through-the-end

More Money Slashed From High-Speed Rail

by on April 11, 2011

Huffington Post…

WASHINGTON — As part of the final budget deal formally agreed to on Friday night, the Obama administration signed off on a big cut to a closely held transportation policy priority. Multiple Hill sources from both parties confirm that the final continuing resolution (CR) to fund the government through the end of September will include a $1.5 billion cut in funds for the planned national high-speed rail system. Jennifer Hing, communications director for the House Appropriations Committee, said that the reduction could actually grow larger as lawmakers negotiate the final language. “The final agreement will reflect” the $1.5 billion of high-speed rail funds slashed from the temporary CR, Hing wrote in an email to HuffPost, “but that is not to say that it couldn’t be more.” In signing off on cuts, the Obama administration is taking a major hit to one of the president’s favorite transportation priorities. In the process, he is also giving fodder to critics who have accused the White House’s push for high-speed rail as pie-in-the-sky policy that would fall far short of transforming the nation’s antiquated infrastructure. Already there have been several Republican governors who have refused to accept federal money to build high-speed rail projects in their states. Florida Gov. Rick Scott turned down $2 billion alone, citing concerns that the state’s portion of the funds would go well beyond projections. That money was, in turn, sent to the Department of Transportation to be awarded to other interested states. Now it appears a good chunk of it will go towards deficit reduction. The White House was able to secure $8 billion in high-speed rail money in the 2009 stimulus package. The current level of funding was $2.5 billion-a-year. The cuts secured under the budget deal reached on Friday night brings the annual rail dollars down to $1 billion, though administration officials stressed that none of the lost funds would come from existing projects that have received grants. The president had budgeted $1 billion himself in his 2012 budget proposal but as recently as mid-February 2011, Transportation Sec. Ray LaHood was encouraging Congress to authorize $53 billion over the next six years.

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More Money Slashed From High-Speed Rail

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Stopgap Budget Proposal To Be Sent To Obama

by AP on March 2, 2011

Huffington Post…

WASHINGTON — The Senate on Wednesday sent President Barack Obama a Republican-drafted stopgap funding bill that trims $4 billion from the budget, completing hastily processed legislation designed to keep partisan divisions from forcing a government shutdown. Moments later, Obama called on congressional leader to meet with top administration figures including Vice President Joe Biden to discuss a longer-term measure to fund the government through Sept. 30. “We can find common ground on a budget that makes sure we are living within our means,” Obama said. “This agreement should be bipartisan, it should be free of any party’s social or political agenda, and it should be reached without delay.” The White House said Obama will sign the bill. Congressional Republicans said it’s up to Democrats to offer an alternative to carry into the talks. They have yet to produce one to respond to a $1.2 trillion omnibus spending measure that passed the House last month. “The House position is perfectly clear. We cut $100 billion off the president’s request for this fiscal year,” said House Speaker John Boehner, R-Ohio. “We have no clue where our colleagues on the Senate side are.” The Senate cleared the temporary measure by an overwhelming 91-9 vote that gives the GOP an early but modest victory in its drive to rein in government. Obama has until Friday to sign the measure and keep federal offices open and operations intact. The House passed the legislation on Tuesday. The measure buys time for Obama, the GOP-dominated House and the Democratic-led Senate to start talks on legislation to fund the government through the end of September. House Republicans last month muscled through a measure cutting this year’s budget by more than $60 billion from last year’s levels – and $100 billion from Obama’s request – while trying to block implementation of Obama’s health care law and a host of environmental regulations. The White House has promised a veto and it will take weeks or months to negotiate a compromise funding measure that Obama would sign. Federal Reserve Chairman Ben Bernanke said in testimony Wednesday that the House GOP spending cuts plan would reduce economic growth by as much as two-tenths of a percentage point and hurt job growth. “That would translate into a couple hundred thousand jobs,” Bernanke said. “It is not trivial.” The $4 billion in savings comes from some of the easiest spending cuts for Congress to make, hitting accounts that Obama already has proposed eliminating and reaping some of the money saved by earlier moves by Republicans to ban lawmakers from “earmarking” pet projects for their districts and states. At issue are the operating budgets of every federal agency, including the Pentagon, where Defense Secretary Robert Gates is increasingly anxious for a full-year funding bill. “Discretionary spending” represents about a third of the overall $3.8 trillion federal budget. “Our priorities are twofold. One, keep the government running so essential services don’t get interrupted,” said Senate Majority leader Harry Reid, D-Nev. “Equally important, we need to lay the groundwork with a budget that keeps what works and cuts what doesn’t.” Some Republicans were restive that the bill didn’t cut further. “While some have been patting themselves on the back for proposing $4 billion in so-called `cuts,’ in reality, this bill fully funds billions upon billions of dollars in wasteful, duplicative programs that should be eliminated, reduced, or reformed,” said freshman GOP Sen. Mike Lee of Utah. But other Republicans seized on the vote as setting a precedent for cuts of $2 billion a week – which, if extended through the end of the budget year, would match the $61 billion in cuts in a measure passed by the House last month to meet their promise of cutting federal agency operating budgets back to levels in place before Obama took office. “It’s hard to believe when we’re spending $1.6 trillion more than we’re taking in a single year, that it would take this long to cut a penny in spending, but it’s progress nonetheless,” said Senate GOP leader Mitch McConnell of Kentucky. “It’s encouraging that the White House and congressional Democrats now agree that the status quo won’t work, that the bills we pass must include spending reductions.” The White House has promised a veto of the bigger GOP measure, citing crippling cuts to many federal agencies and studies by economists that predict the spending cuts would harm the economy. The GOP won control of the House and gained seats in the Senate last fall with the backing of tea party activists demanding deep, immediate cuts in federal spending. They say that an early down payment on those cuts would send a confidence-building signal to financial markets and the business community. Still, difficult negotiations loom between House Republicans, Senate Democrats and the White House over the full-year spending measure. It blends cuts across hundreds of programs – education, the environment, homeland security and the IRS among them – with a slew of provisions that attack clean air and clean water regulations, family planning and other initiatives.

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Stopgap Budget Proposal To Be Sent To Obama

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Wells Fargo To Modify 15K Option-ARM Loans In CA

December 20, 2010

LOS ANGELES — Wells Fargo & Co. has agreed to modify some 14,900 adjustable-rate loans made by banks it acquired, according to filings released Monday by state prosecutors who said the mortgages were harmful to borrowers. The agreement with the state attorney general’s office will result in more than $2 billion in principal write-downs, interest-rate reductions and other concessions through the end of June 2013, Wells Fargo Home Mortgage chief financial officer Franklin Codel said. The deal applies to mortgages marketed as “Pick-a-Payment” loans by Charlotte, N.C.-based Wachovia Bank and World Savings Bank, a subsidiary of Oakland, Calif.-based Golden West Financial Corp. Wachovia bought World Savings in 2006 and San Francisco-based Wells Fargo purchased Wachovia in 2008. The mortgages were so named because their terms allowed borrowers to make payments at various levels each month, including a payment option that increased the loan’s principal by covering less than the monthly interest owed. The payments also ballooned to higher rates after a set period, leaving many borrowers unable to continue paying, Attorney General Jerry Brown said in a statement. “Customers were offered adjustable-rate loans with payments that mushroomed to amounts that ultimately thousands of borrowers could not afford,” Brown said. The California agreement, which also includes $32 million for thousands of borrowers who lost their homes to foreclosure, follows a deal reached in October with authorities in Arizona, Colorado, Florida and five other states to offer modifications worth $480 million to about 5,500 customers. Codel said California borrowers made up some 60 percent of the Pick-a-Payment portfolio that it inherited from Wachovia. He said Wells Fargo has been working to modify those loans since it bought the smaller bank and that it has been entering into agreements with state prosecutors to share details of their actions and assure them they will continue. “This was the best way to get this behind us and move forward,” he said.

