April 27, 2024

You are here: Home / Archives for wall street journal

Ex-Bank Executives Settle F.D.I.C. Suit

December 13, 2011 by Leave a Comment

Former executives at Washington Mutual have reached a $64 million agreement to settle a civil lawsuit with the government, according to officials with the Federal Deposit Insurance Corporation, which pursued the case after the savings and loan collapsed in 2008.

The deal is one of the larger amounts recovered in a financial crisis case, though only about $400,000 in total will be paid by the executives, according to a person briefed on the settlement but not authorized to discuss it. The F.D.I.C. initially sought $900 million in the case, which it filed in March.

Much of the settlement will come from insurance policies the company took out for the executives, who are also releasing Washington Mutual’s estate from some financial claims they have against it. The money in the settlement will be distributed among Washington Mutual’s creditors. It will not benefit the F.D.I.C. fund because the fund did not lose money when Washington Mutual foundered and was sold in part to JPMorgan Chase Company, according to F.D.I.C. officials.

The settlement, which was reported in The Wall Street Journal on Tuesday, is expected to be formally announced within the next week, the officials said.

The executives in the suit are Kerry Killinger, the company’s former chief executive; Stephen Rotella, its former president; and David C. Schneider, its former home loans president.

The F.D.I.C. accused the executives of pushing Washington Mutual, which was based in Seattle, to the brink by making risky bets to reap short-term profits for themselves. In an unusual move, the F.D.I.C. also accused the wives of Mr. Killinger and Mr. Rotella of helping them shield some of the compensation from the company from legal claims. The wives will also be released from the suit as part of the settlement.

The executives will neither admit nor deny wrongdoing in the settlement, according to another person briefed on it but not authorized to discuss it. The government has faced recent criticism over its willingness to settle cases without extracting admissions of guilt. In November, a federal judge in New York denounced that practice when he refused to approve a settlement between Citigroup and the Securities and Exchange Commission.

The Justice Department has already closed its criminal investigation into officials at Washington Mutual, saying last summer that its investigators had “concluded that the evidence does not meet the exacting standards for criminal charges in connection with the bank’s failure.”

After Washington Mutual collapsed, Mr. Schneider stayed on as a mortgage servicing executive at JPMorgan. Mr. Killinger, who ran Washington Mutual for nearly two decades, is retired. Mr. Rotella, who joined the company in 2005 to try to turn it around, is now a consultant.

In March, Mr. Rotella wrote in an e-mail to friends, which was circulated in the media, that he felt the suit was unfair and that he and other managers had been working to put Washington Mutual on a better footing by decreasing exposures to risky mortgages.

Lawyers for the executives declined to comment on Tuesday. A spokesman for JPMorgan, which is not involved in the settlement, declined to comment.

Article source: http://feeds.nytimes.com/click.phdo?i=8b74269885f40ed50d4d77703e1cf8bf

Filed Under: Business News Tagged With: , ,

You’re the Boss Blog: This Week in Small Business: Everything Is Super!

November 22, 2011 by Leave a Comment

What’s affecting my clients, my small business and other small-business owners this week.

The Deficit: We Await the Supercommittee

Lawmakers on the deficit supercommittee continue to haggle before Wednesday’s deadline. The president is bracing for failure. Paul Krugman is hoping for failure. Ezra Klein brings together everyone’s predictions. Businesses are wary. Jane Wells reports that small businesses will feel defense cuts, saying there will be “a trickle down effect of $2.64 in lost sales in the general economy for every $1 in defense cuts.” Steve Pearlstein laments the failure of global leadership.

Red Tape Update: Health Care Goes Supreme

Trish Turner wonders why our tax dollars are subsidizing Scottie Pippen, Ted Turner and Jon Bon Jovi. General Electric pays no taxes on $14 billion in profits. The Supreme Court agrees to hear health care arguments. Anna Yukhananov and Lisa Lambert discuss what the ruling could mean. Gallup says Americans tilt toward favoring repeal. Rob Lynch offers five reasons small businesses shouldn’t drop their health care benefits. Karen Klein explains why so few small-business owners are using the health care tax credit.

The Small-Business Economy: Super Saturday

Global Entrepreneurship Week was introduced in 123 countries last week. American Express is super-sizing this weekend’s Small-Business Saturday (and teamed with Google to offer a cool way for businesses to tell their stories). Janine Popick reports that Kim Kardashian is helping small-businesses. Bank of America hires Malcolm Gladwell to speak to small businesses. Michael J. Fox does Johnny B. Goode again. A study says that Americans really do like big businesses. The Wall Street Journal announces its most innovative entrepreneur of the year.

The Economy: Structural Shift?

A Federal Reserve report says the chance of recession in 2012 is greater than 50 percent. An updated report (pdf) finds that gross domestic product rose 2.5 percent after rising 1.3 percent in the second quarter. Mark Perry points to a structural shift in the economy: “The Great Recession stimulated huge productivity and efficiency gains as companies shed marginal workers and learned how to do more with less (fewer workers).” Prediction: holiday spending should be about the same as last year (thanks in part to pawn shops!). Scott Grannis has a bunch of charts that show where the economy is heading. Rebecca Black still tops the YouTube charts?

