This Week in ESG and Impact Investing

Gary Brouse, ICCR and Mary Schapiro, SEC. SEC Open Meeting, 2011.  Photo by William Michael Cunningham. We note, with more than a little regret, Mary Schapiro's exit from the Securities and Exchange Commission. How her departure will impact the Dodd/Frank Section 342 initiative and Crowdfunding is unclear. She was in a tough and thankless job. In her favor, she did save the Agency. The question is, save it for what? Will it take the more aggressive stance required to repair the financial system? It seemed to be moving in that direction . My concerns with the Agency are well known , but Ms. Schapiro was cordial and professional every time I met her. I thank her for her service and wish her well.

According to the SEC, "In coordination with the federal-state Residential Mortgage-Backed Securities Working Group, the Securities and Exchange Commission today charged J.P. Morgan Securities LLC and Credit Suisse Securities (USA) with misleading investors in offerings of residential mortgage-backed securities (RMBS). The firms agreed to settlements in which they will pay more than $400 million combined.." What's interesting is that this represents a marked increase in the amount of money firms are required to pay, given the size of the estimated damages. According to the SEC, "J.P. Morgan received fees of more than $2.7 million, and investors sustained losses of at least $37 million on undisclosed delinquent loans. J.P. Morgan also is charged for Bear Stearns' failure to disclose its practice of obtaining and keeping cash settlements from mortgage loan originators on problem loans that Bear Stearns had sold into RMBS trusts. The proceeds from this bulk settle...

According to the Washington Post, "Businesses picked up their pace of hiring in October and the unemployment rate rose as more people started looking for work, according to new government data that offer a glimmer of optimism for the long-ailing job market on the eve of the presidential election. Employers reported adding 171,000 jobs in October, beating both analysts’ expectations (125,000 jobs added) and September’s job creation (a revised 148,000). The unemployment rate rose to 7.9 percent, up from 7.8 percent, but the reason behind the uptick also points to an improved job market. Some 578,000 more Americans counted themselves as part of the labor force, and only 410,000 more people reported having a job. In one particularly welcome sign, the proportion of the population reporting that they had a job rose one-tenth of a percent to 58.8 percent." We forecast a 7.7% rate . We'll stand by our number. As is often the case, the Fully Adjusted Return (TM) methodology...

The U . S . Employment Situation report will be released on Friday at 8:30 am. According to the Department of Labor, "Based on the Household Survey, the unemployment rate measures the number of unemployed as a percentage of the labor force." The consensus forecast is for a 7.8% to 8.0% unemployment rate. Our Fully Adjusted Return (TM) Model, combining social and financial data, predicts a 7.7% rate. As noted in the Washington Post, "Hurricane Sandy could complicate Friday’s release of the October U.S.  jobs  report, the final snapshot of employment before the presidential election. Labor Department officials are still hopeful that they can release the report as scheduled at 8:30 a.m. Friday. But they acknowledged Monday that the storm could cause a delay." While the storm may impact the report release date, it will have no impact on the report itself. The storm will influence the November jobs figures, to be released on December 7th. Recent Forecast Track Recor...

According to the Washington Post, "forecasters estimate that the U.S. economy grew at a 1.9 percent annual rate during the third quarter, from July through September..GDP is the broadest measure of the nation’s economic activity, aiming to capture the value of goods and services produced in the United States during a given time period." GDP will be released on Friday at 8:30am. Our Fully Adjusted Return (TM) models predict GDP will be 2.1%. Consumer spending will drive most of the growth. Housing has recovered, adding additional strength to the economy. Government spending and business investment will lag, but will be higher than expected. 

Submitting a brief to the Supreme Court There is a case before the Supreme Court that will allow every person responsible for the recent financial crisis to escape punishment. The case is  Gabelli v. Securities and Exchange  Commission  and   "a decision is expected in the court's upcoming term, which ends in June." I have decided to file a research paper (called an Amicus Brief) with the Supreme Court explaining why letting these guys go might be a bad idea for the rest of us, but I need your help. http://www.indiegogo.com/ supremecourt

On July 25, 2012, Sandford I Weill, former Chairman of Citigroup, said it’s time to break up the largest banks to avoid more bailouts.  Mr. Weill, you'll recall, spearheaded the Citibank/Travelers, sparking the creation of super large financial institutions and creating the "too big to fail" dilemma. Mr. Weill accomplished this by getting policymakers to first ignore and then repeal the Glass-Steagall Act, a Depression era law designed to separate commercial from investment banks. In an interview on CNBC, Mr. Weill stated that “ 'What we should probably do is go and split up investment banking from banking'..Have banks do something that’s not going to risk the taxpayer dollars, that’s not going to be too big to fail.' ” No kidding. Thank you, Mr. Weill. I suppose 5,151 days late is better than never at all. An article about this matter on Bloomberg.com quoted  Thomas Hoenig , a Federal Deposit Insurance Corp. board member and former head of the Kans...