The problem bank list is just about the only part of the industry that’s growing right now.
The sector’s financial problems, outlined by regulators in excruciating detail on Thursday, could speed a shakeout that already has slashed banks’ ranks by almost half over two decades.
"We could end up with a couple thousand fewer banks within a few years," said Terry Moore, managing director of consulting firm Accenture’s North American banking practice. "You could say we’re overbanked right now."
The Federal Deposit Insurance Corp. said Thursday that U.S. banks lost $3.7 billion in the second quarter. Bad loans are growing faster than institutions are setting aside in reserves for future losses, while total lending has declined for four straight quarters.
The list of troubled institutions — those deemed to pose at least a "distinct possibility" of failure — rose by more than a third during the second quarter, to 416. The FDIC doesn’t reveal the names of banks on the problem list.
Anticipating rising costs of dealing with troubled banks, the FDIC on Wednesday formalized new rules for private equity firms and other investors buying failed banks. There has been a heavy trade in failed banks lately, given that 81 institutions have been closed in 2009 and dozens more are expected to be shut over the next year.
The quick pace of failures has already rewarded some prescient bankers.
"We were preparing for this moment for maybe two and a half years," said Norman C. Skalicky, CEO of Stearns Bank, a closely held St. Cloud, Minn., institution that has acquired four banks from the FDIC this year. "The biggest mistake we made was not getting ready a year earlier."
Bank failures aren’t the only driver of consolidation. While bank mergers fell to 89 in the first half of 2009 from their recent peak of 153 in the first half of 2007, growth-minded banks such as First Niagara (FNFG) in Lockport, N.Y., are looking for opportunities to expand.
"We are always working with our eyes wide open," said John Koelmel, CEO of First Niagara, which last month announced the acquisition of Harleysville National (HNBC) of Philadelphia. "Our shopping cart isn’t full."
The shopping spree ahead — Moore says the U.S. could lose 2,000 banks by the end of 2012 — is likely to claim some well known regional banks.
Colonial BancGroup of Alabama and Guaranty Financial Group of Texas have failed over the past month. Chicago condominium lender Corus Bankshares (CORS) has been on death watch for some time.
Judging by stock prices, investors are still questioning the prospects of KeyCorp (KEY, Fortune 500) of Cleveland, Marshall & Ilsley (MI) of Milwaukee and Regions Financial (RF, Fortune 500) of Alabama.
But the bulk of consolidation is likely to come at the expense of smaller banks, whose numbers have been dwindling for decades in the face of deregulation and technological advances that disproportionately aided bigger competitors.
The number of banks with less than $100 million in assets has dropped by more than 5,000 since 1992, according to a study released this year by banking consultancy Celent.
Even more pronounced has been the small banks’ loss of deposits. Small banks’ share of the U.S. deposit market plunged to 2% last year from almost 13% in 1992, according to Celent data.
"The world is only getting more complex," Celent analyst Bart Narter wrote, noting ever-increasing regulatory paperwork and new businesses such as Internet banking. "Small banks are overwhelmed."
That said, small banks aren’t going away. Policymakers such as FDIC chief Sheila Bair have emphasized their importance in lending to small businesses, and studies have found they tend to pay better deposit rates than bigger rivals. The FDIC on Wednesday extended a program that some community bankers credit with helping them to compete with the biggest banks.
And the smallest banks have generally performed better during the financial crisis than their bigger rivals. Banks with less than $100 million in assets make up more than a third of the FDIC’s problem bank list, but have accounted for just 11 of 81 bank failures so far this year.
Like their bigger rivals, community banks are now enjoying stronger profit margins in the second quarter, as the spread between the rates banks pay depositors and those they charge to lend to borrowers widened.
"This is good news for community banks, since three-fourths of their revenues come from net interest income," Bair said Thursday.
A recent column advocating a fiduciary standard for all financial advisers — meaning always putting the client’s interests first — prompted a spate of questions about how to make sure advisers adhere to such a standard.
I’ll discuss that and also how to find an adviser who can help you even if you don’t have a lot of money.