The Data: No Bad Data This Week?

Architecture billing and residential remodeling indexes climb. Industrial production and capacity utilization expand. Machine tool orders surge. Consumer prices and producer prices fall. Retail sales rise and James Picerno is optimistic. But Doug Short says the consumer economy remains in a recession. The United States has the second most efficient labor market.

People: Have You Hired a Veteran?

A report says small-business staffing levels are stable. Sharon Ho gives advice on hiring the right people, and Michael Alter talks about turning them into the right team. Congress approves a tax break for hiring military veterans and Amazon opens its doors. A chief executive explains why he hires vets. A Target employee starts a petition against working on Thanksgiving Day. Darth Vader is promoted to regional director at an electronics chain. Starbucks’ campaign to create jobs surpasses $1 million in donations. Google and Apple top a list of the most attractive employers.

Marketing 1: Social Media Stuff

A report finds that 96 percent of small businesses are on Facebook. Mikal E. Belicove says that Google+ is not good for small businesses: “As of this writing, Google+’s reach is .05 percent of total U.S. Internet users online. By comparison, Facebook’s reach is 63 percent.” Cindy Bates explains how to use Microsoft Bing to promote your business free. A Nielsen survey finds that Indians spend more time on social media than on any other activity on the Internet. Local social media ad spending is expected to hit $2.3 billion in 2015. Jason Keith sums up a bunch of useful social media marketing stats. Here is proof that Americans are still awesome.

Marketing 2: Does Yelp Help?

President Obama and the president of China kiss in a controversial new marketing campaign. MP Mueller reminds us not to forget the clients we already have. Retailers are seeing a split in the behavior of shoppers. Brian Goffman offers 12 marketing predictions for 2012. Amazon goes all out for loyalty. Kara Haas explains how QR codes can help market your services (even if you’re not an accountant). Jonathan Farrington explains why qualification is a process, not a single event. Stephanie Elam and Julie Brayton both wonder if Yelp really helps small businesses. Constant Contact finds small businesses are still slow to adopt social media.

Around the World: Where Are the Innovative?

Ever wonder where in the world the most innovative companies are? A new service will help you expand into foreign markets. Small businesses in Italy are hampered by bureaucracy. Miles of a mysterious network grid appear in Chinese satellite photos. Google creates a start-up incubator in Israel. Bahrain’s Startup Weekend draws a good response. A photographer shares a beautiful 24-hour time-lapse shot of Dubai. An Afghani entrepreneur explains what it’s like to run a business in a war zone. Small-business ingenuity thrives during the recent Thai flooding.

Around the Country: New Jersey and Raw Milk

“The Daily Show” reveals class warfare among the Occupy Wall Streeters and a New York City small-business owner counterprotests. Detroit is running out of money. The New York Times reports that Hispanics are arriving in numbers large enough to offset or even exceed the decline in the white population in many places. A 12-year-old gives a TED talk. New Jersey residents go to great lengths for raw milk. A stuntman does amazing stuff. Natural gas is helping regional economies. The flame-retardant industry spends $23 million on lobbying and campaign donations. Manufacturing in New York (pdf) improves. The Postal Service faces default, and Josh Sanburn explains how it fell apart.

Start-Up: Dirt Cheap?

One report says venture-backed start-up companies continue to be job-creation engines. New farmers find that dirt really isn’t cheap. A start-up raps for financing. A new company achieves a major feat. Jeff Haden lists nine buzzwords your start-up shouldn’t use, including “collaborative partnership”. “When customers pay you, they’re not your partner.” A company helps start-ups find people. Harvard builds its start-up muscle. Adam Dachis gives advice for dating. A start-up invents a spam button for paper mail. The White House honors four Chicago start-ups. Selena Gomez takes the start-up plunge.

Ideas: Preserve Equity

Advice for the day: rather than killing your pets for the insurance, just consider liability insurance instead, O.K.? Thinkers50 lists 50 influential management gurus. Steven Davidoff says wise entrepreneurs know how to preserve equity. A utility executive on solar power: In “three to five years you’ll be able to get power cheaper from the roof of your house than from the grid.” Belinda Parmar offers five things every entrepreneurial woman should know, including: “It will be 100 times harder than you already think.” (An escalator proves surprisingly hard for this woman.) By 2050, the United States is likely to have nine million people 90 and older, up from 720,000 in 1980. A grocery store in Finland shows how to help aging customers. A very bad idea: a dad’s prank goes wrong. The Hunger Games movie looks awesome.

Technology: Warren Buffett Buys a Tech Stock?

Apple warms up to the business market and Arthur Cole recommends 10 Apple apps for companies. Warren Buffett buys a stake in I.B.M. Honda shows off its electric motorcycle. Here’s what it’s like to drive at 462 mph. Smallbusinesscomputing.com lists its five best open source accounting software applications. Amazon’s new Kindle sells for $79 (but costs $84 to make). A New Yorker cartoon portrays the downside of the cloud. These may be the droids farmers are looking for. Matt Smith explains how to find out if an online business is legitimate.

The Week Ahead

Scheduled to be released: existing home sales, preliminary G.D.P., personal spending and durable goods orders.