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Uncertainty Weighs Heavily Over Fourth Quarter Outlook

September 30, 2010

Typically by October, the commercial real estate industry can see its way clearly through the end of the year, with a pretty good idea of what can be accomplished and how the rest of the year will play out. But these are not usual times. The loads of…

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Daniel Akerson, GM CEO: We Want To Beat BMW, Go Into ‘Attack Mode’

September 8, 2010

DETROIT — General Motors’ new CEO told employees that the automaker needs to make cars and trucks that are better than those of competitors such as BMW. Former telecommunications executive Daniel Akerson, in his first webcast to employees since taking over as CEO Sept. 1, said the company needs to go into “attack mode” to stay ahead of rivals, according to a worker who watched the speech on Wednesday. The speech comes just before GM’s board meets this week. Directors may set a date for the sale of GM stock to the public, perhaps in November. That sale would make GM a publicly traded company again after a radical overhaul in bankruptcy court. Akerson, 61, told employees that GM needs to keep competitors on their heels rather than responding to what they do, said the worker, who asked not to be identified because the webcast was not public. Akerson used BMW as an example, saying that GM’s Cadillac luxury brand has to make cars that are better than BMW’s 300, 500 and 700 series sedans. Through August, BMW has sold 139,236 vehicles, beating Cadillac by almost 47,000 cars and trucks, according to Autodata Corp. In his 40-minute address, Akerson, who has been on GM’s board for about a year, said he is learning quickly about the auto industry but faces a large amount of information. “He said he’s drinking from a fire hose right now,” the worker said. Akerson last week replaced Ed Whitacre, who was also known for an aggressive style. He fired ineffective executives, starred in GM commercials and led the company to two straight quarterly profits after years of losses. Akerson, GM’s fourth CEO in less than two years, was introduced by Whitacre, who told employees that he stepped down because the company needed a CEO who would be in charge long after the stock sale. Whitacre, 68, a retired CEO of telecommunications giant AT&T Inc., said he didn’t want to stay too long after the sale, which is called an initial public offering. Like Whitacre, Akerson has worked as a top executive at major telecommunications companies, holding leadership posts at both MCI and Nextel. A graduate of the U.S. Naval Academy, Akerson was appointed to GM’s board by the government in July of last year after GM emerged from bankruptcy protection. He also led global buyouts for The Carlyle Group, a private equity firm. Whitacre will stay on as GM chairman through the end of the year, and no replacement has been named for that position. GM is 61 percent owned by the federal government, but the company hopes to shed that majority control with the IPO.

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New Business Tax Breaks To Be Backed By Obama This Week

September 7, 2010

WASHINGTON — President Barack Obama will call on Congress to pass new tax breaks that would allow businesses to write off 100 percent of their new capital investments through 2011, the latest in a series of proposals the White House is rolling out in hopes of showing action on the economy ahead of the November elections. An administration official said the tax breaks would save businesses $200 billion over two years, allowing companies to have more cash on hand. The president will outline the proposal during a speech on the economy in Cleveland Wednesday. Amid an uptick in unemployment to 9.6 percent, and polls showing that the November election could be dismal for Democrats, Obama has promised to propose new steps to stimulate the economy. In addition to the business investment tax breaks, he will also call for a $50 billion infrastructure investment and a permanent expansion of research and development tax credits for companies. The proposals would requires congressional approval, which is highly uncertain given Washington’s partisan atmosphere. “The White House is missing the big picture. None of its plans address the two big problems that are hurting our economy: excessive government spending, and the uncertainty that their policies….are creating for small businesses,” House Minority Leader John Boehner said. Concerns over adding to the mounting federal deficit could also keep some Democratic lawmakers from approving new spending so close to the midterm elections. And even if legislators could pass some of the proposals in the short window between their return to Capitol Hill in mid-September and the elections, it’s unlikely the efforts would significantly stimulate the economy by November. Stimulus measures enacted in 2008 and 2009 allowed businesses to depreciate 50 percent of their capital investments. A separate small business bill the White House is urging the Senate to pass would extend that tax break through the end of this year. If Congress passes the administration’s proposal to expand the tax breaks to 100 percent, several million people and 1.5 million businesses would benefit, said the administration official, who spoke on the condition of anonymity because the formal announcement has not been made. The official estimated the ultimate cost to taxpayers over 10 years would be $30 billion, with most of the money lost in tax revenue being recouped as the economy strengthens.

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Video: Unnikrishnan Says Wheat Inventory Levels `Comfortable’

August 16, 2010

Aug. 16 (Bloomberg) — Sudakshina Unnikrishnan, a commodities analyst at Barclays Capital, talks about Russia’s decision to ban grain exports from yesterday through the end of the year. She speaks with Andrea Catherwood on Bloomberg Television’s “The Pulse.”

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This Week in Retail: Fitch Projects Modest Growth for Retailers

August 11, 2010

Fitch Ratings sees increased stability for ratings of U.S. retailers through the end of the year, according to its summer 2010 Retail Register report. In fiscal 2011, total sales are expected to grow 4% for the 27 companies under Fitch’s coverage. This…

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Irene Aldridge: Small Investors and the Implications of the Financial Reform Bill