First, we need to know this:
— Registered investment advisers, or RIAs, who are regulated by the U.S. Securities and Exchange Commission and/or the states where they do business, must legally adhere to the fiduciary standard.
— Advisers who’ve earned the certified financial planner (CFP) designation, conferred by the independent group Certified Financial Planner Board of Standards, also are expected to act as fiduciaries based on their code of ethics (the same person can be an RIA and CFP).
— Stockbrokers, who fall under the jurisdiction of the industry group Financial Industry Regulatory Authority, are not held to the fiduciary standard. "Dually registered" brokers who are also RIAs must legally act as fiduciaries when giving investment advice but don’t have to when selling products as brokers.
Being held to a fiduciary standard, however, is no guarantee the standard will be followed. It’s up to you to ask questions.
"The adviser should be willing to state in writing his or her status as a fiduciary," said Knut Rostad, a member of the Committee for the Fiduciary Standard, a group of a dozen prominent investment advisers.
Also ask the adviser to explain, as part of a written "investment policy statement," how he performs "due diligence" before picking an investment and how investments will be monitored.
"If an adviser cannot articulate this, that’s a red flag," Rostad said. The adviser should also fully disclose and resolve, in the client’s favor, all unavoidable conflicts car loan.
Say your adviser is paid, as it is common, based on "assets under management" or a percentage of the money you invest. You ask whether you should pay down your mortgage. The adviser must give you his best recommendation while disclosing his conflict: Paying down the mortgage will reduce the amount you invest and lower his compensation.
You can find other questions to ask advisers at the Certified Financial Planner Board of Standards website. Among them: What services do you offer? How will I pay for your services? Could anyone besides me benefit from your recommendations? Go to www.cfp.net and click on "Learn about financial planning."
The best planner in the world can’t help you, however, if you cannot afford him or her. Most fee-only fiduciary advisers charge about 1 percent of assets under management "and cannot make a living" advising the 80 percent of Americans who have a net worth of less than $250,000 including the value of their home, said Robert Schumann, a certified financial planner with Cambridge Financial Advisors LLC in Colorado.
Some advisers who charge by the hour provide "as needed" services to those who can’t afford or don’t need an ongoing relationship. Still, I agree with Schumann that most Americans may not afford or be willing to pay the hourly fees of $150 or more these planners typically charge.
An option worth considering — one I believe will become more prevalent — are Internet-based, fee-only fiduciary registered investment advisers such as People’s Financial Advisor (www.peoplesfinancialadvisor.com), developed by Schumann.
While never as good as face-to-face advice from a trusted fiduciary, they beat hucksters pushing commission-laden products for their benefit, not ours.
ST. LOUIS — The Avalon Theater, dark for a decade and fallen into severe disrepair, is for sale — for $1 million, as is.
Bjaye Greer, listing agent for the property for the Realty Exchange, said that SOPO Corp. put the property up for sale last month. Some clarification of the building’s ownership still needs to be resolved in court, but Greer hopes a redeveloper or preservationist will soon buy the old theater, in the South Kingshighway commercial district near Chippewa Street.
Greer said the 8,500-square-foot building could be sold for renovation and adapted reuse or torn down for redevelopment.
"That’s up to whomever buys it and what they are able to do within city and zoning parameters," Greer said. The entire lot is about 25,000 square feet.
"It was a beautiful building and supposedly one of the best Art Deco buildings in St. Louis to save," Greer added. "I was hoping someone could restore it and save it. But I also know that the area is a real prime spot for redevelopment."
The area around the Avalon, 4225 South Kingshighway, was once a hub of south St. Louis activities, a destination for shoppers as well as moviegoers. The theater opened in 1935 as one of St. Louis’ "movie palaces."
Now, the building is missing large sections of the shingled roof and has a barricade instead of a box office. The property is now condemned, cited scores of times by the city for building code violations.
LANDMARK STATUS?
The Landmarks Association of St. Louis last spring put the theater at the top of its list of most-endangered historic properties. Many neighbors see it as a significant neighborhood landmark that should be preserved.
