News Clips – Wednesday, April 20, 2011

Cuomo SAGE Panel Includes Corporate Execs In Effort To Reform Services
Gov. Andrew Cuomo named members of his Spending and Government Efficiency Commission, which will be co-chaired by Kodak’s Antonio Perez. Many members were campaign contributors. Cuomo tapped Antonio Perez, chairman and CEO of Eastman Kodak, to co-chair the Spending and Government Efficiency Commission. Cuomo already appointed Paul Francis, who served as budget director under Gov. Eliot Spitzer, as a senior aide tasked with the project.  Lower-level staffers will come from the Rockefeller Institute of Government in Albany; Cuomo said a grant from the Rockefeller Foundation would pay for the work of management consultants from McKinsey & Company. The commission will also include former state Sen. Michael Balboni; former Westchester County Executive Andrew Spano; Jim Corcoran, who served as Superintendent of Insurance when Mario Cuomo was governor; AFL-CIO President Denis Hughes; and Cheryl Felice, president of the Suffolk County Association of Municipal Employees. Several current lawmakers will take part. The panel also has a slew of current or former business executives: Neil Cole of Iconix; Alan Gerry of Granite Associates; Barry Gosin of Newmark Real Estate; Derek Johnson of Integrated Holdings; Anthony Malkin of Malkin Holdings; and others. http://www.timesunion.com/local/article/Business-model-for-renewing-government-1344422.php

Study: States’ revenues up, localities lagging
The fiscal picture is improving on the state level but remains unpretty on the local stage, according to the Rockefeller Institute’s latest State Revenue Report. The report found state tax revenues grew by 7.8 percent in the final quarter of 2010 compared to the same quarter of 2009, according to institute research and Census Bureau data — making it the fourth consecutive quarter that states reported growth in collections on a year-over-year basis. Download the full report here. http://blog.timesunion.com/capitol/archives/64653/study-states-revenues-up-localities-lagging/

DiNapoli re-offers budget reform bills
One-shots, short-term planning and closed-door negotiations are all part of the grand tradition of budget planning in Albany. Comptroller Tom DiNapoli is restating his case for a slate of reform measures that would end or curtail them. Dinapoli first rolled out the reform proposals in March of 2010, just as the fiscal plan was about to blow its deadline but months before it was actually passed. None of the proposals were taken up. Here’s the Comptroller’s press statement detailing the measures: http://blog.timesunion.com/capitol/archives/64644/dinapoli-re-offers-budget-reform-bills/

State Health Department Halts “Risk” List After Uproar
The State Department of Health is backing away from plans to issue guidelines for games — like dodgeball — played at indoor summer camps, facing intense media scrutiny. http://www.timesunion.com/local/article/Punt-ends-fumble-on-state-play-rules-1344427.php

Meet inmate 11-R-1334: Mugshot of former Controller Alan Hevesi released
Meet disgraced former state Controller Alan Hevesi – now a bald state prisoner. Hevesi, as seen in this photo released by state correction officials on Thursday, was forced to surrender his freedom – and his hair. He’s settling in to life as inmate 11-R-1334 at the Ulster Correctional Facility. Hevesi pleaded to a single count of felony corruption last year after pocketing $1 million in gifts for himself and cronies in a massive pay-to-play pension fund scam. He was sentenced Friday to one to four years behind bars for his role in the kickback scheme. http://www.nydailynews.com/news/ny_crime/2011/04/20/2011-04-20_welcome_to_jail_baldie.html