July 27, 2010

About the time of the “flash crash” of May 6, 2010, many small investors appear to have left the U.S. stock markets, according to a recent Wall Street Journal article . The Financial Reform Bill, passed and celebrated with much fanfare last week, is sometimes thought to help bring those investors and their cash back into the equity markets. This articles takes a close look at the likely causes underlying the investor exodus, the Bill and its probable effect on investor behavior. First, a bit about the Bill. The Financial Reform Bill is certainly an accomplishment for the current administration. Earning a consensus on the complicated subject of financial regulation is a coup in its own right. By carefully reading through the text of the Bill itself, however, one may surmise that the Bill is really designed to benefit the U.S. Securities and Exchange Commission (the SEC) the most. The Bill gives the SEC the authority it needs to collect and analyze information on market activity, to gain more control over the regulation of commodities, futures (currently regulated by the Commodities and Futures Trading Commission), other non-equity securities, as well as large hedge funds with assets under management exceeding $100 million. The Bill also imposes tighter capital requirements on banks, but only the largest banks, those with total capitalization of at least $500 billion. Smaller banks (and in the U.S., one can open a bank with as little as $10 million in capital), are largely left to their own devices in the Bill. While it will probably take the SEC another year to interpret and implement the Bill into actionable regulatory items, some implications for investors are already predictable. According to the research I conducted during my PhD studies, stricter SEC regulation typically reduces volatility in the financial services sector, stabilizing stock prices of financial services firms. Reduced volatility, in turn, will translate into lower volatility for major stock market indexes, such as the Dow Jones or the S&P 500, infusing some confidence into investors. Yet, it remains to be seen whether the stability of the market will be enough to entice investors to bring out their cash. And the rationale for the investors’ reticence is simple. While many a traditional broker blames the investor exodus from the markets on the latest technological innovations, like high-frequency trading, many investors have taken out their cash out of stocks for more prosaic reasons: concerns about deflation and the dire financial situation of their local municipalities. Due to deflation , every $1000 kept in cash from the beginning of April 2010 through the end of June now has the purchasing power of $1004 ($4 increase) in comparison with April. In other words, an investor who held on to his $1000 cash from April through the end of June can buy $4 more in average goods now than he could in April. In comparison, an investor who kept his $1000 in the S&P 500 from the start of April through the end of June lost $9 in his investment over the same period, reducing his original $1000 to $995 in nominal terms and to $991 in deflation-adjusted April purchasing power. Naturally, as long as deflation continues and the S&P 500 generates return insufficient to cover deflation, stuffing cash into one’s mattress is an attractive “investment” strategy. Then there is all this mess with the municipalities. To finance even the most basic local services, such as public schooling and garbage collection, the local governments rely on municipal taxation of its residents. Due to the high unemployment rate lingering in the U.S. economy, tax revenues were pitiful in the past couple of years, draining government coffers. And while the Federal government can always solve this situation by printing more money, municipalities’ two options are 1) issuing additional debt, and 2) cutting public services. Some municipalities have such a low credit rating that they have to resort to option 2. Now imagine investors facing the following option: whether to invest the money into the stock market or to have the money in cash or bonds in order to pay for their basic daily services, like children’s school arrangements — avoiding the stock market clearly takes the upper hand in this situation. Overall, however, things are likely to look up in the stock market, at least until the Fall Elections. According to the latest research by Axel Dreher and Roland Vaubel ( Journal of International Money and Finance , 2009), the governments have tools at their disposal to create temporary bursts of economic activity. Predictably, these bursts are often summoned ahead of elections to buoy voters’ confidence in the incumbent politicians. As a consequence, the U.S. investors are likely to see solid returns in the markets through October 2010. Yet the future of the markets beyond the election date is highly uncertain, regardless of whether the Financial Reform Bill is acted upon or not.

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John Linder: Unemployment Benefits ‘Too Much Of An Allure’

June 10, 2010

Georgia Republican Rep. John Linder suggested Thursday that extended unemployment benefits keep people from looking for work. After complaining that the Democrats’ stimulus bill has failed to keep unemployment from hitting double digits, Linder said, “And even when businesses are willing to hire, nearly two years of unemployment benefits are too much of an allure for some,” said Linder. “The evidence is mounting that so-called stimulus policies rammed through Congress are doing more harm than good.” Linder cited a May 10 Detroit News story about landscaping businesses complaining that potential employees rejected job offers in favor of collecting unemployment benefits. The stimulus and several subsequent bills have given laid-off workers up to 99 weeks of unemployment benefits in some states, including Michigan. The average weekly benefit is $320. Linder is the highest-ranking Republican on the House Ways and Means Subcommittee on Income Security and Family Support, which held a hearing Thursday to address long-term unemployment. Committee chairman Rep. Jim McDermott (D-Wash.) called for testimony from four economists who were unanimous that the extended unemployment benefits are necessary and don’t increase the unemployment rate. Michael Reich, an economics professor from the University of California, Berkeley, for instance, pointed out that there are currently five jobseekers for every available job, adding that the unemployed wouldn’t be any less likely to take available jobs even if they had more than 99 weeks of benefits. “Exits from unemployment to employment become less likely the longer the duration of unemployment, largely because employers generally choose to hire new labor force entrants or unemployed workers with short unemployment spells over those with longer spells.” To wit: online job ads from companies that say “NO UNEMPLOYED CANDIDATES WILL BE CONSIDERED AT ALL.” Jason Taylor, an economics professor from Central Michigan University, took Linder’s view. “There can be no doubt that incentives to obtain new employment have been, and will continue to be, tempered by governmental action which has extended unemployment insurance to many through the end of 2010.” Taylor told HuffPost he had not seen an April report by the San Francisco Federal Reserve, which found that “extended unemployment insurance benefits have not been important factors in the increase in the duration of unemployment or in the elevated unemployment rate.” Republicans and in recent weeks conservative Democrats have held up efforts to reauthorize extended benefits because of their impact on the federal budget deficit, which is expected to top $1.5 trillion this year. The result is that unemployment benefits and several other domestic aid programs, including funds for Medicaid and subsidies for laid off workers to buy health insurance , have lapsed while the Senate dithers over the bill. Meanwhile, hundreds of thousands of people will miss checks they’d been expecting. But the opposition hasn’t been all about deficit spending; the notion that unemployment benefits keep people from taking jobs has been a constant undercurrent. Sen. Judd Gregg (R-N.H.) said the same thing in May. Sen. Jon Kyl (R-Ariz.) said it in March. And many Democrats share that view. Rep. Jason Altmire (D-Pa.) said in May that businesses in his district complained that potential workers refused job offers in favor of staying on unemployment benefits (though he declined to name the businesses). Larry Mishel of the Economic Policy Institute pointed out that only 67 percent of the 15 million unemployed receive benefits. Even if all those people are enjoying the dole, shouldn’t businesses still be able to hire some of the other five million receiving no benefits at all? Rep. Shelley Berkley (D-Nev.) didn’t have much patience for the egghead economists and their proposals for additional weeks of unemployment benefits, job-sharing or workforce retraining. “What would help me a lot is if you all came to Vegas and drank and gambled like crazy,” she said.

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Bank of America May Lead U.S. Lenders in Home-Equity Losses, Fitch Says

June 9, 2010

By Dawn Kopecki June 9 (Bloomberg) — Bank of America Corp. , JPMorgan Chase & Co. and Wells Fargo & Co. may lead 20 publicly traded U.S. banks that charge off as much as $40.9 billion on home-equity investments this year, Fitch Ratings said. In the worst-case scenario considered by Fitch, the three banks may write off a combined $31.2 billion as loans from the height of the housing market sour, analysts John Mackerey and Ken Ritz wrote in a report today. The 20 banks on the list, which includes only lenders with above-average exposure to the business, may charge off a total of as much as $76.7 billion in the two years through 2011, the New York-based rating company estimated. “Fitch is concerned that large core portions of these portfolios that were originated during the peak of the housing boom are increasingly at risk due to continued weakness in the housing market,” the analysts wrote. “These loans are becoming less secured and will increasingly exhibit loss severities more similar to unsecured credit.” The report focused on 20 banks that are at a higher risk of losses because their home-equity holdings make up a greater share of the firms’ loan portfolios than the industry’s average of 11.5 percent. Estimates for accelerating losses are based on the expectation that home prices will continue to decline, the analysts said. Citigroup Inc. , the third-biggest U.S. bank by assets, was excluded because its home-equity debt didn’t exceed the industry average to total loans. Hurt by Acquisitions Bank of America, Wells Fargo and JPMorgan all acquired mortgage lenders with “relatively weaker credit metrics,” the analysts said. Charlotte, North Carolina-based Bank of America, which purchased Countrywide Financial Corp. in 2008, may lead charge- offs with as much as $11.8 billion this year and $22 billion through the end of 2011, they wrote. Wells Fargo, based in San Francisco, may follow with $10 billion and $18.7 billion in one and two-year charge-offs. JPMorgan, based in New York, may book $9.4 billion this year and $17.7 billion through the end of 2011, Fitch said. Bank of America Chief Executive Officer Brian Moynihan told investors at a June 2 conference that quarterly losses from the bank’s home-equity unit will run $1.5 billion to $2 billion over the next several quarters before declining to more modest levels. ‘Substantial Portfolio’ “I don’t want to be sanguine about it because it’s a substantial portfolio, but as we see it run through, it will run through, it will just take a little more time,” Moynihan said. Wells Fargo spokeswoman Mary Eshet didn’t return a call for comment and JPMorgan spokeswoman Jennifer Zuccarelli declined to comment. Souring home-equity loans probably won’t affect the lenders’ ratings, “although it continues to be a concern for several issuers,” the Fitch analysts said. Under the least severe of three scenarios, Fitch estimated that charge-offs for all 20 companies would reach $20.5 billion this year and $38.4 billion by the end of next year. The three banks would still account for about three-fourths of the write- offs, according to the report. “Continued home-price depreciation, high consumer debt levels and elevated unemployment have all combined to yield accelerating losses in many bank home-equity portfolios and credit losses are expected to remain elevated in 2010,” the Fitch analysts wrote. To contact the reporter on this story: Dawn Kopecki in New York at dkopecki@bloomberg.net

