This Week in ESG and Impact Investing

The Waxman Committee held a hearing titled, “The Financial Crisis and the Role of Federal Regulators” at 10:00 a.m. on Thursday, October 23, 2008, in 2154 Rayburn House Office Building. The hearing examined the roles and responsibilities of federal regulators in the current financial crisis. This is the fourth hearing into the ongoing financial crisis. Testifying were Alan Greenspan, former Fed Chair, John Snow, the former secretary of the Treasury, and Christopher Cox, the current chair of SEC. This hearing was the first concerning with the role of the public sector. Based upon what legislators learned from previous hearings, the hearing reflected growing suspicion of the government’s role in the crisis. Specifically, if the government had intervened earlier, the crisis would likely be prevented. This led to today's review of actions and inaction before the crisis. Committee Chairman Henry Waxman admitted that there has been a de-regulatory atmosphere throughout the financial syst...

Members of Congress held the third in a series of hearings on the financial crisis titled “Credit Rating Agencies and the Financial Crisis.” The hearing, held on Wednesday in 2154 Rayburn House Office Building, examined the roles and responsibilities of credit rating agencies in the current financial turmoil. Top credit rating agency executives also testified before the House Committee on Oversight and Government Reform. In his opening statement, Committee Chairman Henry Waxman briefly outlined the sequence of events which lead to today’s crises. “The story of the credit rating agencies is a story of colossal failure,” Mr. Waxman said. He pointed out that leading credit rating agencies are essential financial gatekeepers. However, the agencies assigned triple-A ratings to securities and CDOs backed by risky subprime mortgage loans. As a result, the entire financial system is now at risk. The three largest credit rating agencies - Standard & Poor’s, Moody’s, and Fitch Ratings contro...

The 10th Annual Endowment and Foundation Forum will cover the issues that are most relevant to endowments and charitable foundations today and will provide participants with opportunities to network with investors and fund managers in a relaxed setting. The forum will cover the need for non-profit governance for endowments, means of capturing alpha, methods for choosing money managers and the pros/cons of investing in a variety of products. This event will coincide with the world's largest two-day rowing event, the Head of the Charles Regatta, held on the Charles River adjacent to the Hyatt Regency. Join us and over 300,000 spectators to watch 7,500 competitors from around the globe compete in this prestigious event. Topics Covered Will Include: • Trends in Asset Allocation for Endowments and Foundations • Managed Accounts: A Safer Route to Hedge Fund Returns • Challenges facing Endowments and Foundations, past, present and future • Socially Responsible Investing • Incorporating Al...

Modernizing the Securities and Exchange Commission’s Disclosure System Yesterday, the SEC hosted a roundtable meeting to discuss the 21st Century Disclosure Initiative. The Initiative seeks to examine the basic purposes of disclosure, from the perspectives of investors and markets. The SEC hopes to create a comprehensive plan for overhauling the current disclosure system, EDGAR. In the first panel, panelists talked about the kinds of information and data format that the market and investors really need, given this dynamic market environment. Most panelists argued that investors need summarized information rather than whole financial statements. A summary of panelist comments would be: "Most individual investors access company information using third party services, like Yahoo Finance, Bloomberg, etc… The issue is that people don’t really have time and ability to figure out where is the number they want by looking at the hundreds pages financial statements in the EDGAR system. Howe...

We wrote on September 22, 2008 that we were stunned to learn that banking and financial market regulators were considering using taxpayer funds to finance the creation of a separate entity to hold "toxic" financial instruments. We thought this would be a dangerous suggestion that will not solve the problem. We wrote on April 3rd : With the development of toxic (derivative and subprime lending) financial products, the relationship between investment banks and the economy has turned parasitic. We wrote: "To protect the public and the markets, these newer derivative contracts should be extinguished. To put the fire out, put the fire out." Apparently, we’re not the only ones who saw this coming, raised the alarm, and were ignored. In his Commentary in the New York Times on Sunday, September 28 Ben Stein notes similar concerns and the need to “annul” financial gambling run rampant by the financiers who peddle derivatives, including the impossible to value “credit-def...

Below, we feel, are the best minority owned banks in the US (as of 6/30/08): LIBERTY BANK & TRUST CO, New Orleans, LA (Black) INDUSTRIAL BANK, Washington, DC (Black) MECHANICS & FARMERS BANK, Durham, NC (Black) CITIZENS SECURITY BK GQ INC, Guam, GU (Asian) CENTRAL BANK OF KANSAS CITY, Kansas City, MO (Women) BROADWAY FEDERAL BANK F S B, Los Angeles, CA, (Black) BANCO SANTANDER PUERTO RICO, San Juan, PR (Hispanic) UNITED BANK OF PHILADELPHIA, Philadelphia, PA, (Black) CARVER STATE BANK, Savannah, GA, (Black) NORTH MILWAUKEE STATE BANK, Milwaukee, WI (Black) Yes, we know there are a lot of Black-owned banks on the list. Here's why: Black banks have always had relatively higher levels of nonperforming loans, so they know better (than, say WAMU) how to survive with these types of loans on the books. We think this skill will serve them well in the current credit cycle. Thus, they are rated a little higher than other minority banks. We think smaller banks will do well over this ...

Emergency Economic Stabilization Act of 2008 Purpose: To provide authority for the Federal Government to purchase and insure certain types of troubled assets for the purposes of providing stability to and preventing disruption in the economy and financial system and protecting taxpayers, and for other purposes. Title I－Troubled Assets Relief Program Sec.101 Purchases of troubled assets: Secretary (of the Treasury) shall publish program guidelines, including the following: (1) Mechanisms for purchasing troubled assets (2) Methods for pricing and valuing troubled assets (3) Procedures for selecting asset managers (4) Criteria for identifying troubled assets for purchase Sec.102 Insurance of troubled assets. Sec 103 Consideration (of social issues): (1) Protect the interest of taxpayers (2) Protect American jobs, savings, and retirement securities (3) Keep their homes and to stabilize communities (4) Providing financial assistance to financial institutions, including those serving low and...