Police Union Fights Back Against an Inquiry, Calling Ticket-Fixing a Courtesy
As scores of police officers, supervisors and union officials are investigated for fixing tickets in the Bronx, the Sergeants Benevolent Association — the powerful union for the Police Department’s 12,000 front-line supervisors — has started a campaign arguing that the practice, while widespread, is one of courtesy, not corruption. Edward D. Mullins, the president of the sergeants’ union, has recorded an audio message calling on current and retired members of the force, across all ranks, to come forward with testimonials about the beneficiaries of ticket-fixing. He said he expected to find evidence that politicians, prosecutors, clergy members, business leaders, celebrities, athletes and others have been among those who have had tickets fixed, often with the help of top police officials.  The move is a striking public frontal assault on the investigation by the union, even though the inquiry itself has never been officially acknowledged by law enforcement officials, and no charges have been filed. http://www.nytimes.com/2011/04/20/nyregion/police-union-fights-back-against-an-inquiry-calling-ticket-fixing-a-courtesy.html?_r=1&ref=nyregion
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Banks Kept Waiting for Terms of U.S. Foreclosure Accord as States Divided Posted on April 20, 2011 by admin Attorneys general negotiating the settlement of a nationwide foreclosure investigation have yet to approach banks with a proposed dollar amount that would fund principal reductions for borrowers, a state official said. The states have agreed on some terms while failing so far to reach an accord on monetary payments by lenders, a person familiar with the talks said last week. Eight Republican attorneys general have publicly challenged the concept of principal reductions as part of a 50-state settlement…Another person familiar with the talks said state negotiators are discussing what form a financial component may take, and that there will be no settlement without a monetary payment. The person, who declined to be identified because the talks are private, said it may take four months to reach a deal.  Banks Kept Waiting for Terms of U.S. Foreclosure Accord as States Divided – Bloomberg . Posted in Foreclosure , Mortgage Modifications , Mortgage Servicers , mortgage lending/brokering | Comments Off

Analysis: Basel III rules could spell potholes, literally Posted on April 20, 2011 by admin Rules designed to spare the world’s taxpayers from paying for a future financial crisis could also make it more difficult to build and replace infrastructure such as the roads they drive on. The rules, known as Basel III, will weigh on the ability of banks to provide project finance loans on which cash-strapped governments and developers of power plants, pipelines and renewable energy such as wind farms rely to fund schemes. “Banks have been the stalwart of privately financed projects. If long-term lending requires more capital to back it, it affects the enthusiasm of banks to provide it,” said Andrew Davison, senior vice president at credit rating agency Moody’s. Analysis: Basel III rules could spell potholes, literally | Reuters . Posted in Basel II | Basel III | Comments Off

Twelve banks worldwide sued for manipulating Libor | Reuters Posted on April 20, 2011 by admin A European asset manager has sued one dozen U.S., European and Japanese banks, accusing them of conspiring to manipulate Libor, a benchmark used to set interest rates on hundreds of trillions of dollars of securities. Vienna-based FTC Capital GmbH and two funds it operates in Luxembourg and Gibraltar accused the banks of conspiring to artificially depress Libor, and limit trade in Libor-based derivatives from 2006 to 2009. The defendant banks include Bank of America Corp, Barclays Plc, Citigroup Inc, Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings Plc, JPMorgan Chase & Co, Lloyds Banking Group Plc, Norinchukin Bank, Royal Bank of Scotland Group Plc, UBS AG and WestLB AG.  Twelve banks worldwide sued for manipulating Libor | Reuters . Posted in Bank Fraud , Derivatives , Lawsuit | Comments Off

Banks hit back in dark pool trading war of words Posted on April 20, 2011 by admin Investment banks launched a fresh defense of “dark pool” share trading, saying the practice is not nearly as widespread as suggested by Europe’s stock exchanges and should therefore pose few regulatory concerns. Only 16 percent of European trading takes place in secretive dark pools — which enable market parties to trade shares without being seen by others — a trade body said, well below the 40 percent that has been quoted by stock exchanges. Banks hit back in dark pool trading war of words | Reuters . Posted in Bank Regulation (Foreign) | Comments Off

