— One of the executives whose hapless job it was to determine whether Michael Jackson really had it in him to mount a 50-show concert gig in London slated to begin next month told me a few weeks ago that Jackson was surprisingly robust.
What was clear, the executive recalled, was that Jackson was motivated not just by financial gain or rehabilitating his career — though he had dug himself quite a hole in both areas over the years. More than that, Jackson was doing it for his three young kids and his wish for them to see him back on top of his game — more "King of Pop" than the "Wacko Jacko" the tabloids had branded him (with considerable justification).
Buz Kohan, a producer, longtime friend and collaborator of Jackson’s — he wrote the lyrics to the now sadly apt ballad "Gone Too Soon" — was planning to attend a full rehearsal of the show at Los Angeles’ Staples Center this weekend. "He was very enthused and his energy level was high as well as his optimism," said Kohan. "Not that it was a last hurrah — but it was like a reawakening."
Another executive who had dealings with Jackson over the years recalled hearing of his being rushed to hospital in Los Angeles on Thursday: "The first thing everybody thought was ‘here he goes again,’ " this person said. "Three weeks before a TV show or concert he gets sick to get out of things."
Very quickly, of course, it became clear that Jackson, 50, had suffered apparent cardiac arrest, and he was pronounced dead after being rushed to UCLA Medical Center. It was all over except for the speculation about his final days, the tributes, and the messes that Jackson’s untimely death has left behind.
Jackson’s was a life and career of staggering talent and towering weirdness, and perhaps the ultimate cautionary tale of the perils of child stardom. We’ll leave most of the saga for others to parse, but marvel instead at how Jackson is now something more: the ultimate story of the Hollywood comeback that was never to be — at least not the way it was planned.
In business, as in life, Jackson did nothing in small measure.
When tickets for Jackson’s 50-date comeback concert series went on sale in March, some 750,000 tickets sold out in five hours. The shows had been arranged by AEG Live Entertainment, an arm of former telecom billionaire Phil Anschultz’s private empire, which also owns 02, the large London arena where the shows were scheduled to take place over several months.
Swarovski, the crystal-maker, had prepared a new suit for Jackson to perform in encompassing 300,000 crystal elements that is reportedly worth 1 million pounds. Jackson’s comeback was to include a concert DVD, video game, and the release of the singer’s first new singles in years. And the London dates were just the beginning of a tour that, if it all panned, out, might have earned Jackson more than $400 million and even spawned a "Thriller" casino in Macau — the name coming from his 1982 album that remains the best-seller of all time.
There’s no question Jackson needed the money, having dug himself into a hole of close to $500 million in debts over the years by living beyond even his own outsized fantasyland means and fending off a seemingly endless stream of litigation fast cash. He also certainly had assets — mostly notably his own music royalties plus his stake from a music publishing library with more than 200 Beatles songs that he had shrewdly purchased in 1985.
But after various financial reorganizations aimed at staving off creditors, Jackson today owns 25% of the library — the remainder is held by Sony Music — and it is held in a trust designed to shield it from future claims against his estate.
Jackson only released one album in the past decade –it didn’t sell well — and his last few years were marked by controversy and strange dealings.
In 2005, Jackson paid $22 million to settle a civil lawsuit brought by the parents of a 13-year-old boy who had accused Jackson of molesting him, even though he had been acquitted of those charges in a criminal trial. Last year, Jackson narrowly avoided foreclosure on his Neverland Ranch after defaulting on a $24.5 million mortgage when the note was acquired by a big private equity firm that specializes in real estate, Colony Capital. And in April, an auction of Jackson’s possessions from Neverland — from sequined gloves to artwork — was called off after Jackson arranged a settlement with the auction house. (The timing of this, coming right after tickets for Jackson’s London shows sold out and presumably he was paid something, might suggest that the two events are related.)
Colony Capital’s CEO, Thomas Barrack Jr., has done billions of dollars of real estate deals that are often much larger than his firm’s bet on Neverland — for which Jackson was given a piece of the note on the property.
But the purchase was part of a bigger mission by Barrack to rehabilitate Jackson’s career, and in turn (and in theory) boost the market value of Neverland. According to the Los Angeles Times, it was Barrack who called his friend Anschultz to pitch the idea of Jackson’s comeback concert series. After all, AEG was behind other megastar shows like Celine Dion’s concert run in Las Vegas.