The Week’s Bests

Explanation for What Really Motivates Small-Business Owners. Neroli Makim sums it up: “Being able to provide a valuable product and service to others whilst enjoying the freedom to explore and express your creativity is an extraordinary motivator. Your creativity is inextricably linked to how autonomous you feel; freedom and creativity go hand in hand. When you work for someone else, you are rarely given free rein to innovate and problem-solve at will. … The intrinsic motivation of autonomy drives you in business and the sense of freedom and creativity that comes from it is a great source of fulfillment in itself.”

Reason Bad Hires Happen. John Featherstone explains: “Not properly thinking through the problems and requirements of the job, and the related skills and experience needed for a person to be successful. … There are no shortcuts here. How can you possibly pick the right person for the job when you haven’t clearly identified what kind of qualifications to look for? Proper preparation is critical to a successful hiring project.”

Uses of Psychology. Joe Wilner lists five ways positive psychology can help a workplace, including: “Taking an approach of self-determination offers freedom and autonomy for workers to flourish and become absorbed in the work they do best. This involves employees uncovering their signature strengths and having the freedom to use them.”

 This Week’s Question: Are your employees absorbed in their work?

2:11 p.m. | Corrected A previous version of this post misspelled the name of Mikal E. Belicove.

Gene Marks owns the Marks Group, a Bala Cynwyd, Pa., consulting firm that helps clients with customer relationship management. You can follow him on Twitter.

Article source: http://feeds.nytimes.com/click.phdo?i=7c566690c67d2eaef2805674fc80e23e

Filed Under: Small Business Tagged With: , ,

Economix Blog: Bruce Bartlett: A Close Look at the Perry Tax Plan

November 1, 2011 by Leave a Comment

DESCRIPTION

Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of the coming book “The Benefit and the Burden.”

In an effort to rejuvenate his flagging campaign for the Republican presidential nomination, Gov. Rick Perry of Texas announced his support for a flat-rate income tax in a Wall Street Journal op-ed article on Oct. 25.

Today’s Economist

Perspectives from expert contributors.

Mr. Perry said he would establish a single rate of 20 percent on corporate and individual incomes, with individuals receiving a personal exemption of $12,500. The estate and gift tax would be abolished, and there would be no taxation of dividends and capital gains. All deductions, credits and exclusions would be eliminated except for mortgage interest, state and local taxes and charitable contributions.

The flat tax is an idea that has been kicking around Republican circles for 30 years. The publisher Steve Forbes made it the centerpiece of his unsuccessful 1996 and 2000 runs for the G.O.P. nomination. He is now advising Mr. Perry and was glowing in his praise for the governor’s plan. Writing in The New York Post, Mr. Forbes said it would “usher in a great economic boom.”

Larry Kudlow of CNBC, who has never seen a Republican tax cut he didn’t like, was so excited by Mr. Perry’s flat tax and Herman Cain’s 9-9-9 plan that he attributed the recent stock market rise to their influence. In a National Review column on Oct. 21, he said the stock market rally was “discounting a new G.O.P. growth plan that will replace the dreary Obama tax-the-rich mantra.”

Although Mr. Perry praised the simplicity of his plan, it would actually complicate the tax computation for many people, because they would have to calculate their taxes two or even three different ways when the alternative minimum tax was also included. That was because Mr. Perry’s flat tax would be an optional tax system; those who wanted to stay in the current system could do so.

This is really just a gimmick to allow Mr. Perry to say with a straight face that everyone would get a tax cut. “Taxes will be cut across all income groups,” he said. His plan allows Mr. Perry to skirt every difficult issue about the impact of tax reform, like the huge increase in taxes that would be paid by the poor because they would lose all refundable tax credits, including the earned income tax credit.

Keep in mind that refundable credits give many people a negative tax rate. That is, they pay no income taxes but still get a Treasury refund. Going from a negative rate to zero would mean a tax increase for such people, as a Tax Foundation analysis illustrates.

To prevent people from gaming the system, Mr. Perry would insist that all those choosing the flat tax would have to stay in that system permanently. It’s not clear if those paying income taxes for the first time would be permitted a choice.

The idea of an alternative flat tax system was originally cooked up by a Wall Street Journal editorial writer, Steve Moore. But at least his idea was that the alternative system would be something like a pure flat tax with no deductions whatsoever. However, Mr. Perry would keep three key deductions in his system, which undermines the whole point of the flat tax, which is to wipe the slate clean. It also makes no sense because those who want to keep the deductions for mortgage interest, charitable contributions and state and local taxes could simply stay in the current system.

One consequence of Mr. Perry’s flat-tax deviationism is that his proposed tax form is lengthened to a full page from the original postcard that Mr. Forbes promised. Because the 1040EZ tax form that most people use is also one page, it’s hard to see those who care about the length of their tax return flocking to the Perry plan.

Of course, if everyone could simply choose to be taxed less or not, it absolutely guaranteed that Mr. Perry’s plan would be a massive revenue loser. In 2007, the Tax Policy Center analyzed a plan similar to Mr. Perry’s that had been proposed by Senator Fred Thompson of Tennessee, who briefly competed for the 2008 Republican nomination. The analysis found that revenues from allowing people to choose would be substantially less than if everyone were forced into the new system.

