CNBC.com Article: In a Sign of Foreclosure Flaws, Suits Claim Break-Ins by Banks
Critics said a tide of lawsuits accusing banks of wrongfully breaking into homes reinforced their claim that the foreclosure process is fundamentally flawed, the New York Times reports.
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CNBC.com Article: With Rulings, Business Finds Friends on Supreme Court
The Roberts court ruled for business interests 61 percent of the time, compared with 46 percent in the last five years of the court led by Chief Justice William H. Rehnquist. The New York Times reports.
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CNBC.com Article: Filing for Bankruptcy in Retirement—A Good Thing?
There's a stigma attached to filing for bankruptcy protection, especially among the older generation. But for some people facing a huge mound of debt in retirement, it's actually a good choice — and not as painful as you'd think.
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CCIM MailBridge General Message
FYI..Attached is the excerpt the Nov/Dec 2010 CIRE magazine article for the ESRI BAO iPhone app.. and the reference about the forthcoming STDBonline iPhone/iPad app.. I also attached several screenshots from the BAO app with a 1-mile radius around a location in Sacramento and the Comparation Report (Note: yes, the unemployment within this 1-mile ring is 15% vs. 11% National average - try it in downtown Stockton and the unemployment rate is 30%).. good, quick info..
Can't wait for the STDBonline app with the full demographic info (and traffic counts)..
Sean Broderick, CCIM
Pacific Pride Properties
Broker Associate
Lodi, CA 95240(209) 642-4133 (business)
(866) 579-0796 (fax)
sbroderick98@comcast.net
CCIM Profile
CNBC.com Article: Mounting State Debts Stoke Fears of a Looming Crisis
The finances of some state and local governments are so distressed that some analysts say they are reminded of the run-up to the subprime mortgage meltdown or of the debt crisis hitting nations in Europe. The New York Times reports.
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U.S. Dairy Farms Miss Agriculture Boom on Feed Costs
Nov. 29 (Bloomberg) -- This year's agriculture boom is a bust for U.S. dairy farmers as surging costs for cattle feed compound a glut of milk products.
While the 27 percent jump in wheat prices and 48 percent gain in cotton may send farm income to a record, dairies will lose money in 2011 for the second time in three years, said Mike Brown, an economist at Glanbia Foods Inc., which processes milk in Idaho and New Mexico. Corn, a feed ingredient, jumped 33 percent in the two months ended Oct. 31, almost three times the gain in wholesale-milk prices. Futures slumped 11 percent.
Dairy farmers expanded herds following the 70 percent jump in prices to a record in 2007, just before the U.S. began its longest recession since before World War II and unemployment rose to the highest level in a quarter century. Weaker demand was compounded by this year's drought, floods or freezing weather from Canada to Kazakhstan that ruined crops and boosted competition for U.S. grain that dairies require.
"The crop farmers around here have been driving around with new equipment all the time," said Linnea Kooistra, who owns a 250-cow herd in Woodstock, Illinois, with her husband, Joel. "They've been making so much money the last couple of years because of high commodity prices, but for livestock farmers, it's really been a hard time."
'Rough Times'
Farmers lost $2.50 to $4 on average for every 100 pounds (45.4 kilograms) of milk last year, and the deficit may be $1 to $3 in the first half of 2011, Brown of Glanbia Foods said. The company's three plants in Idaho and a joint venture in New Mexico process a combined 22 million pounds a day and make cheese and whey.
"We don't think some dairymen will be able to survive," Brown said from his office in Evanston, Illinois. "They're looking at some rough times."
Corn futures have risen 48 percent since the end of June, the biggest gain in the Thomson Reuters/Jefferies CRB Index of 19 raw materials after sugar. The U.S. Department of Agriculture cut its estimate for the crop on Nov. 9 for a third straight month because of flooding in Iowa and Missouri and hot, dry weather from Illinois to Ohio.
Futures jumped to $6.175 a bushel on the Chicago Board of Trade that day, the highest since August 2008. Soybeans and wheat are up more than 37 percent since the end of June and cotton reached a record on Nov. 10.
Farm Income
Crop rallies may send farm income higher than the record $87.4 billion reached in 2004, according to Neil Harl, an agricultural economist at Iowa State University and a former adviser to the governments of Ukraine and the Czech Republic.
On Nov. 24, Deere & Co., the largest maker of agriculture equipment, forecast that U.S. net farm cash income will jump 31 percent this year to the highest ever, before gaining an additional 15 percent in 2011.
While higher farm incomes improve prospects for Deere tractors and Mosaic Co. fertilizers, Dean Foods Co., the biggest U.S. milk processor, said on Nov. 9 that consumers are swapping name-brands for cheaper products.
"Our industry is going through a wrenching ordeal," Dean Foods Chief Executive Officer Gregg Engles said on a conference call Nov. 9, after the Dallas-based company reported a 51 percent drop in third-quarter net income.
