Daily Archives: September 22, 2014

Citigroup : seeks stay on Argentine debt order; government threatens penalties

Citigroup Inc (>> Citigroup Inc) plans to ask a U.S. judge to put on hold an order barring it from processing payments on $8.4 billion in bonds issued under Argentine law following the country’s record 2002 default, court documents showed.

Citigroup Inc (>> Citigroup Inc) plans to ask a U.S. judge to put on hold an order barring it from processing payments on $8.4 billion in bonds issued under Argentine law following the country’s record 2002 default, court documents showed.

Citigroup says it faces regulatory and criminal sanctions by the South American country, which defaulted on some of its debt in July, if it cannot process the $5 million interest payment due to bondholders by Sept. 30.

Read on.

Plosser, hawkish chief of Philadelphia Fed, to retire in March

Richard Fisher, Fed Chief of Dallas and outspoken critic for TBTF banks, is retiring in April.

(Reuters) – Philadelphia Federal Reserve Bank President Charles Plosser, one of the sharpest internal critics of the central bank’s loose monetary policy, will retire next year in a move that could ease pressure to raise interest rates more quickly.

Plosser, 66, has dissented on policy decisions six times during his eight-year stint at the Fed, including at the central bank’s last two meetings.

He has frequently argued that the Fed’s aggressive easing of monetary policy could spark inflation, and in July and September he broke with colleagues over the central bank’s pledge to keep rates near zero for a “considerable time” after a bond-buying stimulus program ends.

The former economics professor will step down on March 1, the Philadelphia Fed said in a statement on Monday.

The tenor of the debate on the policy-setting Federal Open Market Committee could change with Plosser’s departure and the impending retirement of Dallas Fed chief Richard Fisher, who like Plosser is one of the central bank’s most vocal inflation “hawks.” Both take to the public podium frequently.

“The absence of Plosser and Fisher will certainly be felt,” said OSK-DMG economist Tom Lam. Because of their “hardcore” views, he said, they may play a role in balancing market expectations about a Fed that may otherwise be perceived as dovish.

Although the chiefs of the Philadelphia and Dallas Fed won’t have a vote on monetary policy next year, all 12 Fed bank presidents take part in the central bank’s meetings, and decisions often incorporate views of both voters and non-voters.

Fisher, 65, had said previously he planned to leave the Fed in April. Regional Fed presidents generally face mandatory retirement after 65.

Read on.

Should The U.S. Break Up The Big Banks?

Title: Should The U.S. Break Up The Big Banks?
START DATE: Sunday September 21
TIME: 6:00 PM – 8:00 PM
Location Details:
Stream or download at http://greatspeechesandinterviews.blogspot.com/ Broadcast at Access Sacramento, Sundays 6-8pm PDT at http://www.live365.com/stations/accesssacramento?site=pro
Event Type: Radio Broadcast
Contact Name steve lerman
Email Address great.speeches [at] yahoo.com
Phone Number
Address
banksdebatepictures-1--bba60c5d940247def
Douglas Elliott (left) and Paul Saltzman argue against the motion
“Break Up The Big Banks” Samuel LaHoz/Intelligence Squared U.S.

In 2008, the U.S. Treasury committed 245 billion in taxpayer dollars to stabilize America’s banking institutions. Banks that were once “too big to fail” have only grown bigger. Was size and complexity at the root of the financial crisis, or do calls to break up the big banks ignore real benefits that only economies of scale can pass on to customers and investors? The debaters are Richard Fisher, Simon Johnson, Douglas Elliott, and Paul Saltzman.

banksdebatepictures-11--d8e059bce2fd0fbc
Richard Fisher (left) and Simon Johnson argue in favor of breaking up big banks,
as moderator John Donvan looks on. Samuel LaHoz/Intelligence Squared U.S.