Others call it an eyesore and a threat to the health and safety of the neighborhood. They want it torn down as soon as possible.
The area’s alderman, Stephen Gregali, believes the building is probably doomed. He called the theater a "a never-ending story."
"I’d like to see some venue there, but we have made numerous attempts," he said. "We’ve tried to take it off their (the owners) hands, but they blew us off."
Gregali said the city also offered business assistance.
"Since the building has deteriorated, we may have no alternative but to tear it down," Gregali said. "The last time I was in the building 18 months ago, I had to wear a mask and a hat — the mold is that bad. It’s like ‘The Blob’ movie come to life.
"It’s really a shame because other than the Chase and Moolah and Hi-Pointe, we don’t really have movie theaters in the city. I have had theater and club groups approach me … but unfortunately, they want the building for nothing."
Richard Dempsey, an attorney representing SOPO, could not be reached for comment.
The attempt to sell the building is proceeding even though the building is the subject of a suit filed by the city in May in St. Louis Circuit Court.
The suit seeks to clarify the property’s ownership.
That is complicated because SOPO Corp., which has owned the theater since 1977, has been defunct since 1983, and its last known principals, Constantin and Kay Tsevis, are deceased.
"We don’t believe anybody has clear title to the Avalon Theater so we’ve asked the court to assign somebody to speak for the defunct corporation and take the necessary steps to transfer title to an actual person or valid legal entity," said Erika Zaza, an assistant city counselor.
Zaza said that at the city’s request, Circuit Judge Robert H. Dierker last month appointed one of the Tsevises’ heirs, Larry Tsevis, as the trustee to act on behalf of SOPO. His role will be to distribute assets to shareholders, or wind down the business. That will require the probate estate to be reopened. Once the probate matters are clarified, city officials say, there should be a clear title, allowing for the sale.
Also the city would have a legal owner that would be responsible for the current condition of the property. City officials said they wanted to make sure there was a clear title and if necessary they want to be able to hold the owners responsible for any neglect.
Dierker will hold another hearing on the matter on Sept. 14.
National home prices may be on the road to recovery.
After three years of declines, home prices increased 2.9% in the three months ended June 30, according to the latest S&P/Case-Shiller report. That is the first quarter-over-quarter improvement in three years.
Prices in the national index are down 14.9% compared with the second quarter of 2008, the report said. But that is better than the record 19.1% decline that was set in the first three months of 2009.
"We’re seeing some positive signs," says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s.
The Case-Shiller 20-city index rose quarter-over-quarter by 1.4% but fell 15.4% year-over-year. Still, that was a smaller loss than analysts were predicting: A consensus of experts compiled by Briefing.com had forecast a 16.4% drop
"This is great news; prices may be starting to grow again" said Pat Newport, a real estate analyst for IHS Global Insight. "Three independent sources, the National Association of Realtors, the Federal Housing Finance Agency and Case Shiller are showing price improvement."
Providing a boost
The slide may be over partially because prices have reached affordability levels not seen in a generation, drawing many buyers into the market.
Helping housing markets, too, is the government economic stimulus effort, which includes an $8,000 first-time homebuyers tax credit. That added discount has spurred many entry-level buyers into homeownership.
The rebound may mean that potential homebuyers will have more of a feeling of urgency, afraid that they’ll miss the market bottom.
That’s already happening in some of the markets that had gone through steep price declines over the past few years, such as the area east of Los Angeles that went through a severe boom and bust cycle. Home sales there are now booming again, according to Chuck Whitehead, a Coldwell Banker real estate broker.
"There’s such a frenzy to get in before prices go up again," he said. "Buyers are more concerned about that than about getting the first-time homebuyers tax credit."
Among cities, Cleveland reported the biggest rebound; prices improved by 9.8% compared with the first quarter of 2009. Dallas prices rose 6.5% and San Francisco 5.9%. Prices declined in seven cities, including 7.8% in Las Vegas, 2.2% in Miami and 1.2% in New York.
Warning signs
Despite the upbeat report, Robert Shiller, one of the principle authors of the Case-Shiller index, expressed caution, pointing out that last year’s turnaround quickly fizzled out.
