Hampshire Bankruptcy Court now requires mortgage holders to include written proof of assignment as part of a lender’s request to foreclose. A big culprit in this convoluted mess is MERS, an organization created by various lenders, and one of the foundational blocks of the securitized mortgage market. MERS operates a private recording system where lenders can assign a mortgage outside of the chain of title in county land records, thus, avoiding recording fees. By avoiding the transparency of the public recording system, MERS makes it difficult to follow the chain of title of who has acquired your note or mortgage. Since the typical securitized transaction involves the transfer of a mortgage several times to insulate the trust from liability, MERS lawsuits nationwide have challenged its legitimacy, particularly the intentional avoidance of local recording fees. MERS claims to register more than 60 percent of the mortgages in the United States within its system. The Ibanez problem may be just the tip of the iceberg. The FDIC Chairman recently warned mortgage servicers not to let MERS conduct foreclosures, a common practice in years past. He also advised mortgage servicers to disclose the full chain of mortgage assignments in any Notice of Default sent to a homeowner prior to a foreclosure. If you have a MERS mortgage and are looking for information, you can find it at the MERS Servicer Identification website . If you no longer know who owns your mortgage because your mortgage has been transferred several times, your servicer is required to provide you that information upon written request under the Truth in Lending Act. Send a request for this information to your mortgage servicer pursuant to Section 131(f) of the Truth in Lending Act, 15 USC 1641(f), requesting the name, address and telephone number of the owner of the promissory note signed by you and secured by your mortgage loan. Finally, for the overly ambitious who have a securitized mortgage and want to view the legal requirements for transfer of the note and mortgage to the trust, you can generally find that information in Section 2.01 of the Pooling and Servicing Agreement (“PSA”) at the SEC’s Edgar database . Be forewarned that the length of the typical PSA caused one judge to jokingly warn me that if I made him wade through the hundreds of pages of fine-printed legalese, I might regret it someday. The above is not intended as legal advice for your particular situation. Questions should be addressed to attorneys admitted to practice within your state. Richard Gaudreau is a consumer bankruptcy lawyer admitted to practice in New Hampshire (NH) and Massachusetts (Ma) and may be reached through his website at attorneygaudreau.com, by email at Richard@attorneygaudreau.com, or by calling 603-893-4300.

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Leo W. Gerard: Making America the Best Place on Earth to Work

January 31, 2011

Not the wars. Not greenhouse gasses. Not even the deficit. The issue most important to Americans is jobs. Despite that, jobs failed to make an appearance in the State of the Union address. The talk was all about business. Business was doing better. Business needed taxpayers to help pay for research and innovation. Business will get government help to eliminate pesky regulations. Business must have lower taxes. The most telling statement was this: “We have to make America the best place on Earth to do business.” Especially because it wasn’t matched by a companion: “We have to make America the best place on Earth to work.” The speech expressed a policy in which business is the focus of government, taking precedence over workers. The American colonists created a government for their own benefit; they did not constitute an agent to serve business. A policy giving corporations primacy is risky for American workers. The state of the union noted that happy days are here again for corporations and banks: “Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing again.” Never mentioned, however, were the 14.5 million unemployed Americans, the sustained record rate of foreclosure , and the increasing poverty and food bank reliance among citizens of the richest nation in the world. The state of the union outlined a plan under which the government will coddle corporations, essentially proving companies government welfare using American workers’ tax dollars. If businesses create jobs for workers as a result, fine. If they don’t, there’s no plan to exact a penalty. For example, under the policy described in the speech, American workers will fork over tax dollars to pay for research and development for businesses that are sitting on a record $1.8 trillion in cash reserves — hoarding it rather than creating jobs. The president said: “Two years ago, I said that we needed to reach a level of research and development we haven’t seen since the height of the Space Race. And in a few weeks, I will be sending a budget to Congress that helps us meet that goal. We’ll invest in biomedical research, information technology, and especially clean energy technology — an investment that will strengthen our security, protect our planet, and create countless new jobs for our people.” Maybe it will create new jobs. Hopefully. But no guarantees were offered. Mentioned as a business success story in the speech was a Michigan company, Luma Resources, which began manufacturing solar shingles with the help of a $500,000 government grant. It created 20 jobs , $25,000 a job. American taxpayers might think that’s a little pricey, but what’s worse is the potential for Luma Resources to go the way of Evergreen Solar, squandering the corporate welfare. Evergreen, the third largest maker of solar panels in the U.S. and recipient of at least $43 million in corporate welfare, announced earlier this month it would close its main American factory in Massachusetts and move manufacturing to China. Eight hundred Americans will lose their Evergreen jobs by April. Evergreen officials said China will give the company even higher amounts of corporate welfare, which, of course, makes sense since China is not a capitalist country. Its economy is government controlled. And that government routinely violates international trade regulations – by providing banned subsidies to industries and by deliberately devaluing its currency. No matter how better educated American workers get. No matter how much more innovative. No matter how much more productive. No matter how many tax dollars the government spends on research and development, if the corporations that benefit move manufacturing overseas, the American workers who paid for it will suffer. In fact, it’s more than suffering; it’s betrayal by their government that provided tax benefits to companies for off-shoring jobs. It is betrayal by their government that fails to stop violations of trade laws by countries like China that lure away firms like Evergreen. At the end of the State of the Union speech, the president said: “From the earliest days of our founding, America has been the story of ordinary people who dare to dream.” An ordinary American dreams of a family-supporting job, owning a home, saving enough to pay for a child’s college education, helping to build a safe community. Corporations aren’t Americans, no matter how often the U.S. Supreme Court grants them rights that the U.S. Constitution guarantees to human beings. Businesses aren’t citizens. Their allegiance isn’t to America. It’s to profits. They dream only of dollars. They concede no responsibility to family, community or country. They were not included when the president said: “Tucson reminded us that no matter who we are or where we come from, each of us is a part of something greater — something more consequential than party or political preference. We are part of the American family.” The top priority of the American government must be making America the best place on Earth for Americans. If that’s good for corporations, great. The government must never place American citizens second.