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Merkel Seeks `Decisive’ German Budget Cuts, Putting Her at Odds With U.S.

June 6, 2010

By Brian Parkin June 6 (Bloomberg) — Chancellor Angela Merkel said Germany is poised for a “decisive” round of budget cuts that will shape government policy for years to come, fueling disagreement with U.S. officials who favor measures to step up growth. Speaking at the start of two days of Cabinet talks in Berlin called to identify potential annual savings of 10 billion euros ($12 billion), Merkel said Europe’s debt crisis underscores the need for efforts to ensure the euro’s stability. “It’s not exaggerated to say that this Cabinet conclave will give important direction for Germany in coming years, years that will be decisive,” Merkel told reporters today before the meeting in the Chancellery. “We can only spend what we receive in income.” Merkel’s government is reining in its deficit and urging fellow euro-region states to do likewise to thwart a sovereign- debt crisis. The savings risk further alienating voters angry at Germany’s 148 billion-euro contribution to a European plan to backstop the euro, and clash with Treasury Secretary Timothy F. Geithner ’s June 5 call at a Group of 20 meeting for “stronger domestic demand growth” in European countries like Germany with trade surpluses. At stake for Merkel is “the credibility of Germany as one of the countries forcing the others to start fiscal tightening,” Juergen Michels , chief euro-area economist at Citigroup Inc. in London, said in a phone interview on June 4. “It’s a very fine line between fiscal tightening and choking off the economy.” The Defense Ministry said last week there are “no taboos” when it comes to potential savings, including a possible reduction in the army’s size by 100,000 active-duty soldiers plus scrapping conscription. Tax rises, welfare cuts and the loss of about 10,000 civil servant posts are among other measures being considered, Deutsche Presse-Agentur reported, citing unnamed government sources. The Cabinet seeks to cut almost 30 billion euros through the end of its legislative term in 2013, Bild newspaper said yesterday, without saying how it got the information. To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net .

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Prada Said to Consider Initial Public Offering for Fifth Time in 10 Years

June 2, 2010

By Sara Gay Forden, Elisa Martinuzzi and Andrew Roberts June 2 (Bloomberg) — Prada SpA, buoyed by surging profit at the eponymous fashion label, is exploring options to revive an initial public offering, according to four people familiar with the talks. Prada, which has scrapped an IPO four times in the last 10 years, is considering a Hong Kong listing in addition to Milan, said two of the people, who declined to be identified before a decision is made. Prada hasn’t yet appointed banks to manage the transaction, and talks may not lead to an offering, they said. Prada has cut debt and opened new stores in Asia as the industry rebounds from the worst year on record. Perfume maker L’Occitane International SA sold stock in Asia last month to take advantage of demand for IPOs in the region amid optimism that economic growth will exceed expansion elsewhere. “Prada has sailed well through choppy waters, thanks to its presence in Asia and the resilience of its shoe and handbag business,” said Armando Branchini , vice-president of Milan- based consulting firm InterCorporate. “The strong rebound in the first quarter, which may continue through the end of the year, would make it an opportune time to consider an IPO.” The company continues to monitor market conditions, said a Prada spokesman, declining to comment further. While Prada may hold an IPO as soon as this year, it’s more likely the firm will wait for stock markets to rise and sell stock in 2011, according to one person. Surging Profit The fashion company, which is controlled by Chief Executive Officer Patrizio Bertelli , his wife Miuccia Prada and her family, said May 24 first-quarter earnings before interest, taxes, depreciation and amortization surged to 64 million euros ($78.5 million) from 11 million euros a year earlier. Revenue rose 26 percent to 366 million euros, led by a 62 percent gain in the Asia Pacific region. Prada abandoned plans to list in 2008 because of adverse market conditions. The company had hired Intesa Sanpaolo SpA, UniCredit SpA and Goldman Sachs Group Inc. to manage the offering at the time. Prada, founded by head designer Miuccia Prada’s grandfather Mario Prada in 1913, still operates its first outlet in Milan’s 19th century Galleria shopping arcade. To contact the reporters on this story: Elisa Martinuzzi in Milan at emartinuzzi@bloomberg.net ; Sara Gay Forden in Milan via sforden@bloomberg.net ; Andrew Roberts in Paris at aroberts36@bloomberg.net

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Tier 5: Pelosi Says No To More Weeks Of Unemployment Benefits

May 27, 2010

House Speaker Nancy Pelosi said Thursday that Congress will not take up any measure to give the long-term jobless more weeks of unemployment benefits beyond the 99 weeks available in some states. Congress is currently locked in an epic battle just to preserve the 99 weeks for the rest of the year. In a seemingly futile effort to appease deficit hawks, Dem leadership already weakened its “extenders bill,” formally known as the American Jobs and Closing Loopholes Act, by shortening the unemployment extension through November instead of December. Hundreds of thousands of people, however, have already exhausted 99 weeks of benefits with no jobs in sight. Thousands signed a petition to demand Congress add a “Tier V” to the four tiers of benefits that currently make up the 99 weeks. A reporter asked Pelosi at her weekly press conference if there were any plans to help the 99ers. “No. This bill will go until the end of November, at that time we’ll take up something, but not between now and then,” said Pelosi (D-Calif.). “The situation I see is that members who are from low unemployment areas are very concerned about the deficit. Members who are from high unemployment areas are very concerned about jobs. So we have to come to a compromise as to how to move forward, and we did with this bill going to November.” But come November, if Congress takes up anything related to unemployment, it will most likely be another temporary extension of existing benefits. The extension under consideration this week is the fourth in the last six months. And while a handful of senators have pledged to constituents that they will fight for more weeks of benefits, Senate Finance Committee chairman Max Baucus (D-Mont.) has said that “99 weeks is sufficient.” HuffPost asked Senate Budget Committee chairman Kent Conrad on Thursday (D-N.D.) if Congress will take up another extension in November or if it might not bother even with that. “It’s so hard to know what the economic conditions will be at that point,” he said. Andrew Stettner, deputy director of the National Employment Law Project, which has been lobbying for Congress to extend benefits through the end of the year and beyond, said midterm elections will make things more tricky politically in November. NELP’s goal is for Congress to reauthorize 99 weeks of benefits for the next two years if necessary. “As an advocate, I’m a little worried about what happens at November 30th,” said Stettner. “It’s not a great time to get something done in a thoughtful way.” Stettner added that he does expect Congress to continue to extend enhanced benefits, though perhaps with fewer weeks in certain states. “Nobody’s expecting that there will be no extension next year,” he said. “There have to be extensions given the job hole that we’re in.”