Culling Herd
The National Milk Producers Federation spent $240 million culling more than 231,000 cows in the past two years. The industry-funded group stopped subsidizing the herd reductions last month in favor of promoting exports, Jerry Kozak, the federation's president, said Oct. 28.
The U.S. herd had almost 9.12 million head in October, or 0.2 percent more than a year earlier, according to the USDA. Milk output will rise to a record 192.8 billion pounds this year, the USDA said Nov. 9. Production per cow in May, usually the peak month, reached a record 1,868 pounds, the data show. Cheese inventories reached 1.037 billion pounds in October, the highest for the month since 1984.
Consumers aren't benefiting from the glut. While farmers sell to processors at higher prices, it's not enough to cover additional feed costs. Processors in turn are charging more to retailers. Grocers sold whole milk at $3.321 a gallon (3.8 liters) on average in October, up 9 percent from a year earlier and the highest since January 2009, Bureau of Labor Statistics data show.
Losses Mount
Mounting losses will force producers to keep sending cows to slaughter, said Phil Plourd, the president of Blimling & Associates, a commodity researcher in Cottage Grove, Wisconsin. That should reduce supply and drive milk prices to $17 per 100 pounds by the end of 2011, he said. Futures rose 0.8 percent to settle at $13.81 at 1:10 p.m. today on the Chicago Mercantile Exchange.
About 60,700 dairy cows were slaughtered in the week ended Nov. 13, or 11 percent more than the same time a year earlier, according to the most recent USDA data. That's the ninth consecutive week of higher year-on-year figures.
Ed Schoen, a farmer in Phelps, New York, is selling 155 of the 575 acres (233 hectares) of cropland he co-owns to raise cash for his 180-cow dairy. Schoen said he lost $140,000 in 2009 because of higher costs and lower milk prices.
"We were still under water" for the first nine months of this year, Schoen, 65, said. "It just got drastic enough that in order to pay the bills and bring things back into line, we had to liquidate some real estate."
Carrying Debt
Plunging exports and rising global production sent futures for class III milk, used to make cheese, to a six-year low of $9.24 per 100 pounds in February 2009 on the CME. Farmers took loans to avoid bankruptcy, and those debts will carry into 2011, said Jim Dunn, an agricultural economist at Pennsylvania State University in University Park.
Wholesale-milk prices rose 4.2 percent to $16.94 per 100 pounds in October, the latest USDA data show. Corn futures advanced 17 percent.
The "cost of production has been higher in 2010, because they've got a lot more interest and principal payments," Dunn said. "If 2010 had occurred without 2009 in front of it, nobody would have thought anything of it. Because of the balance-sheet deterioration in 2009, a number of farmers weren't able to make money in 2010 either."
The industry is pinning its hopes on rising exports to China, Russia and India, said Hayley Moynihan, a Christchurch, New Zealand-based senior analyst at agriculture lender Rabobank International. The U.S. Dollar Index, tracking the currency against six counterparts, slumped 8.5 percent in the third quarter, the most in eight years.
'Attractive Global Prices'
A weaker dollar "makes exporting more attractive from a U.S. perspective," Moynihan said by e-mail. There are "attractive global prices for dairy commodities, in comparison to domestic U.S. market returns, due to good demand for dairy products from developing countries," she said.
Record shipments of milk products to countries including China led New Zealand, the world's biggest dairy exporter, to narrow its trade deficit in October, Statistics New Zealand said today in Wellington. Total exports climbed 16 percent from September to NZ$3.68 billion, led by an increase in milk powder.
Earlier this month, the U.S. dollar dropped to a 31-month low against the New Zealand dollar, boosting the appeal of American supplies. Dairy products account for almost a quarter of New Zealand's merchandise exports and 7 percent of the economy, according to the USDA.
Obama Boost
Agriculture already is giving President Barack Obama a boost toward his goal of doubling overseas sales of U.S. goods by 2015. Farm exports from the U.S., the world's largest grain shipper, may top the 2008 record of $115.3 billion in 2011, according to Joe Glauber, the USDA's chief economist.
Dairy exports totaled $2.751 billion in the first nine months of 2010, on pace to break the 2008 record, according to the Arlington, Virginia-based U.S. Dairy Export Council.
Third-quarter shipments of cheese rose 69 percent to 45,788 metric tons, led by sales gains to Mexico, South Korea and Japan, council data show. Nonfat-dry milk, the biggest export product by value this year, surged 45 percent, driven by consumption in Southeast Asia.
"We've already gotten some very nice demand recovery in export markets," said Scott Brown, an economist at the University of Missouri. "2011 will continue to see some expansion."
That may not be enough to eliminate the glut, said Cal Brandt, 50, who runs a 110-cow dairy herd with his brother in Bryant, Wisconsin. He lost about $128,000 in 2009 and was unprofitable in six of the first 10 months of this year.