In all, AEG has reportedly invested more than $30 million in Jackson’s comeback that will never be. Judging by the throngs holding vigils for Jackson, Neverland still has obvious potential to pay off as a kind of Graceland (i.e., a museum for Jackson devotees) if Barrack decides to go that route. And speaking of Graceland, it’s also the case that Elvis Presley sold more records in the six months following his death in 1977 than he had over the previous decade. And, yes, Presley’s daughter was married to Jackson briefly wasn’t she?
Anyway, people will speculate for years about whether Jackson’s London concerts would have worked or even happened had he lived. One person close to Jackson said that he did a full rehearsal of the show on Wednesday night, but wasn’t feeling well when he got home. AEG is just the latest — and last — Jackson business partner to be left with something of a mess to sort out. But there is an unmistakable irony in this tragedy: In death, Jackson’s long-awaited comeback looks to already be well underway.
Chrysler’s bankruptcy lasted just six weeks, but its next test — operating as a Fiat SpA-controlled company — arguably will last longer.
The road ahead for Chrysler Group LLC remains a rocky one, analysts say, despite being saved from liquidation by Fiat of Italy.
Benefits of the partnership, such as sharing vehicle platforms and dealership networks, won’t surface until mid-2011, when the first vehicles using Fiat platforms arrive at U.S. dealerships, according to one analyst’s timeline.
Until then, the alliance must figure out how to endure a dire market without a strong portfolio of new products. It also must implement its plans to make and sell Fiat vehicles in the U.S.
"The next couple of years are going to be about figuring out the difference between the idea and reality," said Stephanie Brinley, a Troy, Mich.-based analyst for auto consulting firm AutoPacific.
Already, the automaker has taken sweeping steps: It laid off workers, cut production and announced plant closures — including both assembly plants in Fenton — to restructure and survive. It has a new leader, Fiat Chief Executive Sergio Marchionne, who spearheaded a turnaround at the Italian automaker in recent years.
But Marchionne and Chrysler still face worrying obstacles:
— Tumbling sales caused by the global recession and tight credit.
— Consumers’ negative perception of a bankrupt company.
— An aging product line with few new products in the pipeline until the Fiat-based vehicles arrive.
Those issues will push Chrysler’s U.S. market share below 5 percent in the next 12 to 15 months, predicted Erich Merkle, president of Autoconomy.com in Grand Rapids, Mich.
Chrysler had a 13.6 percent market share in 2005 and was the No. 3 automaker in terms of U.S. market share, according to data from J.D. Power and Associates. The next year, Toyota pushed Chrysler into the fourth spot.
Merkle estimates Nissan and the South Korean conglomerate of Hyundai-Kia Automotive Group will outpace Chrysler’s U.S. market share in the next six months. That could push Chrysler to the No. 7 spot, he said.
"Every time you find a new partner, the product cadence and product pipeline takes a hit," Merkle said of Chrysler’s new alliance.
Chrysler, for its part, contends it has 24 new vehicles in the next four years. Spokesman Rick Deneau declined to say how many of those were new-name products versus redesigned versions of existing models.
In 2010, it will launch completely redesigned versions of the Chrysler 300, Jeep Grand Cherokee, Dodge Charger and Dodge Durango, he said.
Another analyst, Jim Hall, said that for the next few years, Chrysler will need to live off its profitable vehicles — the minivans and the Dodge Ram. Both have had sales challenges.
"They have to play with what they’ve got," said Hall, principal of 2953 Analytics in Birmingham, Mich.
FIAT TURNAROUND
But the automaker will be playing with a new leader, Marchionne.
Marchionne took the helm of Fiat in 2004, when the automaker was at the edge of bankruptcy. By changing its management and elevating younger employees to higher positions, he helped Fiat rebound, said Pierluigi Bellini, an associate director in Milan, Italy, for IHS Global Insight.
"He’s a very strong leader. He thinks very much outside of the box," Bellini said. "He’s very demanding (of those he oversees) but also gives a lot of empowerment to them."