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Tier 5: Pelosi Says No To More Weeks Of Unemployment Benefits

May 27, 2010

House Speaker Nancy Pelosi said Thursday that Congress will not take up any measure to give the long-term jobless more weeks of unemployment benefits beyond the 99 weeks available in some states. Congress is currently locked in an epic battle just to preserve the 99 weeks for the rest of the year. In a seemingly futile effort to appease deficit hawks, Dem leadership already weakened its “extenders bill,” formally known as the American Jobs and Closing Loopholes Act, by shortening the unemployment extension through November instead of December. Hundreds of thousands of people, however, have already exhausted 99 weeks of benefits with no jobs in sight. Thousands signed a petition to demand Congress add a “Tier V” to the four tiers of benefits that currently make up the 99 weeks. A reporter asked Pelosi at her weekly press conference if there were any plans to help the 99ers. “No. This bill will go until the end of November, at that time we’ll take up something, but not between now and then,” said Pelosi (D-Calif.). “The situation I see is that members who are from low unemployment areas are very concerned about the deficit. Members who are from high unemployment areas are very concerned about jobs. So we have to come to a compromise as to how to move forward, and we did with this bill going to November.” But come November, if Congress takes up anything related to unemployment, it will most likely be another temporary extension of existing benefits. The extension under consideration this week is the fourth in the last six months. And while a handful of senators have pledged to constituents that they will fight for more weeks of benefits, Senate Finance Committee chairman Max Baucus (D-Mont.) has said that “99 weeks is sufficient.” HuffPost asked Senate Budget Committee chairman Kent Conrad on Thursday (D-N.D.) if Congress will take up another extension in November or if it might not bother even with that. “It’s so hard to know what the economic conditions will be at that point,” he said. Andrew Stettner, deputy director of the National Employment Law Project, which has been lobbying for Congress to extend benefits through the end of the year and beyond, said midterm elections will make things more tricky politically in November. NELP’s goal is for Congress to reauthorize 99 weeks of benefits for the next two years if necessary. “As an advocate, I’m a little worried about what happens at November 30th,” said Stettner. “It’s not a great time to get something done in a thoughtful way.” Stettner added that he does expect Congress to continue to extend enhanced benefits, though perhaps with fewer weeks in certain states. “Nobody’s expecting that there will be no extension next year,” he said. “There have to be extensions given the job hole that we’re in.”

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Tier 5: Pelosi Says No To More Weeks Of Unemployment Benefits

May 27, 2010

House Speaker Nancy Pelosi said Thursday that Congress will not take up any measure to give the long-term jobless more weeks of unemployment benefits beyond the 99 weeks available in some states. Congress is currently locked in an epic battle just to preserve the 99 weeks for the rest of the year. In a seemingly futile effort to appease deficit hawks, Dem leadership already weakened its “extenders bill,” formally known as the American Jobs and Closing Loopholes Act, by shortening the unemployment extension through November instead of December. Hundreds of thousands of people, however, have already exhausted 99 weeks of benefits with no jobs in sight. Thousands signed a petition to demand Congress add a “Tier V” to the four tiers of benefits that currently make up the 99 weeks. A reporter asked Pelosi at her weekly press conference if there were any plans to help the 99ers. “No. This bill will go until the end of November, at that time we’ll take up something, but not between now and then,” said Pelosi (D-Calif.). “The situation I see is that members who are from low unemployment areas are very concerned about the deficit. Members who are from high unemployment areas are very concerned about jobs. So we have to come to a compromise as to how to move forward, and we did with this bill going to November.” But come November, if Congress takes up anything related to unemployment, it will most likely be another temporary extension of existing benefits. The extension under consideration this week is the fourth in the last six months. And while a handful of senators have pledged to constituents that they will fight for more weeks of benefits, Senate Finance Committee chairman Max Baucus (D-Mont.) has said that “99 weeks is sufficient.” HuffPost asked Senate Budget Committee chairman Kent Conrad on Thursday (D-N.D.) if Congress will take up another extension in November or if it might not bother even with that. “It’s so hard to know what the economic conditions will be at that point,” he said. Andrew Stettner, deputy director of the National Employment Law Project, which has been lobbying for Congress to extend benefits through the end of the year and beyond, said midterm elections will make things more tricky politically in November. NELP’s goal is for Congress to reauthorize 99 weeks of benefits for the next two years if necessary. “As an advocate, I’m a little worried about what happens at November 30th,” said Stettner. “It’s not a great time to get something done in a thoughtful way.” Stettner added that he does expect Congress to continue to extend enhanced benefits, though perhaps with fewer weeks in certain states. “Nobody’s expecting that there will be no extension next year,” he said. “There have to be extensions given the job hole that we’re in.”

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Tier 5: Pelosi Says No To More Weeks Of Unemployment Benefits

May 27, 2010

House Speaker Nancy Pelosi said Thursday that Congress will not take up any measure to give the long-term jobless more weeks of unemployment benefits beyond the 99 weeks available in some states. Congress is currently locked in an epic battle just to preserve the 99 weeks for the rest of the year. In a seemingly futile effort to appease deficit hawks, Dem leadership already weakened its “extenders bill,” formally known as the American Jobs and Closing Loopholes Act, by shortening the unemployment extension through November instead of December. Hundreds of thousands of people, however, have already exhausted 99 weeks of benefits with no jobs in sight. Thousands signed a petition to demand Congress add a “Tier V” to the four tiers of benefits that currently make up the 99 weeks. A reporter asked Pelosi at her weekly press conference if there were any plans to help the 99ers. “No. This bill will go until the end of November, at that time we’ll take up something, but not between now and then,” said Pelosi (D-Calif.). “The situation I see is that members who are from low unemployment areas are very concerned about the deficit. Members who are from high unemployment areas are very concerned about jobs. So we have to come to a compromise as to how to move forward, and we did with this bill going to November.” But come November, if Congress takes up anything related to unemployment, it will most likely be another temporary extension of existing benefits. The extension under consideration this week is the fourth in the last six months. And while a handful of senators have pledged to constituents that they will fight for more weeks of benefits, Senate Finance Committee chairman Max Baucus (D-Mont.) has said that “99 weeks is sufficient.” HuffPost asked Senate Budget Committee chairman Kent Conrad on Thursday (D-N.D.) if Congress will take up another extension in November or if it might not bother even with that. “It’s so hard to know what the economic conditions will be at that point,” he said. Andrew Stettner, deputy director of the National Employment Law Project, which has been lobbying for Congress to extend benefits through the end of the year and beyond, said midterm elections will make things more tricky politically in November. NELP’s goal is for Congress to reauthorize 99 weeks of benefits for the next two years if necessary. “As an advocate, I’m a little worried about what happens at November 30th,” said Stettner. “It’s not a great time to get something done in a thoughtful way.” Stettner added that he does expect Congress to continue to extend enhanced benefits, though perhaps with fewer weeks in certain states. “Nobody’s expecting that there will be no extension next year,” he said. “There have to be extensions given the job hole that we’re in.”