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Video: Kerry Urges Egypt to Respect the Democratic Process

January 28, 2011

Jan. 28 (Bloomberg) — U.S. Senator John Kerry, a Massachusetts Democrat, talks with Bloomberg’s Olivia Sterns at the World Economic Forum in Davos, Switzerland, about the unrest in Egypt. Protesters demonstrated throughout Egypt with clashes erupting in central Cairo, in the biggest challenge to President Hosni Mubarak’s 30-year rule. (Source: Bloomberg)

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Molecular Insight Receives Court Approval of Assumption of Investment Agreement and Solicitation of Alternative Transactions

January 26, 2011

CAMBRIDGE, MA–(Marketwire – January 26, 2011) –   Molecular Insight Pharmaceuticals, Inc. ( OTCQB : MIPIQ ) ( PINKSHEETS : MIPIQ ), today announced that it has received approval from the U.S. Bankruptcy Court for the District of Massachusetts of its motion to assume the previously announced Investment Agreement entered into with Savitr Capital LLC. The motion was submitted in connection with the Company’s Chapter 11 reorganization case that was commenced on December 9, 2010 under the U.S. Bankruptcy Code.

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Robert E. Scott: Exports and Jobs: Less Than Half the Story

January 26, 2011

President Obama talked about doubling exports in the State of the Union Address last night as a strategy to create jobs. It’s a great sound bite, but woefully incomplete economics. While exports support American jobs, imports displace them ; when imports grow faster than exports, our trade deficit expands and American jobs are lost. Between 2001 and 2007 (both business cycle peaks), we lost 3.4 million U.S. manufacturing jobs, and the fact that the trade deficit as a share of GDP rose by roughly one third is a key reason why. Lately, when the President has talked about jobs and trade, he mentions the jobs associated with exports but ignores those lost due to growing imports. It’s like watching baseball, but only counting runs scored by the home team — lots of fun but it won’t tell you anything about how well they are doing. Last week, the President talked a lot about expanding exports to China . But he rarely mentioned imports or the trade deficit. We heard a lot about unfair trade and job losses during Obama’s primary campaign, but those words disappeared after the election. One reason may be that President Obama has surrounded himself with advisors from multinational companies, who have more to gain from outsourcing than from domestic job creation. For example, just this week, the President appointed GE CEO Jeffrey Immelt to head his new Council on Jobs and Competitiveness. Our exports to China did increase rapidly last year — by about $23 billion, and this did support job creation. But imports increased about three times as fast, by $71 billion, which cost the U.S. many more jobs than exports supported. On balance, the growth in our trade deficit with China cost the United States at least one half million jobs in 2010 . We have huge trade deficits with China because of massive currency manipulation and many other unfair trade practices. Currency manipulation acts like a subsidy on all of China’s exports to the United States, and puts an identical tax on U.S. exports to China, and to every other country in the world where we compete with China, which is our most important trade competitor. The U.S. could recover at least a million jobs by forcing China to revalue its currency now . We will have a record trade deficit of nearly $275 billion with China in 2010. President Obama is unlikely to acknowledge that trade with China cost us a half million jobs in 2010; the U.S. China trade deficit is growing rapidly and job displacement will worsen in the future unless something is done to end China’s currency manipulation and other unfair trade policies. The Obama administration’s trade policies are failing because corporate executives are designing them. Many key staff members have close ties to multinational corporations and Wall Street, such as new White House Chief of Staff Bill Daley (former executive of JPMorgan Chase), former Treasury official Gene Sperling, recently appointed head of the National Economic Council in the White House (formerly worked for Goldman Sachs); and recently departed NEC director Lawrence Summers, who received $5.2 million from a Wall Street hedge fund between stints in the Clinton and Obama administrations. Summers, Sperling and Treasury Secretary Timothy Geithner (also from Wall Street) played key roles in opposing efforts within the Obama administration to impose tariffs on Chinese goods if the Chinese Government continued to manipulate their currency. Multinational corporations are responsible for outsourcing millions of U.S. jobs. What’s good for their corporate profits (and executive pay) often conflicts with the national interest of the United States to maximize job creation and production in this country. Even U.S.