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Socially responsible investing

SRI News   Hedge fund firms accepting screens to get faith-based business Pensions & Investments Hedge fund managers hungry for institutional assets are increasingly willing to incorporate exclusionary screens into their investment approaches to keep portfolios in line with the socially responsible investment values of church-affiliated investors. See all stories on this topic » Pensions & Investments

JOBS Act Hearing and Meeting

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Mary Schapiro, Chair, SEC and Darryl Issa (R-CA) Chairman, Committee on Oversight and Government Reform, at JOBS Act Hearing, June 26, 2012. Photo by William Michael Cunningham As C-SPAN noted, "The JOBS Act ( Jumpstart Our Business Startups Act), designed to help small companies raise investment capital, was signed into law by President Obama on April 5, 2012.  On June 26th, the TARP Subcommittee of  the House Oversight held a hearing on the Security and Exchange Commission's (SEC) efforts to implement the Act. The SEC had 270 days from the signing of the Act to set forth rules. Rep. Patrick McHenry (R-NC) chaired the hearing. The JOBS Act relaxes some of the regulations put in place by the Sarbanes-Oxley Act and establishes the creation of Internet funding portals to facilitate 'crowd funding,' the collective pooling of money to support business projects. Critics worry that the JOBS Act's relaxed regulations will encourage fraud."  We atten

Geithner on the Hill

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U.S. Treasury Secretary Timothy Geithner testified before the House Financial Services Committee this morning. Most of the questioning concerned the growing LIBOR scandal.  Representative Mel Watt noted the declining number of African American car dealers and asked if there was anything Treasury could do, given its large holding of GM stock, to reverse this situation. Rather than giving a solution, the Secretary promised to get back to him.  We suggested a solution as far back as 2008: there is nothing to stop Treasury from filing a shareholder resolution with GM on the matter.  On LIBOR, Representative Scott Garrett (R-NJ) noted that " Geithner had four years, and meeting after meeting, to bring the LIBOR issue to Congress' attention and it just wasn't done. " Mr. Geithner appeared unflapped . He has, after all, done this before. He noted, in prepared remarks, that “The American financial system has regained its footing since the crisis of a few y

Bernanke on the Hill

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Chairman of the Fed Benjamin Bernanke testified before the House Financial Services Committee today. In his prepared remarks he hewed closely to his July 17th testimony before the Senate Banking Committee. A surprising number of questions focused on the LIBOR scandal. One question in particular seemed to go to the heart of the matter. A Committee member read a transcript of a conversation between a Barclay's trader and a staff member at the Federal Reserve Bank of NY. The transcript seemed to show the trader acknowledging his complicity in the commission of fraud. The Congressman then read the definition of fraud to the Chairman. This matched what the transcript revealed. The Committee member then asked the Chairman if he thought this combination was enough to justify a charge of fraud against Barclays. The Chairman was, predictably, reluctant to agree. Fiscal cliffs, twists and sequesters are irrelevant in the face of this type of  clearly defined unethical behavior.  It

Financial damage from subprime implosion will impact African Americans for a long, long time...

As we have noted for some time, " For blacks, the picture since the recession has been particularly grim. They disproportionately held subprime mortgages during the housing boom and are facing foreclosure in outsize numbers. That is raising fears among consumer advocates, academics and federal regulators that the credit scores of black Americans have been systematically damaged, haunting their financial futures." The Washington Post has a good article describing the problem. And keep in mind that banks like " Wells Fargo targeted black communities for shoddy loans. " Which means this did not have to happen. Free market, indeed...

Crowdfunding and Minority Firms

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(Photo from: The JOBS Act: Crowdfunding Guide to Small Businesses and Startups.  https://www.amazon.com/dp/B01MT104U1/ ) In April, President Obama signed the Jumpstart Our Business Startups Act. A provision in the law establishing crowdfunding as a mechanism to spur start-ups has the potential to significantly help minority firms. Large financial institutions, which are supposed to take small deposits from a large number of savers and use those funds to make fair and honest loans to individuals and small businesses, sometimes are not doing so. One only need look at Wells Fargo to see that credit decisions by large financial institutions are not always made in a racially or gender neutral manner. In 2011, a jury in Los Angeles found, according to the court document, that “the bank consistently and knowingly discriminated against borrowers in minority neighborhoods, resulting in these borrowers paying more for their loans than borrowers in nonminority areas.” Small-business own

SEC v Citigroup heats up...