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Eleven Funds Worse Than Elevation

March 26, 2010

Earlier today, I  explained why Elevation Partners is far from the “the worst run institutional fund of any size in the United States?” Of course, this raised a follow-up question: So, what is the worst run institutional fund of any size in the United States? I don’t think it’s possible to give a definitive answer, at least when it comes to private equity and venture capital. After all, final judgement on these funds can only come once all the investments are realized. But we certainly can identify funds that are in trouble. To do so, I turned to CalPERS, which likely has more VC/PE fund investments than any other U.S. institution. CalPERS publicly discloses performance data for each of its 642 general partners, through the end of Q3 2009. I ranked each of those firms by IRR, excluding any fund closed in 2007 or later (such funds are relatively young, and their IRRs can be unfairly depressed by the fabled J-curve). I also removed non-U.S. funds, which means you won’t see things like Permira Europe IV, Polish Enterprise Fund VI, Candover 2005 Fund or Carlyle Japan Partners. So, without further ado, we’ll do this via slideshow (which has become something of its own issue today ) [slideshow] [slide title="Opportunity Capital Partners IV"] OCP IV is a $100 million fund raised in 2001. It’s almost completely called down, with a -30% IRR through the end of Q3 2009. The firm’s website says it “primary investment focus is providing capital to later stage companies seeking acquisition and expansion financing. OCP focuses primarily on businesses in the areas of communications, including media broadcasting and wireless, applied technology and traditional manufacturing segments. We invest in companies with exclusive licenses or franchises, proprietary products or processes or other unique features and characteristics that provide a clear and sustainable competitive advantage. OCP invests only in companies with experienced, compatible management teams that adequately cover each of the businesses’ key functional areas. Our preferred investment range is $2,000,000 to $10,000,000.” Our records show that OCP has not since raised another fund. [slide title="Aberdare II Annex Fund"] In 2006, Aberdare raised around $15 million for an annex to its $50 million second fund (raised in 2001). The annex IRR is -27.5%, with no money returned so far. The overall fund is doing a bit better, but is still in the red (matches the logo). According to CalPERS: “Aberdare Ventures is a small, highly collaborative team, deeply experienced as both venture investors and operators of healthcare technology companies. Aberdare’s investment focus is driven by years of experience growing biopharmaceutical product companies and therapeutic medical device companies.” [slide title="Nogales Investors Fund I"] It’s things like this that make LPs not want to do first-time funds. Nogales’ debut vehicle closed with around $100 million, but sports a -27.4% IRR. According to CalPERS, Nogales I is “a private equity fund specializing in small- to medium-sized U.S. companies that participate in markets or have geographic locations traditionally underserved by other sources of investment capital. They have a successful history of making control and non-control equity and equity-related investments in small- to medium-sized businesses…. Their goal is to develop a close partnership with management and build a company that generates superior returns for their investors while at all times maintaining the highest levels of fairness and integrity.” Again, this is according to CalPERS. The fact that superior returns are lacking is something to take up with their webmaster… [slide title="Sevin Rosen Fund VIII"] This is our first pure VC fund on the list, and was a $600 million vehicle raised in 2000. Actually, it was larger but then got scaled back. It has a -25.4% IRR, but didn’t stop Sevin Rosen from raising a follow-on fund (and repeatedly trying to hit the 10-spot). Like many of its VC fund managers, CalPERS doesn’t provide a description. But here’s the Sevin Rosen website . [slide title="Nogales Investors Fund II"] It’s things like this that make LPs not want to do second-time funds. Los Angeles-based Nogales raised $245 million for this vehicle in 2006, and its currently underwater with a -24.7% IRR. Total distributions equal the number of Super Bowls won by the Cincinnati Bengals. On the upside, this is still a very light portfolio, with barely 25% of its capital called so far. [slide title="Convergence Ventures II"] CV II was a $132 million fund raised in 1999 by Convergence Partners, a Mountain View, Calif.-based firm that is a self-confessed member of the walking dead. It has a -23.3% IRR, is fully drawn and has yet to return a single distribution. Lots of Internet stuff in the portfolio, which makes its failure that much more remarkable. How do you screw up a 1999-vintage Internet VC fund based in Silicon Valley? [slide title="Tallwood II"] Tallwood II is actually the first institutional fund raised by Tallwood, which originally launched as an angel effort in 2000 serial entrepreneur and Dado Banatao. It’s a $180 million fund raised in 2002, and has a -23.3% IRR and virtually no distributions. It later raised around $23 million for an annex fund that also is underwater. [slide title="Inroads Capital Partners"] This was a $50 million VC fund formed to invest in minority- and female-owned companies. It was based in Evanston, Ill., and has proven to be a disaster. The fund’s IRR is -22.5% and is entirely called down with one active portfolio company. Not surprisingly, the firm no longer exists. [slide title="Rosewood Capital V"] Rosewood Capital V is a $200 million fund closed in 2006. It sports a -22.1% IRR and virtually no distribitions. This is the most recent fund from Rosewood Capital, “a San Francisco-based private equity firm focused exclusively on equity investments in consumer growth companies… Rosewood backs profitable consumer companies driven by exceptional management teams and proven business models. The firm pursues both minority and majority transactions with an average equity investment size of $10-40 million.” [slide title="Carlyle/Riverstone Renewable Energy Infrastructure Fund"] This $685 million fund was raised as part of a larger partnership between Carlyle Group and Riverstone. And it’s lousy. The vehicle has a -21.2% IRR, is almost completely called down and has zero distributions. Amazingly, Carlyle/Riverstone raised more than $3 billion for a follow-on fund (makes a bit of sense, since “renewables” are hotter today than in 2001). On the other hand, the relationship has been strained by all that pesky pay-to-play activity in New York… [slide title="Acacia Venture Partners II"] This $120 million fund raised in 1999 has an IRR off -20.7%, and is completely called down. The San Francisco-based VC firm still has an active website, but we can’t find a record of it successfully raising a third fund. The focus is/was on healthcare services deals. [/slideshow/]

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Apollo Management Said to Have Agreed to Buy Citigroup Real Estate Unit

March 9, 2010

By Dan Levy and Dakin Campbell March 9 (Bloomberg) — Apollo Management LP agreed to buy Citigroup Inc.’s real estate investment unit, according to a person with knowledge of the deal. The purchase of Citi Property Investors will more than triple New York-based Apollo’s real estate assets, said the person, who asked not to be named because the negotiations are private. The portfolio includes 65 investments in 26 countries with a net asset value of $3.5 billion, the person said. Citigroup, which is 27 percent-owned by the U.S. Treasury Department, has been under pressure from regulators to sell assets to shore up its balance sheet. The New York-based bank valued the property assets at $12.5 billion as of June, according to its Web site. “Apollo is getting a lot of good assets with a lot of good sponsors because I think Citi was good at it,” said Gary Mozer, principal at George Smith Partners, a real estate investment banking firm in Los Angeles. “They were just a victim of the times.” U.S. commercial prices dropped 41 percent from their October 2007 peak through the end of last year, Moody’s Investors Service said Feb. 22. Citi’s property portfolio includes assets in Asia, Europe and the U.S., the person familiar with the deal said. Apollo signed a letter of intent and the deal may take as long as three months to close, the person said. The company plans to keep the Citi Property staff, according to the person. Kelly Nugent , an outside spokeswoman for Apollo, and Shannon Bell , a Citigroup spokeswoman, declined to comment. To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net ; Dakin Campbell in San Francisco at dcampbell27@bloomberg.net