Ex-Taylor Bean Chairman Farkas Found Guilty on All 14 Counts in Fraud Case Posted on April 20, 2011 by admin Lee Farkas, the ex-chairman of Taylor, Bean & Whitaker Mortgage Corp., was found guilty of 14 counts of conspiracy and bank, wire and securities fraud in what prosecutors said was a $3 billion scheme involving fake mortgage assets. A federal jury in Alexandria, Virginia, yesterday returned the verdict after one day of deliberations. Farkas, who was free during the trial, was taken into custody. He faces a maximum sentence of 30 years on the conspiracy and bank-fraud charges and 20 years or more on the wire-fraud and securities-fraud counts when he’s sentenced on July 1.  Ex-Taylor Bean Chairman Farkas Found Guilty on All 14 Counts in Fraud Case – Bloomberg . Posted in Mortgage Fraud | Comments Off

Fannie Mae Issues Notice Servicers on MI Agreements | Mortgage News Posted on April 20, 2011 by admin Fannie Mae has issued an announcement in which it informs mortgage servicers to halt a practice that could help them avoid repurchasing flawed home loans. Announcement SVC-2011-04, issued April 15th, prohibits its mortgage servicers from from entering into any agreement that modifies the terms of an approved mortgage insurance master policy on loans delivered to Fannie Mae. Fannie Mae Issues Notice Servicers on MI Agreements | Mortgage News | Daily National and State Headlines . Posted in Fannie Mae/Freddy Mac , Mortgage Modifications , Mortgage Servicers | Comments Off

Morning Round-Up | April 20, 2011 Posted on April 20, 2011 by admin TRANSITIONS: SILVERMAN TO TD BANK – Ed Silverman, Senate Banking Committee Chief of Staff during the debate over Dodd-Frank, is headed to TD Bank to head up the lobby shop rather than joining his former boss Chris Dodd at the MPAA. http://www.politico.com/morningmoney WOLIN ON SMALL BANKS – Deputy Treasury Secretary Neal Wolin on why financial reform is not bad for small banks: “Dodd-Frank is focused on constraining risk at the largest institutions and on closing gaps in regulation for activities, like derivatives trading, that are not central to the business of community banks. The legislation does … contain several important provisions that put community banks on more equal footing with their competitors … Dodd-Frank Act raises deposit insurance protection to $250,000, providing greater protection for one of community banks’ core sources of funding … [and] ensures that the cost of deposit insurance is born by the institutions that engage in the riskiest activities and that, consequently, benefit the most from its protection.” http://1.usa.gov/hi6yR7 GOLDMAN SACHS GAVE INVESTORS A PEEK AT THE NEW NORMAL ON WALL STREET – and many are worried. … [T]he bank reported first-quarter earnings of $1.56 a share, nearly double analysts’ expectations. … But investors instead focused on Goldman’s sluggish growth, which offered a stark reminder of the difficulties for an investment bank in this post-crisis world. In trading and the rest of institutional client services, once the hallmark of the firm’s operations, revenue dropped by 22 percent, to $6.7 billion. Over all, first-quarter earnings slumped 21 percent, to $2.74 billion from $3.5 billion, including the one-time hit from the Berkshire repayment.” http://nyti.ms/gJRRRv JUSTICE PROBES NYSE DEAL – The U.S. Justice Department is querying market participants about how a takeover of the [NYSE] … would affect competition in equity listings. Officials are asking how different outcomes for NYSE Euronext would affect companies trying to raise money in the U.S … Antitrust review is emerging as a key test in the battle for the 219-year-old market … Giving Nasdaq control would create a monopoly in listings, a prospect that may create undue risk the takeover will be blocked, according to NYSE CEO Duncan Niederauer.” … Nasdaq OMX may consider selling the NYSE Amex business to allay competition concerns” http://bloom.bg/fYnBrr Posted in Morning News | Comments Off