This week, a number of organizations submitted "Friend of the Court" briefs in SEC v. Citigroup Global Markets. (United States Securities & Exchange Commission v. Citigroup Global Markets Inc. - UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT, docket number 11-5227- cv .) The case is now in an Appeals Court after a lower Court Judge threw out a settlement reached between the SEC and Citi. The National Association of Shareholder and Consumer Attorneys (NASCAT), the Securities Industry and Financial Markets Association (SIFMA), the Business Roundtable, Occupy Wall Street and the US Chamber of Commerce have all either filed or are seeking permission to file briefs in this case. Of course, industry groups, like SIFMA, believe that, if the lower Court ruling is upheld, the wheels will come off the economy. It will be the official End of the World. (We note that one of the attorneys for SIFMA, Annette L. Nazareth of DAVIS POLK & WARDWELL LLP, spent a decade a

SEC v Citi - First response to new briefs

Selected highlights from the Appeals Court Brief filed yesterday by the SEC: "As one example, the same district judge who rejected the consent  judgment here approved a consent judgment in which Worldcom agreed to  injunctive relief—and later, a $750 million penalty, one of the  largest ever obtained  by the Commission—without admitting or denying the fraud allegations in the  complaint." Irrelevant, since they refer to a different time and industry. More  importantly, a $750 million dollar fine in 2002 translates into a $962  million dollar fine in 2012. Or a $285 million dollar fine is only  $223 million in 2002 dollars. The SEC notes that "BP resolved charges that it violated the Clean Air Act in connection  with the Texas City refinery explosion, which killed 15 people and  injured 170, by entering into a consent judgment that ordered it to  undertake an array of remedial measures and pay one of the largest  civil penalties ever assessed for Clean Air Act v

OMWI Office Reports So Far....

Review of Office of Minority and Women Inclusion (OMWI) Performance: Opportunities for Minority and Women firms, Implications for Policymakers Friday, June 8, 2012 from 1:30 PM to 2:30 PM (ET). $100.00. Register by clicking on the link above.  

United Bank of Philadelphia in the news again

A recent article  on United Bank in Philadelphia appeared in the Philadelphia Inquirer today. While the article accurately quotes some of our research, it carefully ignored other points. Here is what we submitted to the paper: Consider something as small as the House dress code being applied differently  to the Chairman of the Congressional Black Caucus. And  there is the more important fact that "redistricting could mean the  CBC’s four most senior – and oldest – members will soon be gone." This  is an unprecedented level of anti black hostility and threatens to  turn the Congressional  racial clock back to pre-reconstruction days.  And finally, five of the eight cases before the House House Ethics  Committee involve blacks. While I might not agree with their alleged  behavior, I know that Black congressmen are not committing 62% of the  ethical violations on Capitol Hill. That much is certain. I believe  many of these investigations are racially motivated. From an econ

Goldman..to Disclose NYC Workers’ Race, Gender Data

From the New York Times,"At the behest of New York City’s public pension funds, two of the biggest financial companies with headquarters in the city, Goldman Sachs and MetLife, have agreed to publicly disclose information about the racial and gender breakdowns of their staffs." Also see: http://www.nytimes.com/2012/04/16/nyregion/goldman-sachs-and-metlife-to-disclose-staff-diversity-data.html Also see: http://www.americanbanker.com/bankthink/goldman-has-some-gall-seeking-profit-in-housing-1048229-1.html

Goldman and the Housing Market

I recently wrote an opinion piece for the American Banker Newspaper website. The article is on Goldman's new housing fund. It was Goldman's mark to market on the Bear Housing Fund that triggered the liquidity part of the housing crisis. They then went into the Fed to become a bank. Subsequently, they got $2 trillion in funding. Now, they are playing the upside, this after denying any meaningful role in the financial crisis (God's work) and after multiple severe securities market violations. My point is that, given this track record, they are lucky to be around, much less raising money for a mega housing fund. One would be justified in being concerned that their actions with respect to the new Fund, despite what they might say, will not help the market and country work it's way out of the housing crisis, just when we are beginning to recover. It's like letting someone with the flu in your house just after you got over pneumonia. Not a good idea. The point i

Minority Business Contracting at the Fed

The BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM released its Report to the Congress on the Office of Minority and Women Inclusion. March 2012. We note that "During 2011, the Board’s procurement contracts for goods and services totaled $125,070,569. Of this total, $15,414,147, or 12.3 percent, was awarded to minority-owned or women-owned businesses. Specific awards by contractor classification are as follows • minority-owned businesses (excludes women owned businesses) = $9,028,526 (7.2 percent of total); • women-owned businesses (excludes minority women) = $4,237,038 (3.4 percent of total); and • minority women-owned businesses = $2,148,583 (1.7 percent of total)." http://federalreserve.gov/publications/other-reports/files/omwi-report-20120402.pdf

Federal Reserve Bank of Kansas City First to release OMWI Report to Congress

The Federal Reserve Bank of Kansas City released their Office of Women and Minority Inclusion (OMWI) Report to Congress today. (See: http://www.kc.frb.org/publicat/aboutus/2011-omwi-congress-report.pdf) They are the first OMWI Office to do so. Under the terms of the statute (Dodd/Frank Section 342) all OMWI offices will have to release a report to Congress on their initial activities. The 21 page Report covers employment diversity, business inclusion and outreach in a pretty standard way. Their track record in this area is solid. Of course, the Federal Reserve Bank of Kansas City is the only one with a woman CEO. This appears to have helped. (In the interst of full disclosure, let me note that I spoke at a Bank Symposium on Minority-owned banks. This was, however, some time ago....)