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Credit Card Companies Waive Fees For Select Haiti Charities

January 15, 2010

All four major credit card companies — Visa, MasterCard, American Express and Discover — have waived or rebated their processing fees on donations to select charities in support of the relief effort in Haiti, representatives of the companies say. Visa Inc. has announced that it will waive fees through the end of February on credit card donations made to a “select group” of 11 major U.S. charities that are providing support to Haitian relief efforts. The eligible charities are American Red Cross; AmeriCares; CARE USA; Direct Relief International; Habitat for Humanity; International Rescue Committee; Mercy Corps; Oxfam America; Save the Children; US Fund for UNICEF; and World Vision. Visa’s number of eligible groups has doubled since the last disaster. After only waiving fees for the American Red Cross in the aftermath of Hurricane Katrina, it did so for five charities after the 2004 tsunami. American Express has waived and rebated its processing fee for card donations between January 12 through the end of February for the 65 charities on the USAID-approved InterAction website . According to Christine Elliot, a corporate spokesperson for American Express, the company took similar actions for the tsunami of 2004 as well as for Hurricane Katrina. “The criteria for when we decide to waive these fees for charities is guided by the level of response from the Red Cross,” Elliot said. “We waive the fees when the Red Cross internally designates something a ‘catastrophic event,’ and we only waive them for the charities designated by USAID because we have confidence that they’ve done due diligence in determining what is a reputable organization.” Elliot said Doctors Without Borders, while not on the USAID list will also have its fees waived because of the group’s “longstanding relationship” with Amex. MasterCard Worldwide has waived its transaction fees on donations to five charities, as it did for Hurricane Katrina, the tsunami and 9/11. Discover has only agreed to forgive their fee for the American Red Cross. This is the first time Discover has done so, though the company raised millions of dollars for Hurricane Katrina and September 11 relief efforts through a cardmember matching program. None of the four major credit card companies would discuss waiving or reducing their fees for these or other charities past February. The Huffington Post estimates that American banks and credit card companies make huge profits — somewhere in the neighborhood of $250 million a year – by skimming their “transaction fees” off the top of charitable donations.

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New Jobless Claims Fall Unexpectedly

December 31, 2009

WASHINGTON — A record 20 million-plus people collected unemployment benefits at some point in 2009, a year that ended with the jobless rate at 10 percent. As the pace of layoffs slows, the number of new applicants visiting unemployment offices has been on the decline in recent months. But limited hiring means the ranks of the long-term unemployed continues to grow, with more than 5.8 million people out of work for more than six months. The number of new claims for jobless benefits dropped last week to 432,000, the Labor Department said Thursday, down sharply from its late March peak of 674,000. The decline signals that the economy could begin adding a small number of jobs in January, several economists said. Still, hiring is unlikely to be strong enough to quickly bring down the unemployment rate, which fell from 10.2 percent in October to 10 percent in November. December’s rate will be announced Jan. 8. Companies will remain cautious about adding staff until they are confident the economic recovery is sustainable – something they remain unsure about as consumers and businesses keep a lid on spending, and as the government begins to wind down various stimulus programs. The Federal Reserve and private economists expect joblessness to stay above 9 percent through the end of 2010. The slow pace of hiring will force Congress and the Obama administration in 2010 to spend as much as $70 billion to extend jobless aid for the long-term unemployed, or else let benefits – which were extended several times in 2009 – expire for millions of people. “Fewer people are getting fired, but nobody is finding a job,” said Dan Greenhaus, chief economic strategist at Miller Tabak. Thursday’s report illustrates the two different trends: first-time jobless claims are falling as layoffs ease, but the total number of people collecting unemployment checks is still rising. More than 10.1 million people collected jobless benefits in the week of Dec. 12, the latest data available. That’s up by about 200,000 compared with the previous week. That figure includes 5.3 million people receiving the 26 weeks of aid customarily provided by the states, and 4.8 million people that have shifted to the extended benefit programs enacted by Congress over the past two years and paid for by the federal government. Unemployment insurance averages about $300 per week. But the extensions are set to expire in February. That could mean as many as 1 million people would run out of unemployment aid in March, according to the National Employment Law Project, a nonprofit group. The total number of people who at one point collected benefits in 2009 – roughly 20.7 million – is also a record. A larger proportion of the unemployed received jobless benefits in the last steep recession in 1981-82, but the work force has grown by about one-third since then. Fifteen million Americans are out of work, an increase of 3.8 million since the start of 2009. There are six unemployed people, on average, for each available job. And the so-called underemployment rate, counting part-time workers who want full-time jobs and laid-off workers who have given up their job hunt, stands at 17.2 percent. Budget-strapped state governments will struggle with higher spending on unemployment insurance in 2010. States are required to set aside money in a trust fund to pay jobless benefits, but 25 have already run through their funds and have borrowed $26 billion from the federal government. The Labor Department has projected that 40 states may need to borrow as much as $90 billion by 2012. Thirty-five states have already increased the unemployment insurance taxes they levy on employers for 2010, according to the National Association of State Workforce Agencies. Some are also cutting benefits as they try to reduce the size of budget shortfalls that are expected to reach $180 billion in the coming fiscal year. The drain on federal and state finances could force Congress to consider raising the federal unemployment insurance tax, which is currently 0.8 percent on the first $7,000 of wages, or making other changes.

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Princeton Hires Cincinnati Bengals Assistant Bob Surace as Football Coach

December 24, 2009

By Aaron Kuriloff Dec. 23 (Bloomberg) — Cincinnati Bengals assistant Bob Surace will become the football coach at Princeton University, the Ivy League school said. Surace will continue working as assistant offensive line coach for the National Football League team through the completion of this season, the Bengals said in a news release. Surace, 41, played center at Princeton starting in 1987, earning All-Ivy honors in 1989 for a team that won the league championship. He joined the Bengals’ staff in 2002, after coaching at Western Connecticut State, where his teams had an 18-3 record in the National Collegiate Athletic Association’s Division III. Terms of the agreement with Princeton weren’t disclosed. “He has experience as a player here at Princeton, as well as in the NFL and as a college head coach,” Gary Walters , Princeton’s athletic director, said in a news release . “He is also a product of and a believer in the Princeton concept of education through athletics. We will work with the Bengals to accommodate what works best for them and for Princeton through the end of their season.” Princeton finished fourth in the Ivy League this season with a 4-6 record before firing coach Roger Hughes in November. The Bengals are 9-5 and leading the American Football Conference North. “I was honored to be a player here, including being part of an Ivy League championship team,” Surace said in the school’s release. “I look forward to being the head coach and making this a special place for our student-athletes here at the best university in the world.” To contact the reporter on this story: Aaron Kuriloff in New York at akuriloff@bloomberg.net .

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At Goldman Sachs, It’s Mostly $100 Million Days

November 4, 2009

On three out of every five days this year, Wall Street’s leading firm has made at least $100 million trading stocks and bonds, and creating and entering into derivatives contracts. Out of 194 trading days through the end of September, Goldman Sachs earned at least $100 million from its trading division on 116 of them. The firm lost money from its trading activities on just one day during the three-month period ending in September, federal regulatory filings show. It made at least $50 million on four out of every five trading days. The documents show just how much of a trading firm Goldman Sachs has become since the financial crisis mushroomed in September 2008. The firm generated about $4.5 billion in pre-tax earnings off trading and investments during the third quarter, compared to a $761 million loss in the same period last year. Source: Zero Hedge Income from other segments of the firm has dropped. Through the first nine months of the year, the firm earned about $1.3 billion off investment banking and managing assets for clients; during the same period last year the firm earned $3.7 billion from those same activities. As the influential financial blog Zero Hedge puts it: “When a firm’s trading performance challenges not only all preconceptions of realistic trading, but also of statistical distributions, one can merely stand back and watch in awe.”