"The biggest problem with the dairy industry is every time the price gets to $17 or $18, guys start adding onto their farm operations," Brandt said. "When you start adding cows, that's when the prices fall quickly."
To contact the reporters on this story: Whitney McFerron in Chicago at wmcferron1@bloomberg.net Jeff Wilson in Chicago at jwilson29@bloomberg.net Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net .
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net .
Find out more about Bloomberg for iPhone: http://m.bloomberg.com/iphone/CNBC.com Article: Low Rates Hurt Bonds for Housing
Housing projects used the interest they earned on spare cash to help them pay off their bonds, but those earnings have now shrunk, the New York Times reports.
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CNBC.com Article: GMAC's Errors Leave Foreclosures in Question
The recent admission by a major mortgage lender that it had filed dubious foreclosure documents is likely to fuel a furor against hasty foreclosures, the New York Times reports.
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Ivy League Football 'Mafia' Gives Wall St. Pipeline
Sept. 22 (Bloomberg) -- University of Pennsylvania defensive back Josh Powers may have a better opportunity than playing for college football's national championship: a six- figure Wall Street salary upon graduation.
Powers, a senior at the Philadelphia-based school, was able to use contacts on Penn's athletic board to land internships at two financial firms.
"I have a job opportunity that the top, top percentile of applicants would give their right arm to have," Powers said in an interview. "I've been blessed with a fantastic opportunity."
Penn's athletic board of overseers includes George Weiss, founder of the George Weiss Associates Inc. hedge fund in Hartford, Connecticut; Robert Wolf, chairman and chief executive officer of UBS Group Americas in Stamford, Connecticut; and Mark Werner, the former JP Morgan Securities Inc. vice chairman who is co-founder and CEO of Pierpont Securities LLC, also in Stamford.
Having that kind of board helps the Quakers land better players, coach Al Bagnoli, who led the team to the Ivy League championship last season, said in a telephone interview from the school's campus.
"We call them our alumni mafia," Bagnoli said. "Everyone looks out for one another. It's a very close group."
The school, founded by Ben Franklin, has an undergraduate enrollment of 10,300 full-time students.
Summer Internships
Ivy League athletes often receive internships from executives involved with their school sports programs, while others use alumni for references or to gain insights into a company's needs. Powers is one of dozens of student-athletes who landed summer internships with financial firms.
New York's Columbia University formally recognized the importance of tapping into networks in 2006 by appointing Kimberly Curry, 36, as the first full-time director of career development for athletics in the Ivy League.
Curry holds so-called etiquette dinners where student- athletes are taught how to make small talk in a formal dinner setting. She schedules mock interviews, sets up talks by local business leaders and arranges for athletics alumni to help students by reviewing resumes, providing advice and making introductions.
Few Sporting Chances
Most college athletes aren't going to make a living with their sports, especially those from the Ivy League, which doesn't award athletic scholarships. For example, about 65,000 student-athletes played college football last season, while National Football League teams had 334 rookie, or first-year players, on their 2010-2011 season-opening rosters, according to the league. None were from the Ivy League, which comprises eight of the top-ranked schools in the U.S.
There were five Ivy players on NFL rosters when the season started: center Matt Birk (Harvard, Baltimore Ravens), defensive tackle Desmond Bryant (Harvard, Oakland Raiders), quarterback Ryan Fitzpatrick (Harvard, Buffalo Bills), linebacker Zak DeOssie (Brown University, New York Giants) and guard Kevin Boothe (Cornell University, New York Giants), who is on the physically unable to perform list with a torn pectoral muscle.
Powers, the son of an accountant and high-school secretary in Fishers, Indiana, has a 3.42 grade-point average as a finance major at Penn's Wharton School, ranked No. 4 among U.S. undergraduate business schools this year by Bloomberg Businessweek. He interned at Wolf's and Weiss's firms the past two years.
Powers, who started buying stocks with his allowance in high school, researched companies, built financial models and made trade suggestions based on his research at Weiss Associates.
"He did phenomenally well," Weiss said. "He's smart and they told me he was real aggressive. I said, 'How can an analyst be aggressive?' They said, 'He is.'"
$80 Million Donations
Weiss, 67, has contributed more than $80 million to Penn, according to the school, including $20 million to recruit and fund professorships, $14 million for undergraduate scholarships and $10 million for a football stadium renovation.
"There is a huge benefit to having the support of our alumni network," Weiss said. "But it's not a freebie, either. They have to pass muster. We work our interns 50 to 60 hours a week and I don't tell them to hire a guy; they have to come to me and say they want to hire this guy."
Weiss said the starting salary for undergraduates at his firm is about $120,000 a year.