Marchionne also has forged more than two dozen partnerships globally, Bellini added. And it seems he intends to do more: Marchionne told trade publication Automotive News that manufacturers need to make 5.5 million vehicles a year to remain profitable and survive.
Fiat made about 2.4 million vehicles last year among its Fiat, Alfa Romeo, Ferrari, Maserati and Iveco units, according to IHS Global Insight data. Chrysler made about 1.9 million vehicles among its Chrysler, Jeep and Dodge brands.
Bellini expects that Marchionne will continue to pursue alliances.
Just two weeks into his position as the head of the new Chrysler company, he is using a similar shake-up to the one implemented with Fiat.
Earlier this month, on the day Chrysler and Fiat finalized their deal, Marchionne announced changes to the new company’s leadership affordable car insurance. He promoted several Chrysler executives, including Jim Press as his deputy chief executive, but also brought in a few Fiat leaders.
Fiat is "certainly not coming in and taking over," Brinley said, adding that Marchionne kept many responsibilities with North American, not Italian, executives.
A request to talk with Marchionne or one of his executives was not granted. Chrysler spokeswoman Shawn Morgan said the company is not making executives available for interviews.
WHAT’S NEXT
Fiat SpA took an initial 20 percent stake in the U.S. automaker earlier this month. In exchange, the Italian automaker will give Chrysler access to small-car platforms at a time when the U.S. company’s lineup is skewed toward pickups and sport utility vehicles. It also gives Chrysler another inroad to selling vehicles outside North America — a feat the U.S. automaker has struggled to achieve.
For Fiat, the alliance gives it access to Chrysler’s manufacturing facilities and dealership network. Fiat made a strong push in the U.S. market in the 1960s and 1970s but pulled out after distribution and quality problems, according to IHS Global Insight.
"Fiat has been looking for returning to the U.S. with the Alfa Romeo (luxury) brand for years," Bellini said.
Several Alfa Romeo cars are scheduled for the U.S. market in the next few years, according to a research note by IHS Global Insight. Likely plans include:
— The Alfa 169 sedan will be built in Chrysler’s Brampton, Ontario, plant in November 2011 for the 2012 model year.
— The Alfa Romeo GTX will be built at Chrysler’s Jefferson North Assembly Plant in Detroit in July 2011.
— The Alfa Romeo MiTo hatchback will be built at the Belvidere, Ill., plant in July 2011.
Some Chrysler products — like the Dodge Caliber and Jeep Liberty — likely will be built on Fiat-based platforms, the research note said.
The only Fiat-badged model to be sold in the U.S., the Fiat 500 subcompact, will be made at Chrysler’s Toluca, Mexico, plant starting roughly in July 2011, according to IHS Global Insight.
Chrysler’s Deneau said Marchionne told employees a few weeks ago that product plans for the Chrysler-Fiat alliance could be unveiled in 60 to 90 days. He could not provide details about specific vehicles.
Deneau also wouldn’t comment on IHS Global Insight’s report of the mid-2011 timeline for Fiat-based vehicles to be sold in the U.S.
But before those car designs come to the U.S., Fiat and Chrysler will have to address differences in federal vehicle regulations and pricing structures.
"Europeans are willing to pay more for small cars (than Americans), and they’re willing to pay for features in small cars," Brinley said.
Several analysts said American car shoppers may not eagerly embrace the Fiat products for several reasons. First, the reputation of poor quality that Fiat left in the U.S. may dissuade consumers from returning to the automakers’ brands, analysts said.
Second, analysts question whether the U.S. government, and not consumer demand, is leading the push for smaller cars on U.S. roads.
"The U.S. is not (a big market) for small, compact cars," even if gasoline prices go higher and the government implements higher fuel regulations, Bellini said. "I still think the American people like big cars, maybe with smaller engines."
Whether Fiat can sell these smaller vehicles in the U.S. is difficult to gauge.
And some say the Fiat alliance won’t accomplish Chrysler’s most important goal: saving it from an eventual breakup.
Merkle said he was glad a bankruptcy judge approved the alliance because it gives Chrysler a chance to wind down operations versus a quick liquidation.
A possible scenario, he said, is Fiat selling off the Jeep and pickup brands, while keeping some Chrysler plants open to produce its own products in North America.
"I take no pleasure in saying that because I love the Chrysler (brands)," he said. "I just don’t see how they get through this."
