Thursday, September 18, 2008
The problem is not at the SEC, as we noted on 5/5/2006.
Wednesday, September 17, 2008
"The share price of the Reserve Primary fund, a money market mutual fund, has fallen below the sacred $1 mark, thanks to the Lehman Bros. meltdown.
Money market funds have been the fund industry's haven for more than three decades, and investors often view them the same way they do bank checking accounts. The funds' safety record has attracted more than $3.5 trillion in assets.
Until now, no money fund open to the general public has ever allowed its share price to dip below a dollar — "breaking the buck," as it's called. (A small institutional money fund, Community Bankers Money fund, broke the buck in 1994.)
Money market funds have long feared that if they broke the buck, thereby shrinking investors' principal, people would shift their money into bank money market accounts or ultrasafe Treasury securities. The question now is whether other money funds will follow the Reserve fund in dipping below $1."
Let me answer that for you: yes. What do we suggest? Two things:
One - Treasury Direct. Now.
And two - Pray. Hard.
Monday, September 15, 2008
Topics Covered Will Include:
• Trends in Asset Allocation for Endowments and Foundations
• Portfolio Construction and Implementation, Developments and Advances
• Challenges facing Endowments and Foundations, past, present and future
• Socially Responsible Investing
• Incorporating Alternatives and Emerging Asset Classes into a Smaller Plan
• Manager Selection
Sponsorship and Exhibiting Opportunities are Available!
Please contact firstname.lastname@example.org or call 212-532-9898, ext. 275.
Register by visiting us online here! Registrations for representatives of endowments and foundations are complimentary.
Monday, September 8, 2008
According to FHFA Director James B. Lockhart and the Treasury, "Conservatorship is a statutory process designed to stabilize a troubled institution with the objective of returning the entities to normal business operations. FHFA will act as the conservator to operate (Fannie and Freddie) until they are stabilized.
There are several key components of this conservatorship:
First, Monday morning the businesses will open as normal, only with stronger backing for the holders of MBS, senior debt and subordinated debt.
Second, the Enterprises will be allowed to grow their guarantee MBS books without limits and continue to purchase replacement securities for their portfolios, about $20 billion per month without capital constraints.
Third, as the conservator, FHFA will assume the power of the Board and management.
Fourth, the present CEOs will be leaving, but we have asked them to stay on to help with the transition.
Fifth, I am announcing today I have selected Herb Allison to be the new CEO of Fannie Mae and David Moffett the CEO of Freddie Mac. Herb has been the Vice Chairman of Merrill Lynch and for the last eight years chairman of TIAA-CREF. David was the Vice Chairman and CFO of US Bancorp. I appreciate the willingness of these two men to take on these tough jobs during these challenging times. Their compensation will be significantly lower than the outgoing CEOs. They will be joined by equally strong non-executive chairmen.
Sixth, at this time any other management action will be very limited. In fact, the new CEOs have agreed with me that it is very important to work with the current management teams and employees to encourage them to stay and to continue to make important improvements to the Enterprises.
Seventh, in order to conserve over $2 billion in capital every year, the common stock and preferred stock dividends will be eliminated, but the common and all preferred stocks will continue to remain outstanding. Subordinated debt interest and principal payments will continue to be made.
Eighth, all political activities -- including all lobbying -- will be halted immediately. We will review the charitable activities.
Lastly and very importantly, there will be the financing and investing relationship with the U.S. Treasury, which Secretary Paulson will be discussing. We believe that these facilities will provide the critically needed support to Freddie Mac and Fannie Mae and importantly the liquidity of the mortgage market."
Freddie and Fannie common stock is, basically, worthless. If you own the stock, I would hold onto it, but recognize that it is now a long term investment. A VERY long term investment.
On June 15, 2000, I testified before the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises (GSE’s) of the US Congress. I suggested that the GSE’s (Fannie Mae and Freddie Mac) be subject to a through “Social Audit.” A Social Audit is an examination of the performance of an enterprise relative to certain social objectives. It also includes a review of ethical practices at the firm.