-based MNCs sometimes profit enormously from China’s unfair trade and industrial policies and currency manipulation. China spent $199 billion last quarter alone buying foreign currency reserves (primarily treasury bills) in order to keep its currency artificially low. They now hold $2.85 trillion in foreign currency reserves. The best estimates suggest that the Chinese yuan (RMB) is at least 30-40% undervalued. That amounts to a subsidy of 30%-40% on all the goods imported by GE and other MNCs from China. These companies would lose billions in profits if China revalued the yuan (RMB) and made these goods more expensive, so they are actively opposing efforts to compel China to revalue. Multinational corporations don’t need government assistance — they are sitting on $2 trillion in cash that they are investing in financial securities, rather than real capital that would create new jobs. They have all the cash they need to invest in R&D and to expand their factories. They can also afford to file trade cases to protect their fair trade and patent rights, which can cost millions of dollars for a single case. Instead, however, while they hoard their cash at home, they are investing abroad. China is giving hundreds of billions in subsidies to MNCs to move factories from the U.S. and other countries and locate them in China. For example, Evergreen Solar announced last week that it will close its solar cell factory in Massachusetts , which opened in 2008 with $43 million in state subsidies. Chinese banks offered Evergreen financing for two-thirds of the cost of its new plant at rates “as low as 4.8 percent” with no principal payments or interest payments due until the end of the loan in 2015. Even cheap labor is beside the point. U.S. clean energy loan guarantees can’t compete with the Chinese loan subsidies. This is another reason why MNCs will oppose (overtly or covertly) efforts to enforce fair trade laws by the Obama Administration. Americans who work for a living should be outraged that the President has appointed an executive of a firm that has offshored tens of thousands of jobs to serve as one of his key advisors. G.E.’s Immelt, the President’s newest CEO advisor, says that he wants to create jobs in the United States. But as Scott Paul of the Alliance for American Manufacturing showed last week , Immelt and GE have been leading the charge of the outsourcers. He notes that GE has “slashed their American workforce to fewer than 150,000, [and] dramatically expanded its global presence, now employing over 300,000 workers worldwide.” The President visited Immelt at a GE Plant in Schenectady, New York, last week where they celebrated $45 billion in new trade deals with China, like the joint venture GE just signed with China AVIC, an avionics firm that supplies components to both civilian and military jet makers in China. GE claims that the deal will create jobs in the US, but they are giving away the keys to their kingdom by transferring key avionics technology to China AVIC. GE put $200 million and its technology in the deal and the Chinese partner is putting up $700 million. GE is effectively selling its treasure for beads and trinkets. This is supposed to be a 50 year deal, but the way these deals usually work, the Chinese partner will appropriate GE’s technology and then kick them out in a few years. Within ten years China AVIC will be a global leader in avionics, and GE will be out of the business. This, in essence, has been the result of China’s indigenous innovation policies, which have forced foreign companies to transfer technology to Chinese firms, according to the National Association of Manufacturers . The deal may boost short term profits and Jeffrey Immelt’s bonuses, but thousands of American jobs will disappear. Who in our government is representing those workers? The deal will supposedly be limited strictly to domestic avionics, but it would be unwise to blindly trust the Chinese partner — this deal will give their military aircraft access to cutting edge US technology; two weeks ago, when Defense Sectary Gates visited China, their military conducted the first test flight of a new stealth fighter — they are catching up fast. Small and medium sized manufacturers create most of the jobs in the U.S. — not the giant corporations. Unlike the big companies, small and medium sized firms cannot get access to enough capital to finance working capital or expansion needs. President Obama should have appointed someone like Laurie S. Moncrieff — President, Adaptive Manufacturing Services and Schmald Tool & Die, Inc., a dynamic business leader who speaks for small and medium sized firms. (Moncrieff appeared at an EPI currency forum last March ). She would make an outstanding Chair for the new White House Council on Jobs and Competitiveness. In his State of the Union Address last night, the President proposed some new investments in infrastructure and measures designed to boost competitiveness. We do need to invest hundreds of billions of public and private dollars each year for the next few years to rebuild our aging infrastructure and lay the foundations for new clean energy industries and for conservation. And those investments can support millions of new jobs. But their effectiveness will just be blunted if we shy away from fixing our trade problems with China and other countries that use unfair trade policies to take away jobs and production from U.S. workers and domestic companies. Without effective trade policies, too much of the boost to U.S. jobs that can be gained from our rebuilt highways and railroads will leak away in the form of rising imports. The President needs to address both imports and exports. He needs to tell us how he plans to end currency manipulation this year, and his plans for ending unfair trade. Eliminating the U.S. non-oil trade deficit would support over five million U.S. jobs, and generate hundreds of billions of dollars in new tax revenues and reduced spending on unemployment and other social services over the next few years. It’s time to end illegal currency manipulation and unfair trade practices, and to do that the President needs a new crop of advisors who care more about American job creation than outsourcing and MNC profits.