In early 2008, prices were falling 3% a month. That improved to -0.5% a month in the spring, giving the impression that the market would turn around. But prices quickly started falling more steeply again. The same thing could happen again, especially with the economy still in a downspin.
"The really important things [affecting home prices] are unemployment and momentum," said Shiller, who is a Yale economist. "We have momentum, which is very important, but we also have high unemployment."
And, he added, "the government has not yet handled the foreclosure problem."
Increased bank repossessions could unleash of flood of new supply on the market, which could dampen prices. Plus, is also some indication of shadow inventory — repossessed homes the banks are holding onto because they don’t want to flood inventories.
That leads Stuart Hoffman, the chief economist for PNC Financial Services Group (PNC, Fortune 500), to conclude that it’s still a good time to be a buyer.
"Given the tremendous amount of inventory, nearly a year’s worth," he said, "it should continue to be a buyer’s market for a while."
Shiller, too, is relatively optimistic despite being cautious. "I have found that momentum matters," he said, "and this is a sudden break in [downward] momentum. The [market] psychology seems to be changing."
After the mad rush of car sales sparked by Cash for Clunkers, dealers will now find they have plenty of downtime to count their money.
The popular program, which ended Monday, will leave many showrooms without cars to sell or customers looking to buy them.
"We’re definitely going to have a hangover," said Edward Tonkin, vice president of the Ron Tonkin Family of dealerships in Portland, Oregon and vice chairman of the National Automobile Dealers Association.
As of Monday morning, dealers had submitted 625,000 Clunkers applications to the government seeking a total of $2.58 billion, according to the Department of Transportation.
The Department of Transportation said Monday that it would give dealers extra time to file their rebate applications after its Web site for handling the submissions was overwhelmed. The deadline for electronic paperwork submissions has now been set at 8 p.m. ET Tuesday night.
The department said the deadline for dealers would be extended beyond 12 noon Tuesday to make up for time that was lost while the system was down.
After the heady rush of Clunkers sales, the return to normal — especially in a market where "normal" means deeply depressed — may be difficult to deal with.
"I think you’re going to be able to shoot a cannon through here and not hurt anybody," Tonkin said.
In the short run, dealers will see sales drop precipitously, said Jeremy Anwyl, CEO of the auto Web site Edmunds.com.
"I think we’re going to see a decline of about 40% in the immediate aftermath," he said.
That would take sales down to where they were in May, lower than they were in the month or two just before the program started.
Much of the decline will be because dealers don’t have many cars left to sell and, as a result, prices are high.
"This is the first time in years that if someone came and said they were thinking about buying a car, I would tell them to wait," Anwyl said.
Before this, with dealers eager to unload unsold cars, car buyers were paying very low prices for cars, in many cases far below the so-called dealer cost of the car.
Dealers have been having a hard time lately finding cars even for their Clunker buyers to take.
"I am low on everything," said Caroll Smith, president of Monument Chevrolet of Pasadena, Texas.
Many buyers have been forced to take cars with colors and options they didn’t really want, Smith and other dealers said.
Is a brighter day dawning? Automakers have been restarting factories and adding extra shifts to build more cars to refill depleted dealers inventories.
Many analysts were expecting a gradual recovery in auto sales beginning this summer, even before the Cash for Clunkers plan was announced. Those expectations remain.
"Improved consumer confidence and credit availability during the past six months have combined with the CARS program to lift industry sales out of their slumping year-to-date levels, which have been down approximately 35% year-over-year," said Gary Dilts, senior vice president of global automotive operations at J.D. Power and Associates, in a statement.
J.D. Power had been forecasting a late-year lift in sales and still predicts that now.
"Reduced inventories will likely hold back some of this momentum, but the automakers are moving quickly to ramp up production and rebuild stock," Dilts said.
AutoNation, the country’s largest auto dealership chain, also predicts a gradual recovery in sales and thinks the Clunkers program will help boost that recovery.