Had they been subject to this audit, certain flaws in their operation, including certain ethical shortcomings, would have been revealed earlier, in a better market in which to make corrections.
At best, conservatorship is a half measure, designed to, as noted above, stabilize the patient. It is life support, nothing more.
The patient is still, however, in the ER.
Thursday, September 4, 2008
"The chief executive of District-based Adams National Bank (Woman owned) resigned on the eve of a meeting scheduled for today with federal banking regulators to review the company's financial condition. Jeanne Delaney Hubbard also stepped down as chairwoman and chief executive of the bank's parent company, Abigail Adams National Bancorp.
Adams National faces mounting losses on real estate loans and this summer disclosed that it had been classified as "troubled" by its regulator, the Office of the Comptroller of the Currency, subjecting the bank to greater scrutiny. Last week, the Abigail Adams board voted to suspend quarterly dividend payments to shareholders."
Wednesday, September 3, 2008
"Washington, D.C., Sept. 3, 2008 — The Securities and Exchange Commission today charged two Wall Street brokers with defrauding their customers when making more than $1 billion in unauthorized purchases of subprime-related auction rate securities. The SEC's Division of Enforcement in 2007 formed a subprime working group, which is aggressively investigating possible fraud, market manipulation, and breaches of fiduciary duty that may have contributed to the recent turmoil in the credit markets.
The SEC's complaint, filed in federal court in Manhattan, alleges that Tzolov and Butler, while employed at Credit Suisse Securities (USA) LLC in New York, deceived foreign corporate customers in short-term cash management accounts by sending or directing their sales assistants to send e-mail confirmations in which the terms 'St. Loan' or 'Education' were added to the names of non-student loan securities purchased for the customers. Tzolov and Butler also routinely deleted references to 'CDO' or 'Mortgage' from the names of the securities in these e-mails. As a result, the complaint alleges that customers were stuck holding more than $800 million in illiquid securities after auctions for auction rate securities began to fail in August 2007. Those holdings have since significantly declined in value."
"Washington, D.C., Sept. 3, 2008 — The Securities and Exchange Commission today charged former Kellogg, Brown & Root, Inc. (KBR) executive Albert Jackson Stanley with violating the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and related provisions of the federal securities laws. The Commission alleges that over a 10-year period, Stanley and others participated in a scheme to bribe Nigerian government officials in order to obtain construction contracts worth more than $6 billion. The contracts were awarded to a four-company joint venture of which The M.W. Kellogg Company, and later KBR, was a member."
Tuesday, August 26, 2008
"WASHINGTON — The Office of the Comptroller of the Currency (OCC) issued a banking bulletin on an interim final rule to implement the changes to national banks’ public welfare investment authority enacted in the Housing and Economic Recovery Act of 2008 (HERA), which the President signed into law on July 30, 2008."
Public welfare investments are investments that promote the public welfare. (Sorry to be circular, but it is what it is.) These are investments that primarily benefit low and moderate income individuals, low and moderate income areas, or other areas targeted for redevelopment. They include debt or equity investments that finance small businesses, provide credit counseling, job training, community development research. We believe the law and resulting regulation timely.
The OCC goes on to state that "This provision in HERA restored national banks’ full authority to make investments designed primarily to promote the public welfare, including in low- and moderate-income communities, communities affected by
foreclosures and targeted for revitalization, designated disaster areas, and underserved rural communities. The OCC recognized the need to implement this provision promptly.
Although there is a 30-day public comment period, the interim final rule became effective on August 11 when it was published in the Federal Register. The comment period closes on September 10, 2008."
Monday, August 25, 2008
Construction Bank, which on Friday posted a 71 percent jump in first-half net income to 58.7 billion yuan ($8.6 billion), said growth in lending would be driven in part by loans to small and medium-sized enterprises and agricultural businesses."
We have created a set of reports covering the financial and social performance of the top five Chinese banks.