Giving people a choice also substantially mitigated whatever positive economic effects would be achieved from a flat tax. Its whole point is to change economic behavior by, for example, forcing people to stop investing so much of their savings in owner-occupied housing and investing instead in corporate stock or other forms that will add to the economy’s productive capacity.

Because no one is forced to change their behavior under the Perry plan, there is no reason to think that there will be an increase in economic growth if it is implemented. It would just lose revenue and complicate the tax code. That’s all. Edward Kleinbard, an University of Southern California law professor, calls the Perry plan “a promise to put a unicorn in every pot.”

Mr. Perry has countered with an “analysis” by John Dunham, a former tobacco industry economist, that shows growth will explode under his plan. The analysis states that it was commissioned by the Perry campaign and presumably was not done free. Using “dynamic scoring,” the analysis says gross domestic product will be an astonishing $3.5 trillion larger by the year 2020. Implausibly, it says that federal revenues would be $407 billion higher than under the Congressional Budget Office’s current projections and will rise even as a percentage of G.D.P.

There is no explanation whatsoever for how these estimates were arrived at, and they appear to have come from some sort of black box. When I asked Professor Kleinbard, who was formerly staff director for Congress’s Joint Committee on Taxation, what he thought about this, he corrected me. The estimates came from a “black magic box,” he said.

As Simon Johnson of the Massachusetts Institute of Technology recently explained on this blog, studies show that perhaps a third of a tax rate cut might be recouped through higher growth, and only if spending is cut enough to keep the deficit from rising.

Governor Perry says he will slash spending to 18 percent of G.D.P. from its current level of 23 percent. No explanation was offered of how this would be done or how such a huge spending cut would ever be enacted by Congress. It should be noted that even if every domestic program other than Social Security, Medicare and Medicaid is abolished, that would not be enough for Mr. Perry to reach his goal — all those programs together come to just 4.2 percent of G.D.P.

Thus, Mr. Perry’s plan cannot be taken seriously. I don’t think it’s meant to be, at least by those of us who don’t plan on voting in Republican primaries. It’s just a signaling device, telling the Republican faithful that they can trust Mr. Perry on the tax issue.

Whether the plan makes any sense as a matter of policy is irrelevant to its purpose, which is to win him the Republican nomination. With an Oct. 25 ABC News/Washington Post poll showing the flat tax much more popular among Republicans than Mr. Cain’s 9-9-9 plan, it might just work.

Article source: http://feeds.nytimes.com/click.phdo?i=e03724524cdfb2299b7634ab68bf16c1

Filed Under: Economy News Tagged With: , ,

Strategies: Nobel Laureates in Economics, Uneasy With Labels

October 15, 2011 by Leave a Comment

But Thomas J. Sargent of New York University and Christopher A. Sims of Princeton, who were awarded the Nobel in economics on Monday, aren’t accustomed to the media spotlight. And they didn’t entirely relish it last week.

Asked by a Nobel representative how he would deal with being certified as an economic sage in a time of global economic distress, Professor Sargent was puzzled: “Well, I, sorry, I don’t know what’s involved in that. You know, we’re just bookish types that look at numbers and try to figure out what’s going on,” he said. “So I don’t know what to say to that!”

Speechifying didn’t appeal to Professor Sims, either. At a news conference at Princeton, he was asked to comment on the fiscal and financial rescue operations in the United States.

“Answers to questions like that require careful thinking and a lot of data analysis,” he replied. “The answers are not likely to be simple.” Neither he nor Professor Sargent is accustomed to talking “off the top of our heads,” he said. “You shouldn’t expect much from us.”

Journalism abhors a vacuum, however. Others assigned ideological views to the Nobel laureates.

An op-ed piece in The Wall Street Journal on Tuesday carried the headline, “A Nobel for Non-Keynesians,” placing the professors in the camp that opposes the interventionist philosophy of the influential British economist John Maynard Keynes.

It said the two had put “a sizable chink in the Keynesians’ armor.” An editorial said the pair was “ at odds with the recent Keynesian vogue, and in tune instead with the frustration with government fine-tuning that has dominated world economic policy since 2008.”

That’s a compelling narrative. But it’s not the way Professor Sims sees himself, as he told me by phone late last week. (It doesn’t seem to be Professor Sargent’s view, either, but we had only a brief e-mail exchange.)

Professor Sims doesn’t want to be pigeonholed. “I’m not ‘non-Keynesian,’ ” he said, adding that he has been an active “promoter of new Keynesian macroeconomic models,” because they “are the place in our profession where theory and data and policy decision-making are coming together.”

“It doesn’t really make much sense to stand on the sidelines and take potshots at them,” he said. “If you don’t like the way they’re working, you should try to do better.”

He and Professor Sargent have been “trying to do empirical macroeconomics using formal tools of statistics,” he said. “Those tools aren’t in themselves ideological.”

Professor Sims spoke favorably of the Obama administration’s fiscal stimulus programs, which are Keynesian in their countercyclical spending. “An expansionary fiscal policy is probably what we need right now,” he said.

But he criticized traditional Keynesian thought for inadequacy in “the temporal dimension,” meaning that it didn’t focus on the consequences of running long-term deficits. “The implications of that for future stringency are very important,” he said. “Our current policy debates just aren’t doing it.”