"We really think that this is just going to help the gradual recovery we’re going to have in the second half of the year," said AutoNation spokesman Mark Cannon.
Beyond the Monday night closing time, the program has still left consumers with the sense that "it’s OK to buy a car now," Cannon said.
"The main question now is ‘How fast can everybody restock their inventories?’" he said.
Once that happens, Anwyl of Edmunds.com said he expects car prices to fall quickly. Automakers will need to start adding incentives again to get people to buy all those newly minted cars. Anwyl expects incentives of about $3,000 on average.
"I would wait until probably November," Anwyl said.
Did buy a new car under the Cash for Clunkers program? Please share the details. What did you buy? What did you trade in? How much did you pay? We want to find out if people have gotten deals out of this program or not. E-mail your story to realstories@cnnmoney.com or send in an iReport and you could be part of an upcoming article. For the CNNMoney.com Comment Policy, click here.
Bernard Madoff, convicted of swindling $65 billion through the biggest-ever Ponzi scheme, has told fellow prison inmates that he is dying of cancer, the New York Post reported on Monday, citing unnamed prison sources.
Madoff, 71, who since June has been serving a 150-year sentence at a North Carolina federal prison, has been telling fellow inmates he does not have much longer to live, the Post said, citing the unofficial and unusual sources.
The Post said there had been speculation that Madoff was suffering from pancreatic cancer earlier this year. Inmates said Madoff was taking “about 20 pills a day” and “not doing very well.”
The Post said Madoff’s lawyer did not return messages Sunday and had previously declined to answer questions about whether Madoff had cancer. Reuters could not reach Madoff lawyer Ira Sorkin immediately for comment.
The tabloid also reported Madoff has engaged in a number of surprising new activities with some unexpected social circles.
A shirtless Madoff has joined weekly “Native American religious purification ceremonies” that involve prayers, heated rocks to induce sweat and smoking from a ceremonial pipe, the paper said.
The paper also reported that various “gangs” at the prison are trying to recruit Madoff while some inmates regularly cook “sandwich wraps” for him at their cells.
(Reporting by Joseph A. Giannone, editing by Maureen Bavdek)
If you’re looking for the most detailed look yet about how banks have used funds from the $700 billion bailout, you’re in luck.
That is, if you are willing to pour through thousands of pages of surveys.
Neil Barofsky, special investigator general of the Troubled Asset Relief Program, released the bailed out banks’ responses to letters he sent them in early February on Thursday.
Barofsky asked them how they used TARP funds and how they are complying with executive pay restrictions. A report on the spending question was released in July, and another on the executive compensation was released Wednesday.
The question of how banks have used their TARP funds has been a source of particular interest among lawmakers and the public, who want to ensure banks are using taxpayer-provided dollars wisely. Many banks have been criticized for not using TARP money to lend to consumers and small businesses who are creditworthy.
The Treasury Department does not require banks who have received the money to show how they are using it, claiming that it is not possible to demonstrate on a bank-by-bank basis.
But banks did shed some light on how they used TARP funds — although not much.
For instance, Bank of America (BAC, Fortune 500), which has received $45 billion of taxpayer funding, said that TARP enabled them to "avoid lending less."
Citigroup (C, Fortune 500), which also received $45 billion of TARP funds, said the bank formed a committee made up of senior executives to review all uses of its federal bailout free credit report and score.
The bank said it has not used the funds to support its expenses, but it has instead used it to support "lending initiatives, financing transactions, … the provision of credit to Citi’s credit card customers and purchases of loans and securities in the secondary market that have the effect of increasing liquidity."
CIT (CIT, Fortune 500), the small business lender whose bid for fresh bailout money recently was rebuffed, said the $2.3 billion in TARP money it has received helped the bank to gain enough capital to become a bank holding company. That status allowed it to raise deposits to fund its financing operation.
As of March 6, when CIT responded to Barofsky, the bank said it originated $1.5 billion of loans, which would not have been created without TARP.
"If we had not received TARP funds at the end of 2008, we intended to significantly reduce or eliminate new lending volumes significantly through 2009," the lender said.