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Video: Cavallo Says U.S. Inflation Stable, `Not a Big Problem’

January 14, 2011

Jan. 14 (Bloomberg) — Alberto Cavallo, an assistant professor at the Massachusetts Institute of Technology’s Sloan School of Management, talks about U.S. inflation. The cost of living in the U.S. climbed more than forecast in December, led by higher fuel and food prices, while other goods and services showed the smallest annual increase on record. Cavallo speaks with Lisa Murphy on Bloomberg Television’s “Fast Forward.” (Source: Bloomberg)

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Banks Lose Pivotal Mortgage Case

January 8, 2011

The highest court in Massachusetts ruled against U.S. Bancorp and Wells Fargo & Co. Friday in a pivotal mortgage foreclosure case that could spark more turmoil and uncertainty in a housing market already mired in depression. The Supreme Judicial Court affirmed a lower court judge’s ruling invalidating two mortgage foreclosure sales because the banks, in their capacity as trustees for mortgage securities, did not prove that they actually owned the mortgages at the time of foreclosure. The decision, which highlights the failure of financial firms to adhere to the rules that govern mortgage-backed securities, is likely to lead more borrowers to sue bank servicers and trustees for wrongful foreclosures. It’s unclear what the ruling means for people who were forced from their homes after defaulting on their loans or for those who purchased houses in foreclosure sales. “There are now thousands of these homes that have been purchased through foreclosures handled in a very similar fashion where the titles are defective,” said Ward P. Graham, a Massachusetts title attorney who co-authored a friend-of-the-court brief in the case on behalf of the Real Estate Bar Association for Massachusetts, Inc. Last fall, the banking industry’s foreclosure machine came under intense scrutiny with revelations that low-level employees called “robo signers” powered through hundreds of foreclosure affidavits a day without verifying a single sentence. At the time, analysts warned that the banks’ allegedly fraudulent document procedures could imperil their ability to prove that they owned the mortgages. The Massachusetts ruling stokes those concerns. “This decision is going to raise serious problems in hundreds of thousands of foreclosure cases,” said homeowner-defense attorney Thomas Cox, a Maine attorney who was one of the first to put the robo signing scandal in the national spotlight. “It has the potential to require that foreclosures be done over, and I think there’s going to be significant turmoil nationally. There’s going to be major uncertainty.” In the Massachusetts case, the Supreme Judicial Court found that the banks, who were not the original mortgagees, did not show that they held the mortgages at the time of foreclosure. As a result, the court found, the banks did not demonstrate that the foreclosure sales were valid. The banks argued that the securitization documents they submitted were sufficient to prove they owned the mortgages before the publication of the notices of sale and the foreclosure sales. Wells Fargo said in a statement Friday that as trustee of a securitized pool of loans, it expected those servicing the loans to abide by all applicable state laws, including those governing foreclosure sales. The San Francisco bank was a trustee of the securitized trust in question. American Home Mortgage Servicing Inc., was the servicer. In a separate statement U.S. Bancorp said the judgment has no financial impact on the company. “The issues addressed by the court revolved around the process of servicing the loan on behalf of the securitization trust, which was performed in this case by the servicer, American Home Mortgage,” the bank, which is based in Minneapolis, said. It later issued another statement saying that as a trustee of the securitization trust that it has no responsibility for the terms of the underlying mortgage, foreclosure procedure, the conduct of the servicer, the process by which the mortgage is transferred to the trust, or the sufficiency of the mortgage documentation.” American Home Mortgage Servicing, which is based in Coppell, Texas, said in a statement that the “decision is of limited applicability because it is based on law that is unique and specific to Massachusetts. The decision does not extend to foreclosures in other states.” Attorney Paul Collier III, who represents Antonio Ibanez, one of the homeowners in the case, said the ruling affects thousands of mortgages in Massachusetts and could have a far-reaching impact on the nation’s banking industry. “For homeowners and foreclosures in general, it means that any mortgage foreclosure which was initiated by a securitized trust at a time when the trust had not obtained a mortgage assignment which gave it the lawful right to do so is void. Those homeowners, like Mr. Ibanez, still own the property,” Collier said. It’s up to lawmakers to take action to remove the uncertainty over mortgages raised by the decision, said Massachusetts Secretary of State William Galvin. Without legislative action, the court’s ruling will have a “chilling effect” on the real estate market, he said. The broader implications of the case sent bank stocks lower, with Wells Fargo stock falling 65 cents, or 2 percent, to close at $31.50. It earlier traded as low as $30.64. Stock in U.S. Bancorp slid 20 cents to close at $26.09, after dropping as much as 2.4 percent after the ruling.

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Kevin Connor: The Foreclosure Fraud Scandal Just Got Harder to Ignore

January 7, 2011

The Massachusetts Supreme Court issued a major decision against the banks on the issue of foreclosure fraud earlier today. In US Trust vs. Ibanez , the court ruled that the banks in the case did not have standing to foreclose when they failed to assign the mortgage prior to foreclosure. The case carries significant implications, as many foreclosures may be declared invalid in Massachusetts, and the ruling could influence other state courts. The decision has already sent bank stocks down. Now that the Massachusetts Supreme Court has identified a fundamental problem with the mortgage securitization and foreclosure process, Wall Street bankers and their friends in Washington may also have a harder time working hand in glove to stamp out the foreclosure fraud firestorm. Last October, when foreclosure fraud started capturing national headlines, the Obama administration joined the banks’ PR offensive and helped spin illegal foreclosure as a minor clerical issue. At a critical point in the process, White House adviser David Axelrod appeared on Face the Nation to say that he regretted that there was “uncertainty” in the housing market, that the administration was working closely with financial institutions, and that they hoped the issue would be resolved quickly.  He also said that the administration opposed a nationwide moratorium due to the fact that some foreclosures were valid. At the time, Yves Smith said that the comments revealed “astonishing” priorities on the part of the Obama administration . We do not know whether Bank of America wrote Axelrod’s talking points, but we do know that he was partying with the bank’s top public relations strategist a few days later. Axelrod attended an epilepsy research fundraiser in Boston later that week that was co-chaired by Bank of America executive Anne Finucane . The other co-chair, along with Finucane’s husband? Axelrod’s wife, Susan , a co-founder of Citizens United for Research in Epilepsy. Other prominent attendees are listed here . In  one picture from the event , David is standing next to an amused Finucane, a huge, clownish smile on his face, trademark mustache and brow in full effect, with one arm extended as if he is about to shake the hand of the photographer. Obama’s point man on foreclosure fraud could not possibly look like a bigger corporate tool, arm in arm with Bank of America’s top public relations strategist at the height of the foreclosure fraud mess. The “foreclosure fraud as inconsequential clerical error” argument has always been spin meant to mislead the public, put forward by Wall Street with help from government cronies like David Axelrod. Zero Hedge calls these folks the “kleptocratic banker mafia syndicate,” and they come together at events like the Axelrod-Finucane fundraiser to further strengthen their social ties. But did they forget to invite the judge? When the foreclosure fraud scandal hits the front pages again, and threatens to hurt powerful financial institutions — rather than just the foreclosed, unemployed, and powerless — will the syndicate keep pushing the paperwork canard? Will Obama dispatch another Wall Street flack to the Sunday circuit, to say that the issue needs to be resolved quickly? And will talking points matter when court cases keep piling up? It will be interesting to see how this plays out.