President Obama deserves praise for offering a “grand compromise” — including spending cuts and tax increases — to resolve the long-term deficit, Professor Sims said. He criticized the Republican Congressional leadership for ruling out tax increases, which, he said, most economists know are needed. And he generally approves of the accommodative monetary policies of the Federal Reserve, led by his fellow Princetonian, Ben. S. Bernanke, whom he described as a “new Keynesian.”

I asked whether there is a sense in which this is a “non-Keynesian” Nobel.

Yes, he said, but mainly in a historical sense that is already outdated.

It derives from musty arguments from the “warring schools” period of economics in the 1970s and ’80s. William Nordhaus of Yale and the late Paul Samuelson of M.I.T. used that phrase in 1985. They listed Professor Sargent, then at the University of Minnesota, as a leader of the “rational expectations school,” which was “anathema” to “old-style Keynesians.”

Article source: http://feeds.nytimes.com/click.phdo?i=e177890776785d73ee5e39bde5f489ea

Filed Under: Economy News Tagged With: , ,

News Corp. Hits a Bump as Investors Prepare to Meet

October 14, 2011 by Leave a Comment

The revelation of another journalistic lapse at News Corporation — though minor compared with the phone hacking scandal in Britain — further complicates matters for the leadership at News Corporation as it prepares for its annual shareholder meeting next Friday.

“No news of impropriety at News Corporation is a blip when they’re under such scrutiny,” said Doug Creutz, a senior research analyst at the Cowen Group. “This adds to the general question of how the company is being run.”

He pointed to several independent investor advisory groups that have recently recommended that shareholders vote against some members of the News Corporation board, “especially those whose name ends in Murdoch,” he said. Rupert Murdoch is the chairman and chief executive of News Corporation, and his sons James and Lachlan, have large roles in the company.

The scrutiny on the company increased on Thursday when the bureau that audits newspaper sales in Britain said it was reviewing new information about The Wall Street Journal Europe’s circulation arrangement that could lead to further investigation. Under the deal, The Journal used a third party to channel money to a Dutch consulting firm, which bought thousands of copies of The Journal each day for as little as one euro cent (1.37 American cents). The practice helped bolster The Journal’s subscription rate in Europe.

The publisher of The Wall Street Journal Europe, Andrew Langhoff, resigned on Tuesday after an internal investigation revealed that the circulation deal also led to an agreement that provided the Dutch company, Executive Learning Partnership, with two positive articles in exchange for its financial support.

“We have always been transparent with the A.B.C., and they have certified this program over recent reporting periods,” Dow Jones Company, which owns The Journal, said in a statement, using an acronym to refer to the circulation auditing agency in Britain. “We plan to meet with them soon and review all the details with them again.”

The incident at The Wall Street Journal Europe also puts the spotlight on how newspapers report circulation numbers, which are crucial to determining how much publications can charge for advertisements. At a time when the industry is struggling, many newspapers rely on heavily discounted copies to prop up circulation numbers.

Last year, the Audit Bureau of Circulations, the regulatory agency in the United States, added a new category on how publications should report copies that are sold to schools, bought by businesses for their employees, or bought in bulk by third parties, like advertisers, which include promotional inserts or wraps and distribute the copies free. The new category, called “verified,” is separate from paid circulation totals that include home delivery and newsstand sales.

Michael J. Lavery, the president and managing director of the Audit Bureau, said the popularity of the third party bulk sales that are considered verified had waned over the last several reporting cycles. He said the bureau no longer included third-party sales as a paid category that could determine advertising rates.

“There are other distribution channels that helped media buyers and advertisers get their message to their target audiences,” Mr. Lavery said, citing new programs, like Sunday Select by the Gannett newspaper division, where nonsubscribers could opt to have advertising circulars delivered to them directly.

The New York Times does have third-party agreements but does not include those sales in its report to the bureau, the company said Thursday. Around 9 percent of The New York Times’s print and digital circulation of 917,000 comes from verified subscriptions, though that figure does not include Web site subscriptions.

Eric Pfanner contributed reporting.

This article has been revised to reflect the following correction:

Correction: October 13, 2011

An earlier version of this article misstated the price of the discounted papers. It was one euro cent, or 1.37 American cents, not $1.37.

Article source: http://www.nytimes.com/2011/10/14/business/media/news-corp-hits-a-bump-as-investors-prepare-to-meet.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

For Murdoch, a Board Meeting With Friendly Faces

August 10, 2011 by Leave a Comment

The meeting, held on the studio lot of 20th Century Fox and timed to coincide with News Corporation’s quarterly earnings announcement on Wednesday, included many people with deep and longstanding ties to Mr. Murdoch, his company and his family.

One is a former Goldman Sachs president who helped News Corporation broker mega-deals. Another is godfather to one of Mr. Murdoch’s grandchildren. Another ran Mr. Murdoch’s Australian subsidiary, News Limited.

And those are just some of News Corporation’s directors who are designated as independent — chosen because they comply with regulations intended to ensure that companies maintain a layer of objective oversight.