The internships don't violate National Collegiate Athletic Association rules because any student can apply for an internship or job. Participation in intercollegiate athletics is one factor that goes onto an application.
Pierpont Securities' Werner hired Barb Seaman, captain of Penn's 2010 Ivy League champion women's lacrosse team, to work on his sales and trading team after she graduated with a degree in marketing from the Wharton school.
'World Class'
"These are really intelligent kids with a world-class education," Werner, 52, said in an interview. "It's not just about pulling them up. It's an advantage to us, too."
Athletes can bring something extra that's necessary for success in finance, Werner said.
"In a business where it tends to knock you down a lot, they tend to get back up," he said. "That drive, that level of discipline, the rigor they have in their own personal lives and their willingness to take on hard challenges; a lot of that gets taught to you on an athletic field."
Powers said while he loves football, he knows where his future lies. He interviewed with Nick Morris, the head of Weiss's equity trading desk, and got the thumbs up.
Morris was a Penn defensive back in the 1990s. He was voted the Quakers' defensive Most Valuable Player and was tri-captain of the 1995 team that finished 7-3 overall and 5-2 in the Ivy League, tied for second place with Cornell behind Princeton.
"A lot of the time it's who you know," Powers said. "Then, of course, you have to deliver."
To contact the reporter on this story: Curtis Eichelberger in Washington at ceichelberge@bloomberg.net
To contact the editor responsible for this story: Michael Sillup at msillup@bloomberg.net
Find out more about Bloomberg for iPhone: http://m.bloomberg.com/iphone/CNBC.com Article: Man Vs. Machine: Seven Major Players in High-Frequency Trading
These speed-obsessed hotshots aren't household names like other big investors; in fact, until recently, they've shunned the limelight.
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CNBC.com Article: EXCLUSIVE: Outlook Gloomy at Secret Billionaire Meeting
For 25 years, the world's richest people have gathered secretly to discuss investing. After their latest meeting, we've learned what they said and where they're putting their money!
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CNBC.com Article: Home Ownership: Do You Really Need Skin in the Game?
The government is trying to stem the tide of mortgage walkaways by creating programs that force lenders to give borrowers back home equity — and despite the small credit hit to the borrower, that's free equity.
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CNBC.com Article: Housing Woes Bring New Cry: Let Market Crash
When prices are lower, some experts argue, buyers will pour in, creating the elusive stability the government has spent billions upon billions trying to achieve. The New York Times reports.
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CNBC.com Article: Wall Street Insiders Want Out, Selling $100 Million in Stock
In a move that may reflect a growing unwillingness to tie their personal fortunes to those of their companies, Wall Street insiders this year have undertaken more than five times the number of stock sales of their corporate shares as they have purchases.
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Stocks Fall on Income Data; Treasuries Gain, Yen Strengthens
Aug. 30 (Bloomberg) -- U.S. stocks fell, erasing most of the previous day's gain, and Treasuries rallied as a slower- than-estimated increase in American personal incomes fueled concern the economic rebound is slowing. The yen strengthened against all 16 major peers after policy makers stopped short of direct steps to halt the currency's recent gains.
The Standard & Poor's 500 Index dropped 1.5 percent to 1,048.92 at 4 p.m. in New York. Treasury 10-year note yields slid 12 basis points to 2.53 percent. The yen appreciated 0.8 percent to 84.56 versus the dollar, heading for a fourth straight monthly advance. Oil declined below $75 a barrel, while copper rose to a fourth-month high.
Benchmark equity indexes extended three weeks of losses as the 0.2 percent growth in U.S. personal incomes spurred concern that an improvement in consumer spending won't last. The retreat trimmed a 1.7 percent rally in the S&P 500 triggered on Aug. 27, when Federal Reserve Chairman Ben S. Bernanke pledged the central bank will provide more stimulus if necessary to revive the economy.
"Personal income is important here because the average consumer is really struggling with a lot of debt," said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird & Co., which oversees more than $85 billion. "The pessimism in the market has gotten pretty acute."
The S&P 500's decline was led by financial and consumer discretionary stocks, with gauges of both industries falling at least 1.7 percent. Bank of America Corp. and Intel Corp. slid more than 2.2 percent to help pace losses in the Dow Jones Industrial Average. Citigroup Inc. fell 2.4 percent after Credit Agricole Securities' Mike Mayo, one of three analysts with a "sell" rating on the stock, said he had doubts about the bank's trustworthiness because senior management hadn't met with him in almost two years.
Income, Spending Data
Commerce Department data also showed that disposable incomes, or the money left over after taxes, dropped for the first time since January after adjusting for inflation, showing how the lack of jobs may prevent consumer spending from strengthening further after purchases rose 0.4 percent in July, the most since March.
The data overshadowed a continuing increase in takeovers. Announced global mergers and acquisitions have totaled $1.34 trillion so far this year, 25 percent more than during the same period last year, according to data compiled by Bloomberg.
