Friday, May 29, 2009

Emerging Managers Summit

"If you are looking to expand and diversify your asset allocation by investing in emerging managers as well as women and minority owned investment managers, the emerging managers conference will provide the unique opportunity to access a diversified group of up-and-coming performance-oriented managers and manager of managers. The conference will explore the benefits and opportunities offered by investing in emerging managers as well as new strategies for implementing an emerging managers program. If you are an emerging manager, you will learn the procedures used by institutions to launch and maintain successful emerging manager programs. This event will showcase a variety of emerging mangers as well as minority-owned manager funds and other high potential smaller investment firms, and it will offer participants invaluable networking opportunities."

June 7-9, 2009. Chicago Marriott Downtown Magnificent Mile, Chicago, IL.

Wednesday, May 27, 2009

"For Minority Firms, Crisis Opens Doors"

Wall Street Journal, May 22, 2009.

NEW YORK -- The financial turmoil that has weakened or
destroyed some of Wall Street's most prominent companies
is presenting an opportunity for some lesser-known firms,
especially those owned by women and minorities.

One company that is benefiting is Williams Capital Group
LP, an African-American-owned broker-dealer and asset
manager in New York. Earlier this week, Goldman Sachs
Group Inc. said it will invest $1 billion in a
money-market fund managed by Williams Capital, more
than doubling the amount of funds the firm has under
management and pushing it over a critical size
threshold that could help it attract additional
institutional investors.

Last month, Williams Capital was named as part of a
team assembled by Invesco Ltd. that applied to participate
in the Treasury Department's Public-Private Investment
Program, or PPIP, an effort to relieve banks of
toxic assets. Invesco, and its affiliate WL Ross & Co.,
which is controlled by money manager Wilbur Ross,
said it is willing to invest as much as $1 billion in
the program. Williams Capital is also showing up
more often as an underwriter on stock and bond offerings.

"Companies appear a bit more open to broadening their
universe of relationships," says Chris Williams, the
company's founder and chief executive. "We're not a major
firm so if someone only wants to do business with the
top four or five firms, we may not be on the list. But
as companies broaden their relationships, we are being
included more often than we had been in the past."

The nation's most powerful financial firms have long been
hesitant to forge strong ties with minority firms, in part
due to perceptions that the smaller firms lacked the
knowledge base or talent pool they required.

But as the financial crisis humbles some of the industry's
most storied firms, that view is being reassessed.
"The so-called smart money got too smart for its own good
and
got shot in the foot," says William Michael
Cunningham, a socially responsible investment adviser
who
tracks minority-owned financial firms.

In contrast, smaller firms tended to be more conservative,
which caused them to lag behind during the boom years but
is serving them well now.

Meanwhile, there is pressure on financial companies by
politicians and clients to broaden and diversify. That has
led to a recent flurry of large companies, from Pacific
Investment Management Co. in California to Northern Trust
Corp. in Illinois to publicly seek minority-owned and
women-owned firms that could be potential business
partners or service providers.

"As diversity has become a more important issue in this
country, many large pension funds are asking us to be open
to new ideas and new firms," said Lyle Logan, an executive
vice president at Northern Trust, which on Monday
announced that it is seeking "emerging" and minority-owned
broker-dealers to become trading partners.

Some members of Congress have been pressing the Treasury
Department to increase the participation of minority- and
women-owned firms in various asset-management and
bank-rescue programs, including the PPIP and the Troubled
Asset Relief Program, or TARP. The programs are expected
to provide millions of dollars in management fees and
investment possibilities for private companies.

Last month, the U.S. Treasury selected minority- and
woman-owned firm Piedmont Investment Advisors LLC,
of Durham, N.C., as one of three firms to manage
assets acquired by the Treasury through TARP.

One of the most prominent ways in which minority and
small firms have gained attention is through the PPIP
program. In response to pressure from Congress members
-- like Maxine Waters of California, Gregory Meeks of
New York and Keith Ellison of Minnesota -- the U.S.
Treasury asked asset managers to partner with
minority-and women-owned firms before applying
to manage PPIP assets.

A spokesman for Goldman Sachs said the firm's interest
in Williams Capital isn't specifically related to PPIP,
although Goldman hopes the partnership with Williams
Capital will expand to include other business areas.

Leading contenders for PPIP work, such as Pimco and
New York money manager BlackRock Inc., have tied up
with several such firms, according to a spokesman for
Rep. Waters. "This represents the first time in history
that we have opened up real opportunities for
well-qualified small, women- and minority-owned firms
to participate in this type of public-private
partnership," Rep. Waters said through a spokesman.

The smaller companies have been quick to seize the
opportunities coming their way. Maria Fiorini Ramirez,
the founder of New York-based macro research firm
MFR Inc., teamed up with money-management and
private-equity firm Paramax Capital Partners, to
apply for PPIP. "By adding our name to it, it made
the application I think a little bit more attractive,"
Ms. Ramirez says.