A perceived absence of true independence has long been a sore spot for those who criticize the News Corporation board as too deferential to Mr. Murdoch. Last week, in a rare attempt to mollify shareholders, News Corporation decided not to add Mr. Murdoch’s daughter Elisabeth to the board. It was widely expected she would join the board after the company bought Shine, her television production company, for about $675 million earlier this year.

News Corporation considers nine of its 16 directors independent, in keeping with Nasdaq rules requiring a majority of board members with limited company ties. Yet many of them owe their careers to Mr. Murdoch. Others made millions of dollars making him richer. Those include:

¶Roderick Eddington, the former chief executive of British Airways, who became deputy chairman of News Limited in 1997, a year after he was chosen to run Ansett Australia, the airline in which News Corporation owned a 50 percent stake.

¶Natalie Bancroft , the opera singer whose family agreed to sell Dow Jones and The Wall Street Journal to Mr. Murdoch in 2007, and who made a sizable fortune of her own from News Corporation’s $5 billion purchase.

¶Kenneth E. Cowley, who was chief executive and chairman of News Limited for nearly 20 years in the 1980s and 1990s.

¶Andrew Knight, who was executive chairman of News International from 1990 to 1994.

¶John L. Thornton, the former Goldman Sachs president, who advised News Corporation in a number of major deals, including its $1 billion purchase of Star TV, the Asian satellite service. The arrangement brought him and Goldman Sachs millions in fees.

¶Viet Dinh, a former senior official in George W. Bush’s Justice Department and the principal author of the Patriot Act. Mr. Dinh is also godfather to a son of Lachlan Murdoch, the oldest of Mr. Murdoch’s children. Mr. Dinh is ultimately responsible for the independent internal investigation going on into the phone hacking scandal at News Corporation’s British subsidiary, News International.

Mr. Dinh has brought on some of the biggest names in white-collar criminal defense to advise him and the other independent directors on the matter, hiring Mary Jo White, the former United States attorney for the Southern District of New York, and former Attorney General Michael B. Mukasey.

News Corporation’s board is hardly the only one in corporate America that is stacked with independent directors who have close relationships with the companies that shareholders have elected them to serve. But corporate governance experts said that the long history between News Corporation and many of its independent directors is a glaring example of how chumminess in the boardroom can allow and even contribute to mismanagement.

“I keep watching this and thinking that they don’t realize we can see them,” said Lucy P. Marcus, chief executive of Marcus Venture Consulting who writes about corporate governance issues for The Harvard Business Review blog network. “The reason we have corporate governance is not because it’s a nice thing to do. It’s because if you actually have a robust board, it can be beneficial. I don’t think News Corp. would be in the same trouble that they are in now if they had an independent board.”

To overhaul the News Corporation board or any other corporate board, the rules governing who is eligible to serve as a director would need to change. Right now News Corporation is in full compliance of the rules set by Nasdaq, the exchange on which its stock is traded, and federal law.

Nasdaq’s rules state broadly that independent directors cannot have a relationship that “would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.” Specifically, Nasdaq excludes anyone who was employed the company in the previous three years. The rules do allow, however, for former employees collecting retirement benefits to serve as independent directors.

Some News Corporation shareholders have already started to press the issue. Wespath Investment Management, a division of the board of pension and health benefits for the United Methodist Church and owner of about 1.1 million News Corporation Class A shares, wrote to the board last week objecting to, among other things, its seeming lack of independence.

“As shareholders interested in preserving the long-term value of the company, it is important that the board of directors act quickly to improve its governance standards,” the letter said.

Article source: http://feeds.nytimes.com/click.phdo?i=c1d33c629547297f6be217232005da36

Filed Under: Business News Tagged With: , ,

Economix: Media Culpa? Coverage of Jobs vs. Deficit

July 12, 2011 by Leave a Comment

CATHERINE RAMPELL

CATHERINE RAMPELL

Dollars to doughnuts.

I’ve suggested several different explanations for why the jobs crisis has gotten so little attention in Washington, especially compared to the deficit. In response, a lot of frustrated readers e-mailed me to argue that I’d left out one other explanation: the media. Major news organizations have devoted much more air time, ink and pixels to America’s debt concerns than to the 14-million-person army of jobless workers, they argued.

As a reader named Cindy writes:

If any of these big media conglomerates really cared about the millions of people that are being tossed like road kill, they would be doing something to help us organize and give us the coverage we need to be heard once and for all.

Another reader, Virgil, writes:

People hear in the media that it is not that bad out there, so they turn on their friends that are unemployed and call them deadbeats and state that their taxes are so high because they have to pay for those that won’t get a job.

Complaints about media coverage do appear to be supported by a cursory review of articles from the last two years.

In May, the National Journal published a report on economic coverage in the five largest newspapers in the country by print circulation: The New York Times, The Wall Street Journal, The Los Angeles Times, USA Today and The Washington Post. They did this by searching for the words “unemployment” and “deficit” (excluding articles that also used the words “Europe,” “European,” “Greece” or “Greek”). This was not the most scientific (or comprehensive) study ever conducted, but it did show that over the last two years, the number of articles on “unemployment” had fallen while those on the “deficit” had exploded.

One can argue about the extent to which policy makers guide news coverage, and whether news coverage guides policy makers. Whichever way (or ways) you think that relationship works, it appears that both Washington and news organizations have been emphasizing long-term debt reduction over near-term job growth.