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Foreclosure Case Deals Big Blow To Banks, Lenders

January 7, 2011

NEW YORK (By Jonathan Stempel and Dena Aubin) – In a ruling that may affect foreclosures nationwide, Massachusetts’ highest court voided the seizure of two homes by Wells Fargo & Co and US Bancorp after the banks failed to show they held the mortgages at the time they foreclosed. Bank shares fell, dragging down the broader U.S. stock market, after the Supreme Judicial Court of Massachusetts on Friday issued its decision, which upheld a lower court ruling. The decision is among the earliest to address the validity of foreclosures conducted without full documentation. That issue last year prompted an uproar that led lenders such as Bank of America Corp, JPMorgan Chase & Co and Ally Financial Inc to temporarily stop seizing homes. Courts in other U.S. states are considering similar cases, and all 50 state attorneys general are examining whether lenders are forcing people out of their homes improperly. Friday’s decision may also threaten banks’ ability to package mortgages into securities, including whether loans that were transferred improperly might need to be bought back. Wells Fargo and U.S. Bancorp lacked authority to foreclose after having “failed to make the required showing that they were the holders of the mortgages at the time of foreclosure,” Justice Ralph Gants wrote for a unanimous court. Wells Fargo was not immediately available for comment. U.S. Bancorp spokesman Steve Dale said the ruling has no financial impact on the bank, which has “no responsibility for the terms of the underlying mortgage or the procedure by which they were transferred” into a mortgage trust. “What they were doing was peddling these mortgages and leaving the paperwork behind,” said Michael Pill, a partner at Green, Miles, Lipton & Fitz-Gibbon LLP in Northampton, Massachusetts, who represents homeowners and is not involved in the case. In early afternoon trading, Wells Fargo shares were down nearly 4 percent at $30.92, while U.S. Bancorp was down 1.4 percent at $25.93. Bank of America stock was down 2.8 percent, JPMorgan fell 3.7 percent, and the KBW Bank Index, which includes all four lenders, was down 2.3 percent. Major U.S. stock indexes were down 0.6 percent to 0.8 percent. ‘UTTER CARELESSNESS’ In the Massachusetts case, U.S. Bancorp and Wells Fargo had said they controlled through different trusts the respective mortgages of Antonio Ibanez as well as Mark and Tammy LaRace, who lost their homes to foreclosure in 2007. The banks bought the homes in foreclosure, and sought court orders confirming they had title. A lower court judge ruled against them, and Friday’s decision upheld this ruling. In a concurring opinion, Justice Robert Cordy lambasted “the utter carelessness” that Wells Fargo and US Bancorp demonstrated in documenting their right to own the properties. Massachusetts is one of 27 U.S. states that do not require court approval to foreclose. Gants did suggest in his opinion how banks might properly transfer mortgages via securitization trusts. “The executed agreement that assigns the pool of mortgages, with a schedule of the pooled mortgage loans that clearly and specifically identifies the mortgage at issue as among those assigned, may suffice to establish the trustee as the mortgage holder,” Gants wrote. “However, there must be proof that the assignment was made by a party that itself held the mortgage.” The cases are U.S. Bank N.A. v. Ibanez and Wells Fargo Bank NA v. LaRace et al, Massachusetts Supreme Judicial Court, No. SJC-10694. (Reporting by Jonathan Stempel and Dena Aubin; Editing by Lisa Von Ahn and Matthew Lewis) Copyright 2010 Thomson Reuters. Click for Restrictions .

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Brown & Brown, Inc. Names Scott Penny as Chief Acquisitions Officer

January 6, 2011

DAYTONA BEACH, FL and TAMPA, FL–(Marketwire – January 6, 2011) – The Board of Directors of Brown & Brown, Inc. ( NYSE : BRO ) today announced that J. Scott Penny, CIC, Regional President, has been named to the position of Chief Acquisitions Officer. Mr. Penny, who has served as one of the Company’s Regional Presidents since July 2010 and previously served as a Regional Executive Vice President since 2002, will continue to be responsible for oversight of retail profit center operations of certain of the Company’s subsidiaries in Connecticut, Illinois, Indiana, Kentucky, Massachusetts, New Hampshire, New Jersey, Pennsylvania and Washington. Mr. Penny will also continue to oversee the operations of Axiom Re, Inc. in Florida and North Carolina, and will assume responsibility for the oversight of Florida Intracoastal Underwriters, LLC. 

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Richard (RJ) Eskow: Which of These Banks Was 2010′s Most Shameless Corporate Outlaw?