Intel, the world's biggest chipmaker, slumped after agreeing to buy Infineon Technologies AG's wireless unit for about $1.4 billion. Sanofi-Aventis SA opened the door to a hostile bid for Genzyme Corp. after going public with an $18.5 billion cash offer for the U.S. company. Posco, the third- biggest steelmaker, agreed to acquire South Korean trader Daewoo International Corp. for 3.37 trillion won ($2.8 billion) to expand raw material resources.
European Stocks
The Stoxx Europe 600 Index slipped less than 0.1 percent after rising as much as 1.2 percent earlier. U.K. markets were closed for a holiday. Zodiac Aerospace SA jumped 10 percent in France after La Tribune reported that Safran SA is preparing another bid for Europe's biggest maker of airplane seats. Safran fell 2.3 percent.
U.S. Treasuries headed for a fifth monthly gain amid mounting concern the economic rebound is faltering. Morgan Stanley revised its forecast for second-half growth to a range of 2 percent to 2.5 percent, down from an earlier estimate of 3 percent to 3.5 percent.
German bonds are headed for their best monthly returns in almost two years. The yield on the 10-year bund slipped 7 basis points to 2.14 percent, near a record low of 2.09 percent reached on Aug. 25.
Yen's Strength
The yen's advance today came amid speculation the Bank of Japan's decision to increase credit-easing measures won't be enough to weaken the currency as it heads for a fourth straight monthly advance versus the dollar. Prime Minister Naoto Kan said the nation is preparing a 920 billion yen ($10.8 billion) stimulus plan and the central bank added 10 trillion yen in liquidity injections.
The Japanese currency strengthened to a 15-year high of 83.60 per dollar last week and has rallied 11 percent since the beginning of May as investors seek assets considered the most safe and unwind bets made with borrowed yen amid concern the global economic recovery will falter. The dollar gained 0.7 percent against the euro to $1.2673 after Bernanke pledged Aug. 27 to safeguard the recovery.
Emerging Markets
The MSCI Asia Pacific Index climbed 1.3 percent, the most since Aug. 2. The MSCI Emerging Markets Index rose 0.2 percent, with benchmark gauges in China, South Korea and South Africa climbing more than 1.5 percent.
Copper for delivery in December climbed as much as 2.2 percent to $3.46 a pound on the New York Mercantile Exchange, the highest since April 27. Oil fell 0.6 percent to $74.70 a barrel in New York, after rallying 2.5 percent on Aug. 27 when Bernanke made his statements.
Bernanke last week said the central bank "will do all that it can" to ensure a continuation of the economic recovery, and outlined steps it might take if growth slows.
"Consumer spending may continue to grow relatively slowly in the near term," he said Aug. 27 at the Kansas City Fed's annual monetary policy symposium in Jackson Hole, Wyoming.
The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, climbed 1.9 basis points to a mid-price of 112.91 basis points. The index typically rises as investor confidence deteriorates and declines as it improves. Swaps on 3M Co. and Rio Tinto Group rose.
Wheat for December delivery advanced 1.4 percent to $7.045 a bushel on the Chicago Board of Trade, paring an earlier gain of as much as 4.9 percent, as Russia's export ban for the grain and rain that hurt the quality of crops in Germany boosted demand for U.S. supplies. Corn for delivery the same month rose 1.3 percent to a 14-month high of $4.415 a bushel as dry U.S. weather threatens to reduce yields in the world's biggest grower of the grain.
To contact the reporters on this story: Kelly Bit in New York at kbit@bloomberg.net Stephen Kirkland in London at skirkland@bloomberg.net
Find out more about Bloomberg for iPhone: http://m.bloomberg.com/iphone/CNBC.com Article: Death of the 'McMansion': Era of Huge Homes Is Over
"McMansions just look and feel out of place today, given the more cautious environment everyone's living in," said one real estate expert.
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MBIA Unit Asks Judge to Make Bankrupt Vallejo Use Fees for Debt
Aug. 12 (Bloomberg) -- MBIA Inc.'s municipal-bond insurance unit is asking a bankruptcy court judge to order Vallejo, California, to make good on promises to pay investors in case of default by using money from vehicle registrations.
Debtor protection doesn't pre-empt a state law that requires the use of the license fees to pay off city debts, National Public Finance Guarantee Corp. said in a motion filed Aug. 10 with U.S. Bankruptcy Judge Michael McManus. The income derived from the registration payments was used as a type of secondary pledge to back a $4.8 million bond issue in 1999.
The community of 115,000 on the northern edge of San Francisco Bay sought Chapter 9 bankruptcy protection in May 2008 after it failed to convince labor unions to accept salary concessions as the recession began cutting into municipal tax collections nationwide. Chapter 9 of the U.S. Bankruptcy Code lets cities and towns reorganize rather than liquidate.