Credit Unions Worried about Dodd/Frank 342

According to recent news reports, the "Credit Union National Association (CUNA) has written NCUA's Office of Minority and Women Inclusion to urge the agency implement one of the requirements of the Dodd-Frank Act with as little additional reporting requirements as possible." The referenced section of Dodd/Frank requires regulators to report on diversity at the financial institutions they firms regulate. This is an entirely new reporting requirement, and the first time a diversity reporting rule has been applied so broadly in an industry. This is also the first time a federal financial institution regulator has been tasked with this work. Credit Union executives met with NCUA's OMWI office director, Tawana James, "on February 29 and..have written her a letter on March 26 expressing concern about a possible requirement to assess the diversity practices of credit union contractors and suppliers." We will cover this and other recent Section 342 development

NCUA’s Diversity and Inclusion Strategic Plan

Last week, the national Credit Union Administration released it's Diversity and Inclusion Strategic Plan for 2012-2016. The Plan is an outline of the diversity goals of the Agency. NCUA is responsible for the supervision of the nation's credit unions. The plan is a competent strategic document, but does not address diversity at the entities regulated by the NCUA. A copy of the plan can be found at: http://www.ncua.gov/about/Documents/Agenda%20Items/AG20120315Item2B.pdf

Dodd-Frank Office of Minority and Women Inclusion (Section 342): Update and Review of Guiding Principles

Dodd-Frank Office of Minority and Women Inclusion (Section 342): Update and Review of Guiding Principles. Webinar. Thursday, April 12, 2012 from 2:00 PM to 4:00 PM (ET). To regisiter: http://342update.eventbrite.com Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act contains a “provision creating an Office of Minority and Women Inclusion at various agencies to monitor the diversity efforts of the agencies, the regulated entities and agency contractors.” We estimate new contract opportunities for woman and minority firms will total $205 million per year. The Section requires the Department of the Treasury, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, each of the Federal Reserve Banks, the Board of Governors of the Federal Reserve System, the National Credit Union Administration, the Office of the Comptroller of the Currency, the Securities and Exchange Commission and Bureau of Consumer Financial Protection to create “an O

Socially Responsible Goldman Sachs - NOT

An article in today's New York Times written by a soon to be former employee of Goldman Sachs starts with the admission that.."after almost 12 years at the firm..the trajectory of (the firm) is as toxic and destructive as I have ever seen it." The author goes on to state what many have long known, that "the interests of the client continue to be sidelined in the way the firm operates and thinks about making money." This is news? The writer blames Goldman's "current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn" for a "decline in the firm’s moral fiber.." What moral fiber is he referring to? The fiber evident in multiple lawsuits and "S.E.C. investigations, Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids?" Read Money and Power: How Goldman Sachs Came to Rule the World if you really want to know. The author then goes on to brag that "Over the course of my career I hav

Recent News Citations

Big banks: Too big to behave? March 12, 2012: 10:28 AM ET Given the level of repeat offenses at some of the largest financial firms, it's clear that the SEC needs to change its approach. By Eleanor Bloxham, CEO of The Value Alliance and Corporate Governance Alliance. Minority banks are struggling, even with bailouts March 11, 2012. By Beth Healy, The Boston Globe. OneUnited Bank is facing a painful question: What purpose can a minority institution serve when its own community is turning against it? That’s the situation the Boston bank, the nation’s largest black-owned bank, finds itself in after threatening to foreclose on Charles Street African Methodist Episcopal Church, one of the most revered black churches in Boston, which, like many borrowers, fell behind on its loans during the recent recession. Community leaders vow to organize a national boycott of the bank if it fails to renegotiate the church’s loans by Thursday.

Boston's Mayor Sides With Church

According to the Boston Herald , "Boston Mayor Thomas M. Menino is offering to help Roxbury’s historic Charles Street AME Church avoid foreclosure — and blasting the bank that’s trying to seize the house of worship. Menino yesterday called the Rev. Gregory Groover Sr. — pastor of the church and chairman of the Boston School Committee — to offer help in the congregation’s fight with Hub-based OneUnited Bank. The nation’s largest black-owned bank, OneUnited is threatening to foreclose on the church even though the company itself received $12 million in federal bailout funds in 2008. OneUnited has scheduled a March 22 foreclosure auction of the church, some nearby storefronts and a Milton parcel that once served as the congregation’s parsonage. Charles Street AME’s $1.1 million balloon mortgage recently came due, and the church says OneUnited hasn’t responded to an offer to keep making monthly payments while the congregation tries to refinance. The two sides have long bee