Thursday, August 21, 2008
According to the Wall Street Journal, “Andrew Bischel believes green-minded, socially conscious investors don't have to sacrifice returns to have a portfolio they feel good about.”
“‘There's a belief that the effect of shrinking the universe through constraints either causes you to lose return opportunities or it increases volatility because you don't have diversification,’ Mr. Bischel says. ‘We believe we know how to manage within a constrained universe. It is true that good companies can be good stock -- they perform well over the long term because they are less likely to have disasters down the road.’”
“Socially responsible funds came into vogue and prospered through the 1990s, but not necessarily because they were well-managed, Mr. Bischel says. For the most part, such funds were heavily weighted in the then-booming technology and telecommunications sectors because those companies had a sterling reputation among the social-responsibility crowd. When the bubble burst on tech stocks, those funds sank with them.”
“Just 55 per cent of large UK charities had an ethical investment policy in 2006, and charities risk their reputations and income if they do not make investments which are conducive with their objectives.”
“Many charities are concerned that the credit crunch will have an adverse affect on their income, both from monetary gifts and in the form of donated goods to sell in their shops; thus it is more important than ever for charities to insure that they do not jeopardise income by going against the principal foundations of the organisation, the EIRS said.”
Sunrise Community Banks To Offer Remote Deposit Capture Service From Kodak And CFC Technology To Business Customers
“EZ Deposit stands for ‘energy efficient and zero waste,’ which complements Sunrise Community Banks' socially responsible business model.”
“‘Collectively, we're recognized as ‘Minnesota's Socially Responsible Banks®,’ having demonstrated our ability to make a difference in our urban communities,’ said David Reiling, CEO, Sunrise Community Banks. ‘Our Socially Responsible Deposit Fund allows depositors to dedicate funds to be targeted toward affordable housing projects, small business and community investment programs in low and moderate income areas of the Twin Cities.’”
Wednesday, August 20, 2008
Freddie and Fannie became arrogant, in that way that says: we know more that you do, we know more that you ever will, we are smarter, better paid and better looking than you. They were right, for a time. But time always runs out.
They were "socially responsible" companies of long standing, the originals, immune to either criticism or improvement. Their attitude, financial and reputational strength gave them great power, power they misused.
Deregulation supported them on the upside and failed them on the downside. They should have stopped abusive home mortgage market lending practices, as we suggested in 1995 and 2001, but found themselves turning up the heat on a housing market mania that required fraudulent practices. Generating income and increasing "shareholder value," became the order of the day. Managers at Freddie and Fannie were caught up, too. They wanted their share of the American Pie, even if that meant turning the oven up way too high. GSE managers stopped being anything other than greedy. Of course, anything smacking of long term social concern was driven out, also.
With no regulators to fear, with little competition, operating within a maniacal market that forgave all sins (except missing earnings estimates), they forgot their role in setting ethical home mortgage market lending standards.
Ironically, other, more powerful and greedier groups were angling for profit. A new set of players stood at the ready. Hedge funds, eying $5 trillion dollars of potentially distressed MBS and other debt, operating in the dark, took advantage of a lack of both GSE oversight and hedge fund regulation. Enjoying freedom from concern about society, and able to use fraudulent and unethical business practices, hedge funds may drive the companies into bankruptcy. Once there, Funds would have a field day, buying GSE debt and MBS securities for pennies on the dollar, waiting for the housing market to rebound, earning 2 and 20, easily.
Yet and still, we believe in the social mission these companies set out to achieve. The bottom line: Socially Responsible Investors might consider buying Freddie and Fannie stock at these levels.
Friday, August 15, 2008
"Salt Lake City-based Zions' Bancorporation..closed down 14.3%, becoming the top loser among financials after a rapid tumble.. The fall in the bank's share price comes after Moody's Investors Service said it was reviewing the company for a downgrade.
Wachovia reported a second-quarter loss of $9.11 billion, or $4.31 a share, last month. Wachovia ended 12% lower as traders beat down the stock on news that the bank is revising lower its second-quarter loss by $500 million pretax. This was to reflect a hit it is likely to take from settlement discussions with regulators of investigations relating to auction-rate securities."