State law "was specifically designed to protect debt holders in the event a municipal issuer fails to pay for any reason, by using vehicle-license fees," Kevin Brown, a spokesman for the Armonk, New York-based insurer, said yesterday by e-mail. "National's motion simply asks the court to ensure that investors receive what was promised when the bonds were issued."
In September 2008, McManus ruled from his Sacramento, California, court that the city was insolvent because it couldn't pay its bills. In March 2009, he ruled that the city can nullify contracts with police and firefighter unions.
Financed Fire Station
The city sold $4.8 million of "certificates of participation" in 1999 to build a fire station and finance improvements on six others. In May last year, the city stopped making payments to bondholders, a default allowed under bankruptcy protection. National said it has paid more than $200,000 in resulting claims filed by investors.
Under a proposed workout plan approved by the City Council in March, holders of the 1999 bonds are expected to forgo the vehicle fees and four years of interest, and to defer payments of principal for three years so that other creditors and union members can be paid, National said in the court filing.
California collects a registration fee of 0.65 percent of the value of a vehicle and each month doles out most of that money to cities and counties. Local governments are allowed to use that revenue as a form of additional backup security on municipal debt. At least six other cities and counties in the state sold bonds with the additional backup security, according to a 2010 Standard & Poor's report included in court papers.
Fee Mandates
Under California law, if there is a default on bonds backed by the fees, the state controller must turn the city's portion of the money over to investors through a trustee. Vallejo contends that while in bankruptcy, it doesn't have to make payments to bondholders or divert the funds.
"We have been discussing the matter with National Public's counsel for some time and we disagree with National Public as to its rights to these funds," said Marc Levinson, the city's bankruptcy lawyer in a telephone interview yesterday. He works for Sacramento-based Orrick, Herrington & Sutcliffe LLP.
The insurer's lawyers said in the court filing that "the city's bankruptcy does not change or interfere with the 1999 trustee's right to receive" the fees. "Thus any attempt to collect such amount should not be subject to the automatic stay or any other provision of the bankruptcy code."
A call to Robert Adams, Vallejo's city manager, wasn't returned yesterday.
Ratings Cut
Standard & Poor's in March lowered its rating on the debt to C, the second-lowest level, from B, the fifth step below investment grade. In December, the city had about $51.6 million in debt payable directly from its general fund.
Before Vallejo, the last California city to seek protection from creditors was Desert Hot Springs in 2001. The town of 20,000 near Palm Springs was hit by a legal verdict it couldn't afford. Orange County filed the biggest municipal bankruptcy in U.S. history in 1994, after some investments soured.
The Vallejo case is In re City of Vallejo, 08-26813, U.S. Bankruptcy Court, Eastern District of California (Sacramento).
To contact the reporter on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net
Find out more about Bloomberg for iPhone: http://m.bloomberg.com/iphone/CNBC.com Article: Debts Rise, and Go Unpaid, as Bust Erodes Home Equity
Lenders say they are trying to recover some of that money but their success has been limited, in part because so many borrowers threaten bankruptcy and because the value of the homes has often disappeared, reports The New York Times.
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California Demands Data on City Manager Paid $800,000
Aug. 9 (Bloomberg) -- California Attorney General Jerry Brown said he expects legal action in "weeks, not months" after subpoenaing personal financial records of present and former officials of Bell, the Los Angeles suburb that paid its city manager almost $800,000 a year.
Brown said legal violations in Bell may involve both civil and criminal statutes. The attorney general's office began serving the subpoenas today, Brown said in a statement.
The state is reviewing the possibility of voter fraud and election violations, Brown said. The Los Angeles Times reported July 27 that Bell police officers collected absentee ballots and told residents who to vote for.
"We want to see their e-mails, we want to see the ordinances, the resolutions, the minutes of meetings -- we want to find out exactly how they ever came to the conclusion that city officials should make so much money," Brown said.
The town of 38,000, about 10 miles (16 kilometers) southeast of Los Angeles, has a largely Latino population with a per-capita income of $24,800 in 2008, according to the city's latest annual report. More than a quarter of its residents live below the poverty level, according to the website CityData.com.
The chief administrative officer, Robert Rizzo, resigned July 22 after the Times reported his total compensation was almost $800,000 a year and that Bell's part-time council members took in almost $100,000 annually, mostly by serving on city- affiliated boards and commissions.
Financing Deal
A $35 million financing deal has also raised questions about the officials' stewardship of the city.
Bell's Public Financing Authority sold a $35 million note that is set to mature in November. The city raised the money to buy a patch of industrial land, with plans to lease it to Berkshire Hathaway Inc.'s Burlington Northern Santa Fe railroad, the Times reported. The plan never went through, however, after the city was sued for failing to conduct adequate environmental reviews, the newspaper reported.