December 30, 2010

Bankers. The red carpet’s still being rolled out for them in Washington, but if there’s a stain on it they’ll pout for days. Jason Linkins documents the latest set o f cheap white whines from very wealthy white men . This time they’re upset because nobody from the six largest banks in America was invited to the President’s CEO Roundtable. They’re offended because they didn’t meet with the President? From the looks of things they’re lucky not to be meeting with the warden . Let’s review the record for these corporate malefactors, and then decide: Which of these six banks was “America’s Most Shameless Corporate Outlaw” in 2010? #1. Bank of America Here are some recent headlines for the country’s largest bank: ” Bank of America Ends Year With Flurry of Lawsuits ” ” Arizona Sues Bank of America ” ” Arizona Wants Bank of America Held in Contempt ” ” Nevada, Arizona sue Bank of America over failed mortgage aid ” ” Allstate Sues Bank Of America For Selling ‘Toxic’ MBS ” ” Bank of America Hit With Missouri Class Action Over Loan Modifications ” Here are the details: Associated Press : “Attorneys general in Arizona and Nevada filed civil lawsuits Friday against Bank of America Corp., alleging that the lender is misleading and deceiving homeowners who have tried to modify mortgages in two of the nation’s most foreclosure-damaged states.” Courthouse News Service : “Bank of America violated a consent judgment it signed almost 2 years ago to provide loan modifications and help relocate borrowers, the Arizona attorney general claims … Bank of America has continued to misrepresent ‘to Arizona consumers whether they were eligible for modifications of their mortgage loans, when Bank of America would make a decision on their modification requests, whether Bank of America had approved their modification requests, why Bank of America declined their modification requests, and whether and when Bank of America would foreclose upon their homes.’” Consumer Affairs : “The bank is also facing at least three suits claiming that it reneged on duties it undertook by accepting $25 billion under the Troubled Asset Relief Program (TARP).” In total, Bank of America’s last annual report lists 29 pending lawsuits against the company. Lawsuits are not proof of guilt, of course. But the bank has already paid a fine for illegally concealing $6 billion in payouts to employees, and another fine for concealing major losses at its Merrill Lynch subsidiary. ( Both fines were low – not much more than a slap on the wrist – because Bank of America was on taxpayer-funded life support at the time.) BofA also confessed to committing fraud as part of a settlement this month, which the Justice Department noted was restitution “for its participation in a conspiracy to rig bids in the municipal bond derivatives market.” The Bank was also ordered to pay Lehman $590 million for illegally seizing its deposits , in violation of bankruptcy law. Bank of America has been one of the worst offenders during the foreclosure crisis, with documented case of widespread abuse and legal violations. From the Associated Press : “A document obtained last week by the Associated Press showed a Bank of America official acknowledging in a legal proceeding that she signed thousands of foreclosure documents a month and typically didn’t read them. The official, Renee Hertzler, said in a February deposition that she signed 7,000 to 8,000 foreclosure documents a month.” How generous has the taxpayer been to Bank of America? There was the TARP money, of course. And BofA, like other banks, has been suckling at the teat of Federal Reserve’s discount money window throughout the crisis. And, as Zach Carter noted, the bank was also one of two institutions that were the main beneficiaries of a special Fed program called the Primary Reserve Credit Facility. There were those cushy settlements with the SEC. BofA stock was trading at $53 at the end of 2006. As of this writing the stock is trading for $13.30. But its executives have been wasting corporate money and resources buying up 419 web URLs with insulting phrases and the names of their senior executives – most of whom nobody’s ever heard of – to protect their personal reputations. No company’s ever done that before. Bob Scully “blows” (bobscullyblows.com) and Bill Boardman “sucks” (billboardmansucks.com)? Who knew? Last year two senior executives received $9.9 million and two others received $6 million in total compensation. If they’re really worried about their reputations they should stop running their company in a way that “sucks” and “blows.” The guy who robbed a Bank of America branch in West Palm Beach is going to prison . The bank’s senior executives are hurt that they didn’t get invited to the Rose Garden for tea. Rap Sheet: BofA has probably committed more foreclosure offenses than any other single institution. It deceived stockholders, and the public, about the $6 million in bonuses it paid out (during the rescue process). It was equally deceptive about Merrill Lynch’s financial status. And it admitted to rigging bids for municipal bond derivatives. Shameless Quotes: CEO Brian Moynihan’s response toward demands that his bank comply with HAMP’s legal requirements? “Sure,” he sneered,” we’ll go back and check our homework again.” And he says he won’t accept anything but “constructive criticism.” #2. JPMorgan Chase ” We don’t think there are cases where people were evicted out of homes when they shouldn’t have been .” JPM Chase CEO Jamie Dimon. From the Washington Post : “J.P. Morgan Chase, one of the nation’s leading banks, announced Wednesday that it will freeze foreclosures in about half the country because of flawed paperwork.” As we learned recently, Jamie Dimon doesn’t feel loved or admired enough. Small wonder, given the way his bank treats customers. Even as he was making arrogant statements like this one, papers like the New York Times were telling the truth about the sleazy operation he’s running at JPMorgan Chase: “At JPMorgan Chase & Company, they were derided as ‘Burger King kids’ — walk-in hires who were so inexperienced they barely knew what a mortgage was … revelations that mortgage servicers failed to accurately document the seizure and sale of tens of thousands of homes have caused a public uproar …” Failure to accurately document home foreclosures is illegal. I’s lousy management, too. Chief Executive Dimon oversaw a sloppy operation that’s going to cost his shareholders a lot of money : “JPMorgan set aside $2.3 billion of reserves to cover mortgage repurchases or litigation expenses, including some for ‘mortgage-related matters,’ the lender said Oct. 13.” A whistleblower complaint alleges that the bank “sold to third party debt buyers hundreds of millions of dollars worth of credit card accounts. . .when in fact Chase Bank executives that many of those accounts had incorrect and overstated balances.” According to the complaint, “Chase Bank executives routinely destroyed information and communications from consumers rather than incorporate that information into the consumer’s credit card file … mass-executed thousands of affidavits in support of Chase Banks collection efforts … (and) did not have personal knowledge of the facts set forth in the affidavits.” It also claims that “when senior Chase Bank executives were made aware of these systemic problems, senior Chase Bank executives — rather than remedy the problems — immediately fired the whistleblower and attempted to cover up these problems.” There are also multiple lawsuits against Chase for allegedly manipulating the price of silver, and there is at least one report that the bank is being probed by several Federal agencies (including the Justice Department) over its trading activities in precious metals. JPMorgan Chase is also one of several banks that are being sued over the handling of Bernie Madoff funds . JPMorgan Chase “agreed to pay $25 million to settle allegations it sold unregistered securities, many of which defaulted, to the state of Florida,” as the Orlando Sentinel reported. That’s a crime. Chase was also one of several banks that paid to settle charges that it illegally propped up a failed mortgage lender . (These settlements have typically allowed the banks to “admit no wrongdoing” – a practice which should be stopped. These are crimes.) JPMorgan Chase’s behavior in Jefferson County, Alabama made Huey Long look like a piker. The bank