A federal appeals court upheld a 2-year-old ban on Monsanto Co.’s genetically modified alfalfa in a case a biotech food opponent calls a "turning point" in the regulation of such crops.
The ruling by the 9th U.S. Circuit Court of Appeals on Wednesday leaves Creve Coeur-based Monsanto with two options. It can appeal the case to the U.S. Supreme Court or hope for regulatory approval after the Agriculture Department completes a comprehensive environmental review.
"The ruling is disappointing, both to our company and the growers," said Garrett Kasper, a Monsanto spokesman.
However, Monsanto said a dissenting opinion by one of the three judges provides a "sound argument" if the case is appealed to the Supreme Court.
Monsanto got regulatory approval for biotech alfalfa in 2005. A year later, two alfalfa-seed farms and a coalition of environmental groups sued the government, challenging the decision to approve the crop without
requiring an environmental impact statement.
The groups cited concerns that conventional and organic alfalfa could be contaminated through cross-pollination, preventing crops from being sold. They also claimed biotech crops have led to overuse of herbicides and given rise to "super weeds" resistant to glyphosate, the active ingredient in Roundup.
A U.S. District Judge in San Francisco issued an injunction that banned the planting of biotech alfalfa after March 30, 2007. By then, more than 260,000 acres of the Roundup Ready alfalfa had been planted payday loans in one hour.
Monsanto intervened on the government’s behalf after the injunction, joined by Forage Genetics Inc., an alfalfa breeder that licensed the technology.
Nationwide, 23 million acres are devoted to growing alfalfa, most of which is used as animal feed.
But biotech opponents say the case is much broader because it marks the first time a thorough environmental review has been required for regulatory approval of a genetically modified crop.
Such a study will help regulators and the public understand any risks associated with crops that are genetically engineered to help farmers ward off weeds and pests, they say.
"This is a major victory for the public, for farmers and for the environment," said George Kimbrell, staff attorney for the Washington-based Center for Food Safety, a plaintiff in the case.
A draft copy of the environmental study on genetically modified alfalfa is expected later this year, according to the Agriculture Department. That will be followed by a public comment period and a final report.
Monsanto is still hopeful for government approval of Roundup Ready alfalfa and believes the results of the environmental impact statement could help with future reviews of new biotech crops.
Meanwhile, a lawsuit challenging the government’s approval of Monsanto’s Roundup Ready sugar beets is pending.
When Ponzi scheme mastermind Bernard Madoff is sentenced on Monday, he’ll be sent to a real prison with real bars and violent offenders, not a "country club" for white collar crooks, consultants say.
Madoff, age 71, faces a maximum sentence of 150 years in the federal prison system. This is based on his confession to 11 felony counts for orchestrating the largest Ponzi scheme of all time. For decades, Madoff stole billions of dollars from thousands of victims, while masquerading as a legitimate businessman through his investment firm.
The length of Madoff’s maximum sentence, which is based on the sweeping magnitude of his crimes, gives him an incentive to escape and virtually ensures that he’ll be sent to a prison instead of a minimum-security camp, according to prison consultants.
"Madoff, he’s not going to a camp, ever," said Larry Levine, founder of Wall Street Prison Consultants and a former inmate of the federal prison system. "His sentence is too long, so he becomes a flight risk. And then it gets into the severity of his crime. If you have more than 10 years, you can’t get a camp."
No camp for Madoff
Camps are generally preferred by convicts, because they’re deemed as safer, with fewer restrictions, consultants said.
"Prison camps are open facilities," said Alan Ellis, an attorney, prison consultant and author of the "Federal Prison Guidebook." "They are not surrounded by a fence. They generally house first-time offenders, non-violent offenders, people who are not going to be troublemakers."
Larry Levine speaks from first-hand experience. During his 10-year sentence for ties to organized crime, he said he served in 11 federal facilities, including high, medium and low security prisons, and minimum-security prison camps.
He said his favorite facility was Federal Prison Camp Nellis, on an air force base near Las Vegas. That’s where Martha Stewart’s co-conspirator in insider trading, Peter Bacanovic, served five months. The facility has since closed.
Madoff will most likely serve time in a medium-security prison, consultants believe — his non-violent history will keep him out of maximum-security, but his sentence is too long to justify low-security.