Thus, small, minority banks will, we believe, outperform their larger, non-minority counterparts for the balance of the year.
At Carver, net interest income declined by $400,000, and non-interest expense climbed by $800,000. Non interest income increased by $600,000, and the bank generated an income tax benefit totaling $500,000.
One worrying sign: Carver increased provision for loan losses - non-performing loans at the bank increased. And bank assets fell to $788.7 million, driven lower by declines in cash and cash equivalents.
Carver Bancorp is the holding company for Carver Federal Savings Bank, the largest African American run bank in the United States.
Thursday, August 14, 2008
According to CityWire.co.uk, “While some advisers may still be warming up to the idea of ethical or socially responsible investment (SRI), research shows clients are increasingly demanding it. But despite what some may fear, investing in line with a client’s principles does not have to mean the death of decent returns, particularly if advisers choose funds with care.”
“Research released by the Association of Independent Financial Advisers in May revealed that close to a quarter of advisers saw increased consumer interest in ethical investments last year. Meanwhile, figures from Ethical Investment Research Services (Eiris) show that as of December 2007, there were nearly 100 green and ethical retail funds available in the UK with investment at a record £8.9 billion.”
“Eiris head of responsible investment development Stephen Hine said experience shows that over an extended period, ethical, SRI and sustainable funds can perform as well, if not slightly better, than their non-ethical, non-green peers.”
Thursday, August 7, 2008
"Green" Sections removed from the Housing Bill, replaced with the "Green Act of 2008" (Amy Rosenthal)
All is not quiet on the clean energy front, however. While the housing bill might serve as a setback, another bill titled the GREEN Act of 2008, sponsored by Colorado Representative Ed Perlmutter and 41 other co-sponsors, focuses on providing incentives to green building. This bill includes an overhaul of the current energy efficient mortgage process to help provide oversight for the current program, as well as expand it. The bill also expands regulations on energy efficiency in building, and provides community reinvestment aid for supporting energy efficient housing.
Wednesday, August 6, 2008
Interested parties must register to be considered. Logon to:
www.mbecapitalcall.com today to register.
James R Taylor, Director
VHCDC-MBE Capital Connect™
Tuesday, August 5, 2008
“Christian W. Magoon, President and Senior Managing Director of Claymore Securities, told SocialFunds.com, ‘Water is the only commodity for which there is no replacement. Can we replace oil? Yes. Oil we can replace. Same with lumber or soybeans. There is only so much water on earth, but the demand for water itself is not affected by inflation or tax rates,’ Magoon said.”
“Water companies span a wide range of sectors and industries including infrastructure, utility, clean water production, efficiency, filtration, purification, monitoring, waste water treatment and pollution control. Sectors that can have a significant impact on water include chemical, steel, manufacturing, and agriculture.”
Monday, August 4, 2008
According to GuruFocus.com, “More environmentally-conscious Canadians are looking at socially-responsible mutual funds as a way to invest using a "green" approach.”
“There are now almost 50 SRI mutual funds and ETFs available in Canada and the major players are starting to realize that there is something happening that merits their attention. Within the past year, three of the big bank fund groups have launched SRI entries. Last July, RBC created the RBC Jantzi Balanced Fund, RBC Jantzi Canadian Equity Fund, and RBC Jantzi Global Equity Fund. Two months later, we got the TD Global Sustainability Fund and in February of this year the Scotia Global Climate Change Fund appeared. If you sense a trend here, you're right.”
“Portsmouth, N.H.-based Pax, a pioneer in the growing socially responsible investing niche, agreed to pay the penalty to resolve civil charges announced Wednesday by the Securities and Exchange Commission.”
“Pax said the portfolio managers that had overseen the two funds at which the SEC found violations are no longer employed by Pax. The firm's head of social research at the time of the failures also has left, along with the chief compliance officer.”
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