spread more than $8 million around the county through local interediaries to secure highly lucrative deals on municipal derivatives. As Bloomberg News put it, ” JPMorgan, the second-largest U.S. bank by assets, used fees on the unregulated derivative contracts — and a trip to a New York spa for one elected official — to curry political favor, a decade after the SEC adopted rules to drive out pay-to-play from the $2.8 trillion municipal bond market.” The bank conducted this criminal behavior under Dimon’s watch. And while it “neither admitted nor denied wrongdoing,” as usual, it had to pay a three-quarters-of-a-billion dollar settlement to wrangle its way out of this snakepit of illegality. Rap Sheet: Corruption in Alabama; widespread violation of foreclosure laws; sale of unregistered securities. Also under investigation for illegal manipulation of the precious metals market; mishandling of Madoff funds; deliberate lawbreaking in credit card processing, concealment of criminality. Shameless quotes: “Judy Dimon says the crisis took a toll on him. He used to stand up to bullies who threatened his smaller twin; now he felt as if he, and bankers in general, were being bullied.” (from a New York Times profile of Dimon) 3. Citigroup Citi’s being sued for gender discrimination by its own employees. Citi settled a class action lawsuit after illegally raising rates for credit card customers . The bank’s being sued by an independent trustee for allegedly “aiding and abetting” a Ponzi schemer . Citi executives were given slap-on-the-wrist fines for lying to investors about $40 billion in subprime exposures, which is a criminal act. It should also be remembered that Citigroup paid $2.65 billion in 2004 to settle class action lawsuits over its alleged illegal actions in propping up WorldCom stocks in return for enormous fees. As Citi’s annual report notes, “Citigroup and Related Parties have been named as defendants in numerous legal actions and other proceedings asserting claims for damages and related relief for losses arising from the global financial credit and subprime-mortgage crisis that began in 2007.” Citi is still being investigated by Italian courts for possible criminal behavior in the Parmalat case, and it’s being sued by a Norwegian bank for misrepresenting its financial condition and failing to disclose material information. It’s being sued by investors for misrepresenting its underwriting of mortgage backed securities. Rap Sheet : Violation of SEC law regarding corporate disclosures; illegal rate activity toward credit card customers. Under investigation for aiding and abetting a Ponzi scheme. Shameless quotes: “Almost all of us … missed the powerful combination of forces at work and the serious possibility of a massive crisis.” (Robert Rubin) “On November 3, 2007, I sent an email to Mr. Robert Rubin and three other members of Corporate Management. In this email I outlined the business practices that I had witnessed and attempted to address. I specifically warned about the extreme risks that existed within the Consumer Lending Group.” (Former Citi exec Richard Bowen) 4. Wells Fargo They illegally laundered drug money for the Mexican cartels – and nobody went to jail. Here’s a suggestion: Read stories “War Torn Mexico: A Population in Terror ,” which begins: “Massacres, beheadings, YouTube videos featuring cartel torture sessions and even car bombs are becoming commonplace in Juarez.” Study the statistics on the violent murders – which include Federal agents , children, and “penniless immigrants ” – and then remind yourself: These are Wells Fargo’s business partners. Rap Sheet: What can anyone add to that? Shameless quotes: “We’re more of a Main Street bank than a Wall Street bank.” “”Of all the decisions I’ve had to make, few have been as difficult as cutting the dividend.” (Wells Fargo CEO John Stumpf) 5. Goldman Sachs Goldman is Goldman. The SEC charged them with fraud, and they settled the suit by admitting their marketing materials contained lies – they called them “mistakes.” They were fined by Great Britain for illegally concealing US fraud investigations. Goldman has a gender discrimination lawsuit, too, and theirs comes complete with strippers and racist emails . Goldman’s being sucked for deceiving its clients over an offering its own people privately (and thanks to Sen. Levin, famously) bragged was ” a shitty deal .” Goldman paid $60 million in Massachusetts to settle charges of predatory loan practices. After mismanagement drove Goldman into impending doom, the firm was saved by TARP funds and Federal Reserve’s Emergency Liquidity Programs. Total taxpayer lending to Goldman exceeded three-quarters of a trillion dollars. Goldman also received $13 billion in backdoor payouts through the AIG liquidation (under Tim Geithner’s supervision). Rap Sheet: Fraudulent misrepresentation; predatory loan practices; illegal concealment of an investigation. And God know what else. They’re Goldman, man! S hameless Quotes: “”We’re very important … We do God’s work.” (Goldman CEO Lloyd Blankfein) “If I whet My glittering sword, and Mine hand take hold on judgment; I will render vengeance to Mine enemies.” (God) 6. Morgan Stanley Earlier this year the Wall Street Journal reported that “U.S. prosecutors are investigating whether Morgan Stanley misled investors about mortgage-derivatives deals it helped design and sometimes bet against.” The firm’s also being sued by US Bank for fraudulently misleading it and other investors over a structured residential investment called “Tourmaline.” A group of investors in Singapore is suing the firm for designing CDOs to fail and then selling them as “conservative investments.” The Financial Industry Regulatory Authority fined Morgan Stanley this year for failing to disclose material conflicts of interest to investors. The same agency hit the firm with a $12.5 million fine in 2007 for illegally concealing emails during customer arbitration hearings. In a particularly sleazy move, Morgan Stanley claimed that the emails had been lost on 9/11, when they were all safely stored in backup copies elsewhere. MS was also sued by the EEOC for gender discrimination . The firm was able to beat back an investors’ lawsuit over bloated executive pay – it set aside 62% of net revenue for employee compensation – so its executives get to keep fat bonuses for driving the company into the ground. Greed and stupidity aren’t illegal, after all. On the other hand, their portfolio of lawsuits including one that says they defrauded nuns in Europe . Rap Sheet: Despite numerous violations and charges, Morgan Stanley is a relatively minor player compared to its bigger colleagues. On the other hand, it illegally concealed evidence from arbitrators by using the World Trade Center attack as an excuse, and six of its own employees died in that attack. That’s simply vile. On top of that, they’re being sued by nuns . Shameless Quotes: “When we think back on 2001, we are filled with deep sorrow and outrage over the events of September 11. Who among us will ever forget the shock and horror of that day?” (Morgan Stanley Annual Report, 2001) “When you come that close to really going out of business, call it near death, death experience, the end of the line, whatever you want to call it, your only focus is to make sure your company survives.” (former CEO John Mack) __________________ We rescued these six banks. They’ve all broken the law, and they’re all under a cloud of suspicion regarding even more possible illegalities. And yet they’re all pouting because they weren’t invited to the White House. Which is our most shameless corporate lawbreaker? Bank of America’s the biggest, and it has probably committed the most widespread foreclosure fraud. JPMorgan Chase has played fast and loose with the law, and Dimon’s unwarranted arrogance raises their shamelessness quotient dramatically. It’s hard to top Wells Fargo and the drug cartels (although getting sued by nuns comes pretty close). Citi had Chuck Prince and Robert Rubin, two pretty shameless individuals. And Goldman … well, as we were saying, they’re Goldman . In any normal period of history all of these organizations would be recognized as corrupt institutions, and their leaders would be ashamed to show their faces among respectable people. But these aren’t normal times, are they? Frankly I’m stumped. You guys decide. They all deserve the title as far as I’m concerned.