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Euro Falls From One-Year High Versus Dollar Before Meeting of G-20 Leaders

September 23, 2009

By Yasuhiko Seki and Ye Xie Sept. 24 (Bloomberg) — The euro fell from a one-year high versus the U.S. dollar amid speculation that global policy makers will discuss the rapid appreciation of the 16-nation currency at the forthcoming meeting of the Group of 20 leaders. The euro strengthened after Reuters cited a French government official as saying France is concerned about the increasing strength of the euro and intends to press fellow G-20 members to set a timeframe for a discussion on exchange rates. The dollar rose against all 16 most-active currencies following the Federal Reserve’s decision to slow its purchases of mortgage-backed securities and housing agency debt. “The market is becoming sensitive to comments from monetary authorities as the G-20 meeting approaches,” said Kosei Fujita , a foreign-currency dealer in Tokyo at SBI Liquidity Markets Co., a unit of financier SBI Holdings Inc. “As comments from French government officials added to concerns, people are inclined to close long positions on the euro and other higher-yielding currencies.” A long position is a bet that an asset will rise. The European currency traded at $1.4717 at 8:08 a.m. in Tokyo from $1.4735 yesterday in New York where it touched $1.4844, the weakest level since September 2008. It traded at 134.61 yen from 134.52 yen in New York. The dollar was at 91.46 yen from 91.29 yen yesterday. The French government is seeking a “framework” for discussions, Reuters quoted the official as saying. G-20 leaders will meet in Pittsburgh this week to discuss the latest developments of the global economy and financial markets. FOMC The U.S. currency advanced after the Federal Open Market Committee said in its statement at the conclusion of a two-day meeting yesterday that it will “gradually slow” the pace of its $1.45 trillion in asset purchases and close the program at the end of the first quarter of 2010. The buying was previously scheduled to cease by the end of this year. Fed officials left the target rate for overnight loans between banks at a record low of between zero and 0.25 percent. Yesterday’s decision was unanimous. The Dollar Index , which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners including the euro and yen, rose 0.4 percent to 76.404. The gauge dropped 15 percent from its 2009 high of 89.624 reached in March on speculation investors sold the dollar to buy higher-yielding assets. Interest-rate futures contracts on the Chicago Board of Trade showed a 43 percent chance the central bank would keep the fed funds target unchanged through March, up from 27 percent odds a month ago. The central bank will hold the benchmark lending rate steady through the end of the first quarter, according to the median forecast of 65 economists surveyed by Bloomberg. The dollar will strengthen to $1.45 per euro and 97 yen by the end of the year, according to economists in a separate survey. To contact the reporters on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.net ; Ye Xie in New York at yxie6@bloomberg.net .

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New York City to Sell $1.83 Billion in Bonds, First Build America Offering

September 22, 2009

By Jeremy R. Cooke Sept. 22 (Bloomberg) — New York City plans to sell $1.83 billion of taxable and tax-exempt debt with fixed rates next week, including its first issue of federally subsidized Build America Bonds. The debt offerings by New York, the largest borrower among U.S. cities, will include $800 million of taxable Build America Bonds to fund public works, finance officials said in a news release today. State and local governments raised $33.1 billion under the Build America Bonds program since public offerings began in mid- April. The federal program provides a 35 percent interest-cost rebate created by February’s economic stimulus act. “The BAB market continues to grow and become a more integral part of the municipal bond market,” Chris Holmes , a fixed-income strategist at JPMorgan Chase & Co. in New York, said in a Sept. 18 report. Yield spreads over U.S. Treasuries for long-term BAB issues larger than $200 million have tightened by almost 200 basis points since late June, to about 150 basis points, according to JPMorgan. A basis point is 0.01 percentage point. “We expect no material change in this trend over the near term,” Holmes said. New York City also intends to sell $130 million of taxable securities without federal subsidies and $900 million of tax- exempt bonds to refinance debt. Build America Bonds, which can be issued through the end of 2010, can’t be used to refinance long-term debt or for projects that wouldn’t otherwise qualify for tax-exempt financing. A group of investment banks led by Morgan Stanley will underwrite the taxable deal. Underwriters led by Bank of America Corp.’s Merrill Lynch & Co. will handle the tax-exempt offering, which will begin Sept. 25, when individual investors can place orders for the bonds. New York City is rated Aa3 by Moody’s Investors Service and AA- by Fitch Ratings, each the fourth-highest of 10 investment grades. Standard & Poor’s rates the city one level higher at AA. To contact the reporter on this story: Jeremy R. Cooke in New York at jcooke8@bloomberg.net .

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Sacramento Foreclosure ‘Surge’ Dead Ahead?

August 6, 2009

From CNN Money: Buy foreclosures now – before it’s too late In many markets, if you want to buy a repossessed property, you better come with your best offer first — and fast. You’ve heard of speed dating? It’s got nothin’ on foreclosure buying these days. In many places, anyone who wants to buy a foreclosure better act fast, or they’re going to come away with bupkus. … The hot spots for this fast-paced foreclosure activity are former bubble markets where foreclosures soared — places like California cities Sacramento, Riverside and San Bernardino. In Sacramento, for example, the inventory is down to less than 30 days, making it a cut-throat market. … The trend is causing intense agita for buyers. “People feel like they’re getting left out,” said [Caesar] Dias, the agent in Stockton. From News10 : Declining home values might also be in our future, especially homes priced at $300,000 and up. Jim Waters, a regional director for Lyon Real Estate, said there are more than 20,000 foreclosed homes waiting to be released by lenders just in the Sacramento region. “We’re going to see a good surge, probably in the middle to latter part of September or the end of the 3rd quarter, and that surge will run all the way through the end of the year and all of next year, from what they’re telling us,” said Waters, who talks regularly with banking executives. When asked if the economy will see as many foreclosures in the coming year as the past two years, Waters replied, “More, more.” From the Sacramento Bee : In Sacramento “we have a lot more decompressing to do,” added Sanjay Varshney, dean of the College of Business Administration at California State University, Sacramento. “Normally, I would have said we would have defined a bottom, too, later this year or early next year. I think for us the challenge is the government layoffs have just begun. “We might be looking at our cycle to be pushed out compared to the national cycle,” he said.

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Silverman Quits as NBC Universal Entertainment Co-Chief for Diller Venture

July 27, 2009

By Sarah Rabil July 27 (Bloomberg) — Ben Silverman , producer of “The Office” and “The Biggest Loser” television series, is leaving his position as NBC Universal’s co-chairman of entertainment to head a new venture with Barry Diller ’s IAC/InterActiveCorp . Silverman has led NBC’s TV division since 2007 and hasn’t been able to pull the broadcast network out of fourth place in TV ratings. Silverman’s venture with IAC will work with producers, creators, advertisers and distributors to develop content for TV, the Internet, mobile phones and digital-video recorders, IAC said in a statement today

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