The city has since fallen behind on its payments on the bonds, which are owned by Dexia SA, the Paris- and Brussels- based bank, said Ulrike Pommee, a spokeswoman. The bank entered into an agreement with the city in June aimed at resolving the issue, she said in an e-mail.
Pedro Carrillo, the city's interim chief administrative officer, didn't immediately respond to a message seeking comment.
Brown, 72, a former California secretary of state and governor, is running as the Democratic gubernatorial candidate against former EBay Inc. Chief Executive Officer Meg Whitman, who is on the Republican ticket.
To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net
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Jul 29, 2010 -
There is no better way to learn how to succeed in business than to learn from mistakes -- yours or someone else's. I often come across case studies looking into how and why certain companies smashed records, busted budgets and succeeded beyond all imagination. Those studies have their uses, of course, but it's the stories of businesses that didn't turn out so well that truly interest me. I learn much more from them.
One of the reasons Virgin's enterprises have been successful over the years is that we empower the staff to make mistakes -- and then learn from them. Since our management structure is very decentralized, our teams are challenged to run the businesses as if they were the owners. I have found that this creates a high level of loyalty, devotion and innovation. When things do go wrong, the team members feel such ownership of the enterprise that they usually roll up their sleeves and turn it around.
This ability to bounce back after a setback is the single most important trait an entrepreneurial venture can possess. If innovation is at the heart of your business, obstacles come with the territory. How you react to and navigate those hurdles will make the difference between failure and success.
I've been lucky enough to helm many successful companies, but I'm the first to admit that I've also directed a few that failed. You may have heard of Virgin Cola, a company we formed in the 1990s to take on the industry's two big powerhouses: Coca-Cola and Pepsi. We attempted to shake up the market in true Virgin fashion, but it didn't quite work. From the outset, we faced distribution issues: we couldn't get Virgin Cola on the shelves in the numbers needed to make an impact and achieve economies of scale.
We certainly didn't lack enthusiasm, but we quickly learned that the two giants had a firm grip on the market. It was tough to find their weaknesses. Taking on two of the biggest brands in the world, both of which proved to be anything but complacent, was a tremendous lesson for all of us. But still, one of my fondest memories is of our publicizing Virgin Cola's attack on Coke by driving into Times Square in a huge army tank and taking aim at the Coca-Cola billboard!
A more recent example involves Virgin Money (our financial-services arm) in Australia, where we introduced our first Virgin branded credit card in 2003. The Australian banking industry is monopolized by four major concerns: ANZ Bank, Commonwealth Bank of Australia, National Australia Bank and Westpac Banking Corporation. Altogether, they handle 80 percent of all banking transactions in Australia. Though we entered the market for the right reasons and had a terrific product, we took the wrong approach with the partner bank that issued the card, which eventually led to the business's demise.
It was a tough loss for many of our customers. As a matter of fact, when I'm in Australia, I still meet people who carry their old Virgin cards in their wallets! We vowed to launch an even better card as soon as the right opportunity presented itself.
Which brings me to the next stage: bouncing back. Nearly three years after the failure of the original Virgin credit card, I have returned to Sydney both to relaunch a range of card products and to start the Virgin Saver online savings account. The difference this time: we have the right people and the right partner (Citibank) for achieving long-term success.
I suppose the secret to bouncing back is to be unafraid of failure. Setbacks are discouraging, but you should always try to channel that feeling into positive action. The key to Virgin's continuing success has been this simple idea: When we get something wrong, we try to understand why and quickly make a change. Then we focus on what works and take it to the next country or industry or sector.
If you can identify and learn from your mistakes, you have a much greater chance of bouncing back from them -- and succeeding the next time.
Questions from readers will be answered in future columns. Please send them to BransonQuestions @ Entrepreneur.com. Please include your name and country in your question.
From Dublicore.org
http://www.dublicore.org/Commercial-Finance-Funding-Misinformation/
Recent uncertainties in financial and credit markets have produced misleading information about the availability of business financing. For most small business owners, it is probably not clear if commercial finance funding is realistically available to them or not. It seems apparent that there have been many reports suggesting that normal commercial loan channels are either frozen or extremely sluggish. In reality there are more opportunities for commercial finance needs than suggested by such reports.
One harsh reality that is unfortunately true for commercial financing: many banks have discontinued all or most of their business lending activities, often with very little advance notice. However, in spite of this admittedly bad news, there continue to be to reliable funding sources for commercial real estate financing, business cash advances and working capital loans. At the same time, the current negative economic conditions will prove to be difficult for most businesses and commercial borrowers should expect that extra efforts will be required to successfully arrange business financing.