Madoff’s next home
Madoff’s lawyer, Ira Lee Sorkin, would not comment on whether he’ll request a specific prison for his client. The Federal Bureau of Prisons has the final say in such matters. BOP spokeswoman Felicia Ponce said the bureau tries to place inmates within 500 miles of their families, but she would not comment on where Madoff will be sent.
But Alan Ellis believes Madoff will probably land in one of the closest medium-security prisons to his family in Manhattan, where he lived in a $7 million apartment until his March 12 guilty plea. Since then, he has been incarcerated in the Metropolitan Correctional Center in lower Manhattan, a temporary federal facility, prior to his prison transfer paydayloan.
Ellis identified the most likely prisons for Madoff’s term as Federal Correctional Institution Otisville, about 70 miles northwest of New York City, and FCI Fairton in nearby New Jersey. He said that Madoff might also be sent to FCI Ray Brook in upstate New York and FCI McKean in northwestern Pennsylvania. All are medium-security.
In a medium-security prison, prisoners are fenced behind a double-layered razor-wire perimeter with electronic detection systems, according to Felicia Ponce of the BOP. Inmates share cells, which are closely monitored after lights-out by patrolling officers, she said. They are subject to cell searches and pat-downs in the near-constant search for weapons and other contraband. They work menial jobs, often in kitchens or laundry rooms, where they are paid 12 to 40 cents an hour.
Madoff’s prison survival strategy
"You’re going to find a lot of people in medium who have a violent background," said Ellis, noting that the top concerns of his soon-to-be-incarcerated clients are "fear of prison assault" and "fear of the unknown."
Levine said that Madoff might be targeted by other prisoners as "an economic terrorist" and blamed as a general scapegoat for the financial woes of family members on the outside, even if they had nothing do with his Ponzi scheme.
"There will be people who think that Bernie can give them stock tips, but I don’t see anyone being his big pal," said Levine. " I believe he’ll be treated like an outcast."
Levine said that Madoff should always "maintain high visibility" as a security precaution.
"Try to stay in an area where there’s a lot of people watching you, where the guards are watching you," Levine said, when asked what his advice would be for Madoff. "Do not become confrontational with anybody. Respect people; be polite. Don’t borrow anything from anyone. Don’t become beholden to anyone."
If Madoff feels that he’s in danger, then he can report the threat to correctional officers and request protective custody, said Ponce. If that happens, he would be separated from the general inmate population and put into a special housing unit while the prison staff investigated his claims, she said.
In this regard, Madoff’s fame — or infamy — might actually help keep him out of danger, the consultants said.
"If he gets assaulted while he’s in there, that’s big news, and the BOP hates publicity," said Levine. "If anything comes down on Madoff, it’s going to come down on the warden."
The outspoken head of a U.S. Congressional watchdog panel will strongly urge lawmakers on Wednesday to set up a new government agency to protect consumers from “tricks and traps” set by banks.
President Barack Obama has called for creating an independent financial products agency to oversee consumer lending as part of his sweeping proposal to overhaul the U.S. financial regulatory system.
“We can help fix the broken credit market. And I can sum it up in four words: Consumer Financial Protection Agency,” said Elizabeth Warren, chairman of the Congressional Oversight Panel of the Troubled Asset Relief Program, in prepared remarks.
Warren, who is a professor at Harvard Law School, will be the marquee witness at a House of Representatives committee hearing on Wednesday looking at a key provision of Obama’s broad plan to drag the aging U.S. financial regulatory system into the 21st century.
The provision to establish a financial protection agency for consumers “will be carried out,” Senator Jack Reed, chairman of the Senate securities subcommittee, said in an interview with Reuters Television on Tuesday.
“Definitely you have to have a consumer protection agency,” he said, echoing vows made in recent days by Obama and by Senate Banking Committee Chairman Christopher Dodd on a proposal that is meeting more criticism from business interests than perhaps any other part of the Obama plan.
Congress is only beginning to delve deeply into the plan, a far-reaching response to the severe banking and capital markets crisis that has rocked economies around the world. The European Union is eyeing similar reforms.