Before the debate, the audience at New York City’s Kaufman Center voted 37 percent in favor of the motion and 19 percent against. Forty-four percent were undecided. After the debate, 49 percent supported breaking up big banks which is an increase of 12 percentage points and 39 percent opposed which is an increase of 20 points. That made the side arguing against breaking up the banks the winners of the debate.
Source: intelligence2 Debates: Should The U.S. Break Up Big Banks?

Christie’s Pension Overseer Invested New Jersey Money In Fund He Is Linked To Privately

In the context of a New Jersey pension system stocked with $81 billion in assets, here was a transaction that seemed unremarkable. It was 2011, the year after Gov. Chris Christie had installed his longtime friend Robert Grady to oversee the state pension fund’s investments. A former executive from the heights of finance and a national Republican Party power broker, Grady was pursuing a new strategy, shifting money into hedge funds and private equity holdings in the name of diversification and higher returns. He was now pushing to entrust up to $1.8 billion of New Jersey pension money to the Blackstone Group, one of the largest players in private equity.

But one special feature of that Blackstone bet underscores the interlocking relationships at play as states increasingly rely on the counsel and management of Wall Street institutions to invest their pension dollars: One of the private equity funds New Jersey was investing in – a pool of money called Blackstone Capital Partners VI – claimed among its investors a Wyoming-based company named Cheyenne Capital. That company’s list of partners included one Robert Grady.

In short, Grady was pushing to invest New Jersey public money in the same Blackstone fund in which his own firm was investing — without disclosing that fact to N.J. officials.

This sort of arrangement is generally anathema in the realm of public pension oversight, where state rules often bar public officials from being involved in investments in which they or their companies have a financial interest.

Such rules aim to protect public funds from being used to grease the wheels for private deals. Without such strictures, a private equity firm might be tempted to court managers of state pension funds by giving them their own piece of the action in exchange for delivering public money on terms less-than-optimal for taxpayers. Managers of state pension money might, say, be rewarded with lower fees on their own investments while agreeing to turn over public pension money to be managed at higher fees.

Read on.

CEO of shoe maker: I didn’t disappear with any money, I was on holiday

The chief executive of a shoe company who disappeared at the same time as some of the firm’s cash has denied absconding with any money, saying he was on holiday.

Wu Qingyong, who was fired from German-listed Chinese shoe maker Ultrasonic after he went missing, said reports he had taken any of the company’s funds were “purely rumours”.

Wu Qingyong claimed he was on holiday in Hong Kong before travelling to the Philippines for medical treatment. During the trip he lost his mobile phone, he said.

“Rumours say that I took more than a billion (yuan). This is pure rumour. No such thing has happened. The company’s financial situation remains normal,” Wu Qingyong said in a video interview with Chinese news outlet Sina.

Ultrasonic warned investors last Thursday that insolvency procedures were “imminent” following the financial loss. The company claimed that Wu Qingyong and his elder son Wu Minghong, the chief operating officer, had “drawn the credit facility in two tranches in August and transferred most of the money from Hong Kong to China shortly before their getaway”. Wu Minghong has also been sacked.

Read on.

Wells Fargo Advisors to pay $5 million fine over controls failure

WASHINGTON (MarketWatch) — Wells Fargo Advisors will pay a $5 million penalty to settle Securities and Exchange Commission charges it didn’t have adequate controls to prevent an employee from insider trading. The agency said Wells Fargo Advisors admits wrongdoing, and that multiple groups were at fault by not preventing a broker from trading on a client’s nonpublic information. The SEC said the broker learned from a customer that Burger King was going to be acquired by a private-equity firm, and traded on that information. The charges are the first against a broker-dealer for failing to protect a customer’s material nonpublic information.

Source: MarketWatch

N.Y. financial regulator says to focus on cyber security

New York’s financial regulator said on Monday his agency will focus on cyber security over the next year, saying the possibility of a systemic attack to the financial system is one thing that keeps him awake at night.