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Obama To Renominate Nobel-Prize Winning Economist To Fed

December 23, 2010

WASHINGTON — President Barack Obama will resubmit the failed nomination of a Nobel Prize-winning economist to the Federal Reserve, even though he faces even stronger opposition from the next Congress. The nomination of Peter Diamond fizzled when the Senate adjourned Wednesday without acting on it. But the White House said Thursday that the president will press ahead on the nomination. Diamond, a professor at the Massachusetts Institute of Technology, is an authority on Social Security, pensions and taxation. He shared the Nobel Prize in economics that was awarded in October. But Senate Republicans have opposed his nomination, questioning his practical experience and research. Republicans will hold six additional seats in the next Senate, making Diamond’s confirmation even more difficult. The Fed often operates with vacancies on its board. The board has seven seats but hasn’t had every seat filled since 2006. Chairman Ben Bernanke and the board’s other members belong to the Fed’s main policymaking group, the Federal Open Market Committee. The committee sets interest rates and makes other policies that influence economic growth, employment and inflation. The Senate Banking Committee had approved Diamond’s nomination in November and sent it to the Senate for consideration. It was the panel’s second attempt to overcome Republican opposition. Obama struggled to get Bernanke himself confirmed to a second term in the last Congress. Bernanke, a Republican, faced a backlash over the Fed’s role in bailing out Wall Street firms during the financial crisis. That angered ordinary Americans and stirred a wave of Senate opposition. Bernanke was ultimately confirmed by a 70-30 vote. It was the slimmest margin ever for a Fed chairman.

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Brookfield Pays $113 Million for Blackboard’s HQ in DC

December 3, 2010

Brookfield Properties Corp. (NYSE: BPO) closed on its all-cash purchase of an eight-story, 305,442-square-foot office building at 650 Massachusetts Ave. NW in Washington, DC. The seller, an investment group called Washington Television Center LLC, sold…

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Andrew Tucker Avorn: The AT&T Settlement: A Reason to be Thankful This Holiday Season

November 26, 2010

AT&T Mobility customers who use a smartphone to connect to the internet got notice of an early holiday gift this year — a class action settlement to compensate them for illegal taxes that the company has collected since 2005. After looking at the settlement website and one of my wireless bills, I realized that this lawsuit provides a good reason to be thankful America’s class action system in this season of consumer largesse. The settlement is for a lawsuit that was filed on behalf of customers for AT&T Mobility’s violation of The Internet Tax Freedom Act, passed by Congress in 1998. The Law prohibits states from taxing access to the Internet. In spite of the law, AT&T Mobility has been collecting state sales taxes on iPhone and Blackberry data access packages, and keeping a fee for collecting those taxes. A monthly bill provides evidence of AT&T’s overcharge. Suppose I have an iPhone and pay $25 per month for voice and text service and $30 for data. Because Internet taxes are illegal, my state can only tax me on my voice and text plan, which is $25. I live in Massachusetts, which has a 6.25% sales tax, so my telecommunications tax should be $1.87. But it’s not. On my bill, next to “Massachusetts Telecom Tax,” it says $3.52, which means that AT&T is assessing the tax based on $55.00. I lose $1.65 per month so that AT&T Mobility can help Massachusetts illegally tax my access to the Internet. The bigger the tax that AT&T Mobility collects, the bigger the fee they get to keep. This practice demonstrates why class actions are so vital for holding companies accountable to their customers. Your state government has no interest in helping you, because they are benefiting from your tax revenues even though they are illegal under state and federal law. Congress can’t help you because it doesn’t enforce the laws it passes, and it has already spoken on the issue legislatively. Because a legislative battle would pit big telecom and state governments against unorganized, unfunded consumers, consumers would lose on Capitol Hill. Since the amount of money per person is only a few dollars per month, no individual has a strong enough interest in hiring a lawyer to his/her own lawsuit. But multiply those few dollars per month times several years for each subscriber, and multiply that by AT&T Mobility’s 92.8 million customers, and we are talking about a gigantic sum of money that the company has stolen from the public. Because of the class action system, the enterprising consumers who figured out this scheme can combine forces with every subscriber who has lost money by hiring a few lawyers to stop AT&T Mobility from collecting the illegal tax, disgorge its ill-gotten gains and compensate consumers. Instead of charging by the hour, the attorneys who represent the class will get a percentage of the total settlement. Consumers pay nothing if they get nothing, but lawyers take a massive risk by investing their time and resources if they lose. The parties have negotiated a settlement, and a federal court will determine its fairness in March. The usual arguments against class actions will surely surface: the lawyers have made a windfall, and the customers got comparatively little. But without our admittedly flawed system of civil justice, who else will prevent companies from ripping off their customers with impunity? Probably no one. AT&T Mobility will take a costly hit, and the next time that they, or any other company, considers charging an illegal tax in order to profit at the expense of its customers, it will have to decide whether or not it’s worth facing the consequences of America’s class action system. To collect your compensation, you do not have to do anything. Judging by the flurry of text messages that the court has sent to class members, someone will notify you when your claim is ready. So this holiday season, as you prepare to give and receive, to own and enjoy the fruits of American capitalism, you may rest easy, knowing that there is a class action lawyer out there who might be the only force between you and the company who is trying to rip you off.

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