Nonetheless, not even TARP was enough to really help CIT. The company barely avoided bankruptcy after the government refused to give it more funding, CIT was forced to secure a $3 billion emergency loan from bondholders last month.
There’s a reason consumers are worried about protecting their credit- and debit-card information.
The feds said Monday that one alleged master scammer stole data involving more than 130 million credit cards. In fact, Albert Gonzalez may be responsible for the largest case of identity theft on record, according to federal prosecutors.
Meanwhile, other hackers are working their way into the computer systems of major retailers across the country, experts say.
As the bad guys get savvier, identity theft has become more common. Last year, the number of incidents of identity fraud in the United States increased 22% over 2007, according to the most recent survey by Javelin Strategy & Research.
Identity theft occurs when someone uses your information to open credit cards or bank accounts, write bad checks or take out loans. Victims can be left with countless charges, years of bad credit and endless aggravation.
Some 10 million Americans were victimized in 2008, up from 8.1 million in 2007, Javelin said.
"Let’s face it, these scammers are extremely intelligent people," said Bill Hardekopf, CEO of LowCards.com and author of "The Credit Card Guidebook." But, "there are certain things that you can do to protect yourself."
Stop identify theft before it starts
What can you do to keep it from happening to you?
The most effective weapon against identity theft is to safeguard your personal information: birth date, Social Security number and credit card numbers.
Shredding your mail, using unpredictable passwords and secure networks, keeping careful tabs on your bank statements and monthly bills and monitoring your credit report regularly are the best ways to prevent identity theft.
"The key word vigilance," said Linda Foley, founder of the Identity Theft Resource Center affordable car insurance.
Consumers are entitled to one free credit report a year from each of the three credit bureaus — Equifax, Experian and TransUnion. Hardekopf recommends staggering the reports so you’ll get one every four months.
To get your report, go to annualcreditreport.com — the official site set up by the three credit bureaus to comply with federal law.
The three major agencies each offer ID protection services for about $15 a month as well. That includes monitoring your credit report and notifying you of any changes plus a few fancy extras.
Equifax’s ID Patrol searches suspected underground Internet trading sites for your personal information and includes identity theft insurance up to $1 million with no deductible.
Other credit monitoring services are available from your bank. Bank of America’s Privacy Assist service costs $12.99 a month for unlimited credit checks. For $9.99 a month, Chase’s Identity Protection will also reimburse up to $100,000 of identity fraud expenses.
But keep in mind, most services can only warn or insure you against ID theft after the fact. Monitoring services can only throw up red flags at the first sign of trouble and help limit losses, which Foley says is "reactive, not proactive."
Even after paying for credit monitoring and insurance, experts agree that no identity theft prevention service is foolproof.
"As a consumer there is only so much you can do," Foley said. "But you can lower your risk somewhat."
The Obama administration pledged unprecedented transparency in its accounting of the $700 billion bank and auto bailouts (TARP) and the $787.2 billion Recovery Act. A lot of information has been made public but there are some key details where the transparency falls far short.
Here’s what we still don’t know:
They’re important questions: We want the government to ensure it is spending our money wisely, and experts want to know why the Obama administration won’t provide the answers.
"Why are we bailing out banks, and what are we getting out of it?" asked Craig Jennings, senior fiscal policy analyst at transparency research organization OMBWatch. "These are very big questions, and the administration doesn’t seem to be willing to answer them."
What we do know. To make the bailouts and stimulus more transparent, the administration commissioned Web sites like recovery.gov and financialstability.gov, which have given the public previously unattainable information about how taxpayer funds are spent.
"The president and vice president made a clear commitment from the beginning that we would provide unprecedented accountability and transparency," said Liz Oxhorn, the Obama administration’s spokeswoman for the Recovery Act. "Look at recovery.gov and compare it to the standard of how government worked in the past. It is truly a pioneering site in terms of access."
But many analysts and overseers say that the provided information is not nearly enough.
"The administration’s transparency goals clearly have not been reached," said John Clippinger, co-director, of the Berkman Center for Internet & Society at Harvard University. "I think this administration is making a huge effort to enable them, considering where we’ve been in the last eight years, but they’re certainly not there yet."