That balance may change, though, in light of Friday’s weak employment report, and as more workers exhaust their jobless benefits.

Article source: http://feeds.nytimes.com/click.phdo?i=1044caec7ccbcd6e652dc36f0981c8ba

Filed Under: Economy News Tagged With: , ,

AARP Is Open to Cuts for Social Security Benefits

June 18, 2011 by Leave a Comment

The group’s stance, which generated quick reaction from all sides because of its powerful voice on the issue, could provide added ammunition to fiscal conservatives who have sought unsuccessfully to restructure Social Security and chip away at the benefits it promises older Americans.

“Our goal is to limit any changes in benefits,” John Rother, AARP’s policy chief, said in a telephone interview, “but we also want to see the system made solvent.”

Mr. Rother said the group’s stance on possible cuts, which was first reported in The Wall Street Journal in Friday’s editions, should be seen less as a major change in position than as a reflection of the political and financial realities facing the Social Security system and the country as a whole.

“You have to look at all the tradeoffs,” Mr. Rother said, “and what we’re trying to do is engage the American public in that debate.”

He made clear that the group’s willingness to discuss cuts comes with conditions: Reductions in benefits should be “minimal,” they should not affect current recipients and instead should be directed “far off in the future,” and they should be offset by increases in tax-generated revenue.

Nonetheless, the group’s openness to the possibility of unspecified cuts was seen as a significant development by people on all sides of the Social Security question because of AARP’s influence on federal policies affecting older Americans, including Medicare, prescription drugs and many more.

Third Way, a moderate Democratic group in Washington that has favored possible reductions in benefits, called AARP’s position “a watershed moment” in the debate over Social Security.

“Now that they have opened the door to reform, it is time for lawmakers to walk through it,” said Jonathan Cowan, president of Third Way.

But other advocacy groups that are pushing to preserve Social Security benefits accused AARP of effectively abandoning its core constituency.

Max Richtman, executive vice president of the National Committee to Preserve Social Security and Medicare, an advocacy group in Washington, said the timing of AARP’s statements was particularly bad because it came in the midst of deliberations between the Obama administration and Congressional Republicans about the debt ceiling and overall deficit reduction.

AARP insisted that the Social Security trust funds should not be raided to reduce the deficit and that the two issues were separate. But Mr. Richtman said the group’s openness to considering future cuts would no doubt be used by deficit hawks to push for immediate cuts in Social Security benefits as part of the debate over deficit reduction.

“I think it’s tragic that AARP would, wittingly or unwittingly, play into the hands of people who have never really liked Social Security and want to decimate it,” Mr. Richtman said. “AARP is the 800-pound gorilla, but they do not speak for seniors.”

Republican leaders, who have led calls for revamping Social Security, had no immediate comments on AARP’s willingness to consider benefit reductions.

An aide to the Republican-led House Ways and Means Committee, who spoke on condition of anonymity under committee protocol, said AARP’s position was a welcome acknowledgment that Social Security would be unable to pay future benefits at the current rate and that it must be restructured.

“The longer we wait,” the aide said, “the more difficult it will be to protect current beneficiaries and those who rely on Social Security the most.”

The most recent projections from the Social Security Administration, issued last month, indicate that at the current rate, the program’s trust funds will be exhausted by 2036, and that $6.5 trillion in additional money will be needed over a 75-year period to pay all scheduled benefits.

Mr. Rother said AARP expected to hear criticism from some of its members over its position on possible cuts.

“We have such a broad membership, Mr. Rother said. “I’m sure there will be some who will not be happy, but others will be eager to see the program put on a stronger financial footing for the long term.”

While AARP has not issued specific recommendations or figures on how benefit reductions might be carried out, the group’s recent discussions with its members signal support for using increased revenue to fill two-thirds of the projected gap, and benefits reductions for one-third, Mr. Rother said.

As word of AARP’s position set off debate in Washington on Friday, the group’s chief executive, Barry Rand, issued a formal statement saying that the group’s position had not changed in any substantive way and refuting what he described as “misleading” media reports.

“Let me be clear — AARP is as committed as we’ve ever been to fighting to protect Social Security for today’s seniors and strengthening it for future generations,” Mr. Rand said. 

While he did not directly address the question of possible cuts in benefits in his statement, Mr. Rand said his group would be working to evaluate any proposed changes in Social Security “to determine how each might — individually or in different combinations — impact the lives of current and future retirees.”

Article source: http://feeds.nytimes.com/click.phdo?i=0f1567d25a70e9abc732adef8d162a32

Filed Under: Business News Tagged With: , ,

AARP Is Open to Future Cuts of Social Security Benefits

June 17, 2011 by Leave a Comment

“Our goal is to limit any changes in benefits,” John Rother, the group’s policy chief, said in a telephone interview, “but we also want to see the system made solvent.”

Mr. Rother said that the group’s stance on possible cuts, which was first reported in The Wall Street Journal in Friday’s editions, should be seen less as a major change in position than as a reflection of the political and financial realities facing the Social Security system and the country as a whole.

“You have to look at all the tradeoffs,” Mr. Rother said, “and what we’re trying to do is engage the American public in that debate.”