“It is impossible to take it seriously enough,” said Benjamin Lawsky, superintendent of the Department of Financial Services (DFS) for the state of New York.

Cyberterrorism is “the most significant issue DFS will work on in the next year,” he said, speaking at a Bloomberg Markets event at the Museum of Jewish Heritage in lower Manhattan.

Read on.

Six years later after OJJDP grant scandal, still no changes in the practices and lack of transparency

By SP Biloxi

I decided to followup into any changes within the OJJDP department (part of the Department of Justice) from the OJJDP grant scandal which lead to investigation and congressional hearings six years ago. OJJDP stands for Office of Juvenile Justice and Delinquency Prevention. Six years ago, OJJDP Program Manager, whistleblower, and now CEO of Global Youth Justice Scott Peterson blew the whistle on his now former boss J. Robert Flores of waste, cronyism, and fraud in the OJJDP grant procedures. Flores was accused of awarding grants to organizations that didn’t score as high in merit for political purposes and not awarding grants to organizations that had high scores. Here is the YouTube video of the OJJDP scandal reported by Brian Ross on ABC Nightline:

As of today, there is still work to do in the OJJDP department. In Juvenile Justice Information Exchange website in an article in April, there is a lack of transparency existed for all federal grants to show a fairness in competition:

A 2012 Congressional Research Service report also noted that this lack of transparency existed for all federal grants and even noted that some of the factors used in formula grants are not publicly available either.

“Without greater transparency into these processes, it is difficult for Congress to measure the effectiveness of federal grant allocation formulas or to determine whether there has been fair competition in the awarding of federal grants,” the report said.

A member of Congress introduced a bill last year to change the way of disclosing grants. Yet, the bill  has been brought up to Congress to vote and doesn’t address certain aspects the grant procedures:

U.S. Rep. James Lankford, (R-Okla.), hopes to change the way grants are currently disclosed. Last fall he introduced the Grant Reform and New Transparency Act of 2013 or GRANT Act, which calls for agencies to post information about each grant opportunity, a copy of a successful grant abstract or application, award decisions including rankings and the name or a unique identifier of peer reviewers, and a final performance report at the end of the grant.

The bill would protect national security and some proprietary information by not requiring agencies to post information that would otherwise be exempt under the Freedom of Information Act, Lankford’s office says.

Under the proposal, agencies will also be required to screen potential grantees to ensure they’re capable of performing the grant. The bill also offers those that lost out on grants valued at more than $100,000 the chance to request a debriefing with the agency, which the agency must provide.

The bill doesn’t address invited awards, which are still very much a part of the OJJDP grant process. In 2013 alone, the agency awarded about $106 million through invited grants, according to a recent JJIE report. Lankford said he wasn’t aware of invited awards, but said it didn’t sound fair.

“This is a competitive merit-based process and we want that criteria to be clearly known in advance,” Lankford says. “The bill provides everyone with the opportunity to know how their federal tax dollars are being used.”

The aim is to help groups that are doing well but can’t seem to break into and be successful at the grant process to learn why they failed and how they can do better next time, Lankford says. And it will also shed light on the very small group of well-connected people that get grants all the time, he adds.

The bill was amended and approved by the House Oversight Committee to add some protections for peer reviewers and intellectual property issues, Lankford says. The congressman introduced a similar bill in the last legislative session but it never got to a House vote. At that time, it faced opposition from academic groups concerned that it could jeopardize intellectual property rights and reveal proprietary information. They also objected to revealing names or unique identifiers of peer reviewers as many research areas have a small pool of potential reviewers that can be easily identified.

So far, his bill is still very much alive, Lankford says, adding that he’s gotten bipartisan support for it and it’s awaiting a House vote.

I asked Scott Peterson for a response to lack of transparency of the OJJDP grant procedures. His email response today to me: “Release the scores and rankings for non-competitive federal grants !!!!” We only hope that will happen.

For more information on the OJJDP scandal. Click here and here.