Accounting for TARP. The Treasury Department states on financialstability.gov that the $204 billion in capital investments in banks are "for stability or lending." But it does not require banks who have received the funds to show how they are using the money.
Special Inspector General for TARP (SIGTARP) Neil Barofsky, and Prof. Elizabeth Warren’s Congressional Oversight Panel (COP) have been outspoken on this issue, and Barofsky even performed his own voluntary survey to show the accounting could be done. Treasury responded that its current method of accounting is sufficient — reporting on broad trends for the top 21 banks’ lending habits.
"We share SIGTARP’s interest in tracking the level of lending by those institutions that have received government investment," a Treasury official said. "To that end, Treasury has released monthly reports tracking how much these institutions are actually lending."
Experts say without deeper digging into the question of "where the money is going," the public will never really know if the program is working: If banks are lending, what do they have to show for it? How has lending improved?
"Are they giving loans just to extremely credit-worthy people? Subprime borrowers? Are minorities able to secure loans?" asked Jennings online payday loans.
Besides "is it working," Treasury also won’t answer how taxpayers’ investments are faring, declining to make public the fair market value for the shares and warrants it holds as a result of TARP. Taxpayers won’t have any way of knowing whether they have lost or gained money on their investments in companies like General Motors, AIG (AIG, Fortune 500), Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500) until after the government sells its stakes.
Digging into stimulus. The accounting of stimulus has been met with less scrutiny, mostly because Congress made it a point to track how every dollar was spent after struggling to get the same information from the TARP program.
Still, the government’s accounting only goes as far as the first tier recipients from the states. For example, say a construction company gets stimulus funds from the state of Nebraska. That company has to report the receipt of those funds to the government, but if they hire a dump truck company and an asphalt company to do the work, that doesn’t get reported.
Why do we care? "It would enable the Obama administration to say there were X amount of businesses that benefited from a particular project, and the government could connect the dots if there is fraud, waste or abuse," said Jennings.
What can be done. Some argue open-source technology is the best solution for both the government and the public.
That is, use the Internet to provide all forms of government data in a very sortable, searchable database, said Clippinger. He argues that if all the data are in one place, with independent eyes looking at it, then the data couldn’t be co-opted, or selectively made available.
"When you get lots of people looking at it, you’ll create better accountability and efficiency," said Clippinger.
That idea is supported by House bill H.R. 1242, backed by Reps. Carolyn Maloney (D-N.Y.) and Peter King (R-N.Y.). The bill would take the reporting out Treasury’s hands, and require the administration to send all data straight into a database.
It’s similar to the model used by recovery.gov, which is run by the independent Recovery Accountability and Transparency Board (Recovery Board), not by the Obama administration, which runs financialstability.gov.
"We’re fully aware of what our name is and what the public expects of us," said Ed Pound, a Recovery Board spokesman. "We’re not going to fall into that trap of not sharing certain information."
In the end, experts say the Obama administration will have to find ways to make a greater amount of data even more accessible to achieve the transparency goals it set out for itself.
"There are other ways of skinning this cat," said Clippinger.
Ford Motor Co. said Thursday it is increasing production over the rest of the year to meet increased demand spurred by the U.S. government’s "Cash for Clunkers" sales incentive program.
Ford said it now plans to build 495,000 vehicles in the third quarter, up 10,000 from its previous forecast. That would mark an increase over year-earlier levels of 18%.
The No. 2 U.S. automaker also set a fourth-quarter production target of 570,000 vehicles, up 33% from year-earlier levels.
The output gains will translate into immediately higher revenues for Ford (F, Fortune 500), the only U pay day loans.S. automaker to have avoided a federally sponsored bankruptcy. Major automakers book revenue when vehicles are manufactured and shipped to dealers.
Are you part of a Detroit-area family with a tradition of working in the automotive industry? If so, Money magazine would like to speak with you for an upcoming personal finance story. Please email your contact information to gmannes@moneymail.com.
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