One issue in the crisis was the enormous debt shouldered by Americans in a real estate bubble fueled by subprime mortgages that many borrowers could not afford and did not understand, a factor that contributed to a huge spike in foreclosures that has helped drag the United States into recession health insurance.
Ending such lending practices is a key goal of the reforms being proposed by Obama and backed by congressional Democrats.
WARREN SEEN HEADING AGENCY
Warren, in her remarks to be given before the House committee led by Democratic Representative Barney Frank, cited studies and said that most consumers don’t understand the terms underlying credit cards, mortgages, payday loans, tax refund anticipation loans and credit scores.
“The broken credit market has put American taxpayers on the hook for billions in subsidies and trillions in guarantees to shore up our largest financial institutions. … If we do not fix this, we will be hurt again and again,” she said.
A financial protection agency would help consumers make better decisions for themselves, she said.
Warren said that banking has changed over the years, from an old model that she called “simple and effective: consumers shopped around for products and terms, and lenders evaluated the creditworthiness of potential borrowers before making loans.
“Today, the business model has shifted. Giant lenders ‘compete’ for business by talking about nominal interest rates, free gifts and warm feelings, but the fine print hides the things that really rake in the cash. Today’s business model is about making money through tricks and traps,” she said.
General Motors owes hundreds of millions of dollars to major suppliers who have never made an auto part, rubber tire or sheet of steel — and they’re not likely to get paid anytime soon.
GM is on the hook for more than $100 million for advertising it purchased before filing for bankruptcy earlier this month. The list of utilities who are GM creditors takes up 80 pages in its bankruptcy filing.
Among the company’s top 50 creditors, 10 are outside the auto or transportation industries. GM owes these firms just under $250 million. But they may have to take a back seat in the bankruptcy process.
While virtually all of the auto parts makers who work with GM are being declared "critical vendors," which allows them to receive their next payments by July 2, GM’s other suppliers are not guaranteed payments anytime soon. The company cannot make payments to them without approval from the bankruptcy court.
"This is affecting many many different industries, far more than people realize," said Heidi Sorvino, head of the bankruptcy practice in the New York office of law firm Smith, Gambrell & Russell, who is representing some of GM’s suppliers.
GM’s transportation suppliers, such as railroads CSX (CSX, Fortune 500) and Union Pacific (UNP, Fortune 500) also have critical vendor status. So do a handful of its major suppliers from outside the auto or transport industries, such as technology giant Hewlett Packard (HPQ, Fortune 500) and telecommunications provider AT&T (T, Fortune 500). (See correction below.)
HP is owed $17 million, just a bit less than the money it owes those two railroads combined, while AT&T is owed more than is due to U.S. Steel (X, Fortune 500) or any other steelmaker.
But even some of the vendors not granted critical vendor status will have their pre-bankruptcy bills paid, although not as fast at those with critical vendor status.
The lucky vendors are those that will have a continued business relationship with GM after it emerges from bankruptcy. They are likely to eventually get paid for their services once they renew their contracts. But they may have to wait months before doing so.
Media buying firm Starcom Mediavest Group is GM’s largest vendor creditor cash advance no faxing. It is owed $121 million for ad time and space it purchased on GM’s behalf. That’s about $11 million more than what GM owes Delphi, its largest auto parts supplier.
Several of these big vendor creditors outside the auto industry had no comment about when they expected to be paid by GM.
Of course, none of these major companies are likely to face a cash crunch if GM doesn’t pay them in a timely fashion. But for many other vendors, delayed payments could be a matter of corporate life and death.
"If you’re a small supplier, and you live hand to mouth, you need that check," said Sorvino. "You have your own operating expenses, payroll and leases."
GM does not break down in its bankruptcy filing how much it owes to critical versus non-critical vendors. But the company owed $18 billion to vendors worldwide as of March 31. That means a lot of suppliers probably won’t get paid next month.
Sorvino said she expects widespread bankruptcies of smaller GM vendors. That could lead to many workers losing their jobs who didn’t even realize they were depending on GM for their livelihood.
Worse off are suppliers who do not have a continuing contract relationship with GM, but are currently owed money. Even if these firms do work with GM again in the future, their previous bills make them unsecured creditors. So they will be lucky to get pennies on the dollar on what’s owed to them — and probably not for at least another year.