One common example of commercial finance misinformation distorting what is actually feasible: several publications have suggested that most new business financing requests are on hold or have simply been rejected due to recent credit market uncertainties. While the sources for this information might have been truthfully told by one or more lending institutions that they are in fact deferring new commercial loan funding, this does not mean that is the case throughout the United States. If we were discussing automobile sales, it would be comparable to concluding that nobody is selling any cars anywhere after learning that two manufacturers and five major dealers announced that they were going out of business due to lack of adequate sales.
Another example of how business finance funding reports might confuse small business owners: some kinds of commercial financing have been more disrupted than others by recent events. It is possible that commercial borrowers will be unnecessarily confused by a report that primarily applies to a very specialized form of business financing rather than to all variations of commercial loans.
For example, by most accounts commercial construction loans are in short supply currently. A more accurate version would reflect that the number of commercial lenders currently active in construction financing has shrunk dramatically, which means that such specialized business loans are available but not as easily available as they were just a few months ago. At the same time, most commercial real estate loans without new construction have not been as severely impacted as funding requests which do involve construction financing.
In the current commercial funding crisis, small business owners should actively seek a commercial loans expert for a candid discussion and realistic assessment about small business loans and working capital financing. Despite the many reports about limited availability of business financing, some commercial lending activities such as business cash advance programs are as active as they have ever been.
Jul 28, 2010 -
While forecasting cash flow may sound like a smart idea every business should implement, you might be surprised how many don't. Most businesses have no formal cash flow forecasting process in place to plan for and manage the short-term excesses and shortages (also known as peaks and valleys) of cash flow every business experiences.
Regardless of what accounting software you use, it is often best to start your forecasting efforts in a spreadsheet and then try and automate the process with software. Here are the five key secrets to accurately forecast and maximize the cash flow of your business.
1. Weekly for at Least 90 Days into the Future
It is usually appropriate to look at cash flow on a weekly basis — usually as of the last working day of each week. It should also extend, by week, at least 90 days and as many as 180 days into the future. Depending on your needs, between 90 and 180 days is usually sufficient for short-term cash flow. It is important to compare the actual cash flow results from each week to your projections to improve your assumptions each week.
2. Collections by Customer
Now that you have the timeline and frequency handled, you need to look at your cash inflows, which primarily come from customers. First, you need to determine how long it takes to collect from each customer (if you have less than 50 total customers). If you have more than 50 customers, then you need to separate your customers into payment classes such as credit card sales, cash, net 15, net 30, and so on.
Second, you should schedule out when you are expecting payment, by week, for each of your existing receivables. Third, based on your sales projections by customer or payment class, you need to project your subsequent collections for the duration of the forecast. Often the best way to do this is to look at weekly sales for the prior few years and project based on growth or shrinkage factors for each customer or customer class.
3. Separate Variable and Fixed Outflows
It is almost always easiest to separate the variable from the fixed expenses by vendor and type. The variable expenses will be driven by your sales projections and the terms with each of the vendors in this category. The fixed outflows include all cash fixed expenses plus debt payments and regular distributions to owners, if there are any. You may need to separate the variable and fixed portions of payroll and payroll taxes, but you need to make sure they are included.
4. Taxes and Other Quarterly and Annual Outflows
I seem to meet at least one business every month that does not properly plan for its need to pay for taxes in its projections. The result is a business that has to delay other payments and, sometimes, even payroll until the cash flow cycle recovers. Since a lot of businesses are operated as flow-through entities to their owners, the owners typically distribute money either quarterly or annually to meet their income tax obligations. The cash flow projection needs to include the payment of all taxes to manage its impact on the peaks and valleys of the cash flow cycle in the business.
5. Bridge Valleys with Financing
So, why do you bother to go through all of this effort to understand your short-term cash flow? Among many other reasons, so you can see in which weeks your cash flow will become negative, how long it will stay negative, and by how much it will go negative in each of the valleys in your cash flow cycle. If the cash flow is only negative for a week or two, then you can likely handle it by slowing down your payment of payables or through some other working capital "tweak." If it is longer than a few weeks, then you need to plan for how you use other sources of financing to bridge the valley until cash flow recovers.
Not knowing what will happen to cash flow at least 90 days into the future is a great source of anxiety for most businesses. Conversely, having an accurate projection of cash flow that is updated each week removes the anxiety of the unknown and empowers the business to solve any problems or issues before it is too late.
In addition to maneuvering through the valleys of cash flow, it is almost as important for a business to manage its excesses, or peaks, as well. Whether it is merely implementing a treasury management solution to earn some interest or to know that the business has enough cash make a critical capital expenditure, forecasting cash flow will empower any business to manage and plan for its most vital resource — cash.
Ken Kaufman, Founder & CEO of CFOwise®, serves as the Chief Financial Officer for a dozen start-up, emerging, and medium-sized businesses. With almost two decades of experience and as an adjunct professor and published author, Ken focuses his professional efforts on helping entrepreneurs maximize cash flow, improve profits, and obtain clarity.