She notes that smaller firms like hers also are
benefiting from the holes caused by the collapse of
some large financial-services firms in recent months.
Revenues at her firm have increased 10% over the
past year, she says, thanks to new clients and
increased business from existing clients. MFR is now
building up its municipal-bond team by hiring seven
new executives in the past three months, and it is
looking to add more.

Minority-owned and "small firms, in particular,
have a great opportunity to take advantage of the
chaos that's still in the marketplace," Ms. Ramirez
says.

http://online.wsj.com/article/SB124286748215841675.html

See also: http://www.pionline.com/article/20090519/DAILY/905199976/1062

Saturday, May 16, 2009

Top Five Minority Financial Institutions for 2009

Creative Investment Research, Inc. released its listing of the top women and minority owned financial institutions (banks and thrifts). The listing, using 2009 financial, demographic, HMDA and CRA information from a database maintained by Creative Investment Research, was compiled using the firm's proprietary Fully Adjusted Returntm Index. The Fully Adjusted Returntm Index provides a full description of the economic condition and social responsiveness of a financial institution.
  1. Asian - Hawaii National Bank, Honolulu, HI. 808-528-7711;
  2. Black - Industrial Bank, Washington, DC. 202-722-2040;
  3. Hispanic - Interamerican Bank, FSB, Miami, FL. 305-223-1434;
  4. Native American - Peoples Bank, Adair, OK. 918-723-5453;
  5. Women - Central Bank of Kansas City, Kansas City, MO. 816- 483-1210;

See: http://www.minoritybank.com/cirm3.html

If you contact any of these institutions, do us a favor....let them know you found them here!!

Wednesday, May 13, 2009

Financial Market Regulatory Proposals by the Obama Administration

The Obama Administration is gearing up to reform the financial marketplace. Today, two proposals were released. The first, according to the New York Times,"seek(s) new authority to supervise the virtually unregulated complex financial instruments, known as derivatives, that were a major cause of the market crisis.."

And, according to Reuters, the second proposal "reforms..financial industry compensation practices to discourage excessive risk-taking, which is considered to have sown the seeds of the current credit crisis."

The two proposals are linked and reinforcing. The derivatives reform play seeks to eliminate or regulate a key tool used by executives at financial institutions to justify large amounts of compensation. (Unless you can produce outsized returns via standard financial instruments, extremely generous pay packages are unlikely to be received.)

And, in case that fails, the compensation reform play says we will limit your compensation no matter what you do.

All in all, a very good day.

Tuesday, May 12, 2009

TARP Congressional Oversight Panel Hearing in NYC

The TARP Congressional Oversight Panel Hearing is scheduled to have a hearing on May 28, 2009 in New York City. The hearing "will examine the state of our financial markets and assess the effectiveness of TARP.” According to the Panel,

"
In response to the escalating crisis, on October 3, 2008, Congress provided the U.S. Treasury with the authority to spend $700 billion to stabilize the U.S. economy. Congress created the Office of Financial Stabilization (OFS) within Treasury to implement a Troubled Asset Relief Program (TARP). At the same time, Congress created a Congressional Oversight Panel (COP) to review the current state of financial markets and the regulatory system."

No location has been set. The witness list has not been released. To get more information, you can contact the Panel at 202-224-9925.

Let us know what you find out.

Last In, First Out....Minority Gains in Homeownership Erode.

According to the New York Times, "After a decade of growth, the gains made in homeownership by African Americans and native-born Latinos have been eroding faster than those for whites, according to a report released Tuesday by the Pew Hispanic Center.

The numbers indicate that the gains for minority groups, achieved between 1994 and 2004, were disproportionately tied to relaxed lending standards and subprime loan products, and that those gains are now being reversed.

The exception to the pattern was foreign-born Latinos, whose rate of homeownership, while low, has stalled in the downturn but has not fallen.

Since 2004, homeownership for all Americans has declined to 67.8 percent from 69 percent. For African Americans it fell to 47.5 percent from 49.4 percent. Latinos had a longer period of growth, with homeownership rising until 2006, to 49.8 percent, before falling to 48.9 percent last year. Homeownership for native-born Latinos fell to 53.6 percent from a high of 56.2 percent in 2005. "

So much for the Federal Reserve's "Consumer Advisory Council, established in 1976, (which) advises the (Federal Reserve) Board on the exercise of its responsibilities under the Consumer Credit Protection Act and on other matters in the area of consumer financial services."

This is, of course, not surprising. Some part of the fraudulent lending practices that have damaged the economy were designed to achieve this outcome. Keep in mind that blaming the crisis on CRA or subprime lending is flat out wrong. As we pointed out in March, there simply were not enough subprime borrowers to cause a catastrophe of this magnitude. For that, you needed greed-induced leverage, a complete lack of ethics, and a set of parasitic financial institutions.