GM spokesman Dan Flores said the company has done what it can to help vendors, particularly auto parts suppliers who depend on GM to stay in business.
"Unfortunately through this process there are suppliers that do not fall into that [critical vendor] category," he said. "However, we are continuing to work with them as much as we can."
StormHarbour Partners LP, a firm founded by former Citigroup Inc bond trading executives Antonio Cacorino and Fredrick Chapey, has hired 50 traders and bankers from larger financial firms, the Wall Street Journal said.
The hires include about 20 from Citigroup, as well as others from JPMorgan Chase & Co, Goldman Sachs Group Inc, Bank of America Corp and Carlyle Capital Corp, the paper cited StormHarbour as saying.
StormHarbour has also hired Robert Cummings and Sohail Khan from Citigroup, John Stomber from Carlyle and Chris O’Connor, who used to work at Bear Stearns Cos, according to the paper free business card.
“What we’re looking to do is to build a global markets firm,” Chapey told the paper.
The firm started advising clients on bond trades in June and aims to help investors and bond issuers buy and sell bonds that are hard-to-value, according to the paper.
StormHarbour could not be immediately reached for comment by Reuters.
(Reporting by Ajay Kamalakaran in Bangalore, Editing by Ian Geoghegan)
NYSE Euronext said it had signed a deal with Depository Trust & Clearing Corp (DTCC) to form a joint venture for clearing U.S. fixed income derivatives.
The new clearing house, New York Portfolio Clearing, will combine the NYSE Euronext’s U.S. futures exchange and DTCC’s Fixed Income Clearing Corp to offer risk management, clearing and settlement efficiencies for U.S. fixed income securities and derivatives.
NYSE Euronext, the world’s top exchange operator by the size of its listings, said it planned to commit a $50 million financial guarantee as an additional contribution to back the NYPC default fund same day payday loans.
The New York Stock Exchange parent company said the joint venture has been approved by both companies and was expected to be operational in the second quarter of 2010.
The company has also named Dennis Dutterer as interim chief executive of the new clearing house. NYSE Euronext’s shares closed at $27.08 Wednesday on the New York Stock Exchange.
(Reporting by Chakradhar Adusumilli in Bangalore; Editing by Dan Lalor)
NYSE Euronext said it had signed a deal with Depository Trust & Clearing Corp (DTCC) to form a joint venture for clearing U.S. fixed income derivatives.
The new clearing house, New York Portfolio Clearing, will combine the NYSE Euronext’s U.S. futures exchange and DTCC’s Fixed Income Clearing Corp to offer risk management, clearing and settlement efficiencies for U.S. fixed income securities and derivatives.
NYSE Euronext, the world’s top exchange operator by the size of its listings, said it planned to commit a $50 million financial guarantee as an additional contribution to back the NYPC default fund cash advance no faxing.
The New York Stock Exchange parent company said the joint venture has been approved by both companies and was expected to be operational in the second quarter of 2010.
The company has also named Dennis Dutterer as interim chief executive of the new clearing house. NYSE Euronext’s shares closed at $27.08 Wednesday on the New York Stock Exchange.
(Reporting by Chakradhar Adusumilli in Bangalore; Editing by Dan Lalor)
WASHINGTON–U.S. President Barack Obama wants to strengthen the government’s authority over financial institutions in a sweeping attempt to modernize a regulatory latticework that failed to detect early signs of a worldwide crisis.
The president was to detail the administration’s overhaul plan on Wednesday, recommending new powers for the Federal Reserve; a new consumer protection agency to govern lending and credit; and new rules that would reach into currently unregulated regions of the financial markets.
An 85-page draft of the administration’s plan details an effort to change a regulatory regime that Obama’s economic team maintained had become too porous for the innovations and intricacies of the today’s financial markets.
With Congress already embroiled in health care legislation, Obama has set an ambitious schedule, pushing lawmakers to adopt a new regulatory regime by year’s end.
Obama said Tuesday his administration was going to put forward “a very strong set of regulatory measures that we think can prevent this kind of crisis from happening again.”
Meanwhile, Christina Romer, chairman of the White House Council of Economic Advisers, said Wednesday morning the administration’s proposal strikes "the appropriate balance" and that it was "not bulldozing the whole system.”