Nonetheless, the group’s openness to the possibility of unspecified cuts was seen as a significant development by people on all sides of the Social Security question, because of AARP’s powerful voice on federal policies affecting older Americans, including Medicare, prescription drugs and many more.

Third Way, a moderate Democratic group in Washington that has favored possible reductions in benefits, called AARP’s position “a watershed moment” in the debate over Social Security. “Now that they have opened the door to reform, it is time for lawmakers to walk through it,” said Jonathan Cowan, president of Third Way.

But other advocacy groups that are pushing to preserve Social Security benefits accused AARP of effectively abandoning its core constituency.

Doug Henwood, the Brooklyn editor of a liberal business blog and Internet radio program who has written on Social Security, said AARP’s willingness to consider cuts in benefits “reads like a sign that this former lobby for the interest of older Americans has now transformed itself completely into an insurance company.” He continued, “Surely they can’t be persuaded by the merits of the arguments, since the alleged Social Security crisis is a phantom that can’t survive a serious round of fact-checking.”

The most recent estimates from the Social Security Administration, issued last month, indicate that under currrent law the program’s trust funds will be exhausted by 2036, and that $6.5 trillion in additional money will be needed over a 75-year period to pay all scheduled benefits.

Mr. Rother said that AARP expects to hear criticism from some of its members over the new position.

“We have such a broad membership, Mr. Rother said. “I’m sure there will be some who will not be happy, but others will be eager to see the program put on a stronger footing financial for the long-term.”

He made clear in an interview that the group’s willingness to discuss cuts comes with conditions: Reductions in benefits should be “minimal,” they should not affect current recipients and instead should be directed “far off in the future,” and they should be offset by increases in revenue.

While AARP has not issued specific recommendations or figures on how benefit reductions might be carried out, the group’s recent discussions with its public constituencies signal support for using increased revenue to fill two-thirds of the projected gap and benefits reductions for one-third.

Though AARP’s position is likely to shift the debate in Washington somewhat, its insistence that benefit cuts be pushed down the road will probably not sit well with many Republicans, who are demanding earlier reductions as a key part of their plans to address the nation’s overall budget deficit problem.

Article source: http://feeds.nytimes.com/click.phdo?i=0f1567d25a70e9abc732adef8d162a32

Filed Under: Business News Tagged With: ,

Obama Offers Training Plan Designed for High-Tech Jobs

June 14, 2011 by Leave a Comment

The program, which Mr. Obama unveiled during a visit to a lighting manufacturer here, would seek to marry private companies with colleges and universities in a bid to encourage students to focus on science, technology, engineering and math degrees.

“Right now, there are more than four job seekers for every job opening in America,” Mr. Obama said, in remarks at Cree Inc., which makes L.E.D. products. “But when it comes to science and high-tech fields, the opposite is true: businesses like this tell me they’re having a hard time finding workers to fill their job openings.”

In coming to North Carolina to promote his plans to keep high-tech, high-paying jobs in this country, Mr. Obama is trying to hang on to a state that he narrowly won in 2008. But highlighting the climb ahead for the president is North Carolina’s unemployment rate, which was 9.7 percent in April, the 10th highest in the country. The overall national jobless rate in May was 9.1 percent, up slightly from the month before.

“The world has changed,” Mr. Obama said. “And for a lot of our friends and neighbors, that change has been painful. Today the single most serious economic problem we face is getting people back to work.”

After his remarks at Cree, Mr. Obama met there with members of the jobs council he created. Two members of the group — Jeffrey R. Immelt, the chairman and chief executive of General Electric, and Kenneth I. Chenault, the chairman and chief executive of American Express — laid out, in an op-ed article in The Wall Street Journal on Monday, a few ideas the council is exploring to increase employment.

But none of the ideas, which included setting up job training initiatives, providing loans to small businesses and trying to increase tourism, contained any groundbreaking proposals.

“To truly bend the curve over the longer term, we need a more strategic view,” the two men acknowledged in the article. “Over the next 90 days, we will turn to addressing the actions needed to make a more significant, longer-term impact.”

They said they would deliver recommendations in September focusing on “fast-growth” companies, small businesses and the competitiveness of the country’s infrastructure.

It was unclear how Mr. Obama planned to finance his latest jobs proposals. The administration is locked in a debate with Congressional Republicans over long-term spending and deficit reduction, facing an August deadline for a decision on raising the country’s debt ceiling.

There was a touch of nostalgia to the president’s trip on Monday; he visited the Cree headquarters here three years ago, when he was a senator running for the presidency.

Mr. Obama said his hair was grayer now. But, he added, “I have a better plane so it’s a fair trade.”

After North Carolina, Mr. Obama headed to Florida, another crucial state for his re-election hopes; he has scheduled several fund-raisers as part of his effort to raise a record $1 billion during this campaign.

On Tuesday, Mr. Obama is making a rare visit to Puerto Rico, as part of the Democratic Party’s campaign to woo more Hispanic voters back in the mainland United States.

Article source: http://feeds.nytimes.com/click.phdo?i=6ad24b3c50caeaca2254d8b273ac158a

Filed Under: Business News Tagged With: , ,
« Previous Page
Next Page »