But House Republican Leader John Boehner differed with that assertion, predicting "we’ll have the federal government deciding what interest ought to be charged on credit cards, having the government decide what kind of financial products are available,” the Ohio Republican said.
"I think it’s just going to be too big of a foot on an industry that already is having financial problems," Boehner said in an appearance on ABC’s "Good Morning America." Appearing on the same program, Romer insisted that wholesale regulatory change is crucial to overall economic health, saying that in the past "there were gaps, there were failures, in our regulatory system, and we need to make it better.”
The financial sector and lawmakers from both parties concede the need for significant changes in the rules that govern the intricate and interconnected world of banking and investment. But the details of Obama’s proposal already are facing resistance, signaling a tough sell for a president who is spending major political capital on his health care overhaul.
Under Obama’s plan, the Fed would gain power to supervise holding companies and large financial institutions considered so big that their failure could undermine the nation’s financial system. But even as it gains new powers, the Fed also would lose some banking authority to a new Consumer Financial Protection Agency.
Obama’s proposal would require the Fed, which now can independently use emergency powers to bail out failing banks, to first obtain Treasury approval before extending credit to institutions in "unusual and exigent circumstances.”
The expanded Fed role and the new consumer regulator are likely to be the two main political flash points in the administration’s proposal. Many bankers oppose a new consumer protection regulator and many lawmakers worry the Fed could become too powerful. Friction over those points could slow any major overhaul.
Besides having the Federal Reserve supervise "systemically significant" institutions, Obama will recommend a council of regulators, which would include the Fed, to monitor risk throughout the broader financial system creditreport. The arrangement is designed to prevent crashes like those that felled AIG and Lehman Brothers.
In conjunction with the Fed’s authority over large financial institutions and the new consumer agency, Obama also will propose:
– Additional protections for investors, including greater disclosure by hedge funds; regulation of credit default swaps and over-the-counter derivatives that previously operated outside of government oversight; and new conditions on brokers and originators of asset-backed securities.
– A system for the orderly disposition of any troubled, interconnected firm whose failure poses a risk to the entire financial system, together with rules that insist that financial institutions hold more capital to avoid over-leveraging.
Obama’s plan does not attempt major consolidation of turf-conscious regulatory agencies and does not inject itself into an ongoing debate over whether to bring some insurance companies under federal oversight.
"We don’t want to tilt at windmills," Obama said on CNBC.
Obama’s decision to create a consumer agency comes amid criticism that mortgage lenders and credit card companies have taken advantage of unwitting customers and saddled them with debt.
The new regulator would have the power to demand that customers have the option of simple financial products, to impose fines and to allow states to pass laws that are stricter than the federal standards. Consumer protections are now spread among various state and federal authorities, including the Fed, the Securities and Exchange Commission, the Federal Trade Commission and banking regulators.
Financial lobbyists rallied against the new agency, saying it’s impossible to separate bank regulation from oversight of the products they offer.
"We’re supposed to be trying to plug holes and connect dots” with the regulatory overhaul, said Scott Talbott, top lobbyist with the Financial Services Roundtable. "The consumer regulator idea moves in the opposite direction.”
Sen. Chuck Schumer, D-N.Y., called the new consumer products agency "the cornerstone of regulatory reform." The Fed and other banking regulators, he said, were too focused on the "safety and soundness" of the institutions they oversee, and "did not do a very good job of protecting consumers.”
Rep. Bill Delahunt, a Massachusetts Democrat who has helped write a consumer protection bill in the House, said: "Here we are just beginning to extract ourselves from this mess that was on the cusp of total collapse, and the banks don’t want further regulations. Give me a break.”
The administration will also have to use its political skills to strengthen the Fed. While Democrats generally agree with a need for regulatory changes, many oppose a Fed with expanded powers.
Democratic Sen. Christopher Dodd of Connecticut, chairman of the Senate Banking, Housing and Urban Affairs Committee, has advocated an alternative plan to strip the Fed of its regulatory role entirely and create a new consolidated bank regulator that would assume the roles that the Fed and Federal Deposit Insurance Corp. now play in helping regulate state-chartered banks.
Dodd, however, is a strong proponent of a consumer protection agency and is likely to champion that component of Obama’s plan.
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