UPDATE 2-Switzerland presses ahead with stricter bank rules Posted on April 20, 2011 by admin The Swiss government pushed ahead on Wednesday with plans to make UBS and Credit Suisse reach tough new capital standards, saying the benefit to the economy outweighed costs to the banks. As it finalised legislation to go to parliament, the Swiss cabinet said the general thrust of a draft law it issued in December was unchanged but it had made a few minor changes following a consultation period. “The proposed package of measures is designed to prevent the state from having to use tax revenues in the future in order to bail out systemically important banks,” it said in a statement.  UPDATE 2-Switzerland presses ahead with stricter bank rules | Reuters . Posted in Bank Regulation (Foreign) , Basel II | Basel III | Comments Off

CFPB Subject to Annual Audits, Study Posted on April 20, 2011 by admin The Senate continuing resolution passed Friday that will fund the government through the remainder of the fiscal year also included Consumer Financial Protection Bureau provisions; one of which will subject the CFPB to two annual audits, and the other which will require an annual study on the government agency. The first audit will require an independent review of the CFPB’s operations and budget by an auditing firm the bureau will choose, according to the American Bankers Association. The second audit will require a Government Accountability Office review of CFPB’s financial statements to ensure compliance with “generally accepted government accounting standards.” CFPB Subject to Annual Audits, Study | Reverse Mortgage Daily . Posted in CFPB | Comments Off

Regulators says Conn. investors hit with overcharges by Florida firm Posted on April 20, 2011 by admin Connecticut is the first state to bring this action against Newbridge, which has 13 offices in the U.S., including a presence in New York, New Jersey and Boston. Newbridge is a registered broker dealer in all 50 states and two territories. Since 2003, Newbridge has paid regulators in other states a total of $588,500 to settle allegations related to 12 violations that included failure to report transactions properly, selling unregistered securities and enabling the manipulation of a stock, according to the Financial Industry Regulatory Authority. Regulators says Conn. investors hit with overcharges by Florida firm – NewsTimes . Posted in FinRA | Comments Off

Crain’s Insider – Wednesday, April 20, 2011

Crain’s Insider

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Today’s News Wednesday, April 20, 2011

De Blasio Follows Suit

Add this to the public advocate’s limited tool kit: joining lawsuits through friend-of-the-court, or amicus curiae,  briefs. Bill de Blasio plans to file his first in a case against judges in Queens who allegedly discriminate against disabled people. One insider speculated that de Blasio is searching for “new avenues to expand his power” as he considers a run for mayor. De Blasio’s office says the brief is part of a broader strategy to help underserved New Yorkers by any means possible.

Bodegas Seek Security

Manhattan City Councilman Ydanis Rodriguez wants the city to replicate a 2002 program to help bodegas in high-crime areas buy security cameras. It should be easier now: It costs about $3,000 to adequately secure a bodega with eight cameras, half of what it cost then. But that’s still too much money for most bodega owners, says Rodriguez. He wants to steer $200,000 in capital funding to the Department of Small Business Services for bodega outreach.

HTC Rocks the Boathouse

Hotel Trades Council members will rally Thursday outside the Central Park Boathouse to pressure the city’s Parks Department to intervene in a bitter dispute between the union and the facility’s operator, Dean Poll. Some workers at the Boathouse have been organizing with HTC for more than a year and, in complaints made to the National Labor Relations Board, have alleged that management has violated federal law in an attempt to beat back the campaign. It’s the second recent tussle between Poll and HTC, who were unable last year to negotiate a contract at Tavern on the Green. A Poll spokesman said that if the workers want to join the union, they should file for an election. A ruling from the NLRB on the workers’ allegations is expected soon.

Hospitals Favor Styrofoam

The Greater New York Hospital Association is opposing legislation sponsored by two Manhattan Democrats, Sen. Liz Krueger and Assemblyman Brian Kavanagh, that would prohibit state government from using disposable polystyrene cups, plates and cartons. GNYHA said the law would increase costs at the state, county and municipal levels. It noted that disposable paper, in addition to being more expensive, also can be bad for the environment.

Congestion-pricing comeback lacks champion

Transportation advocates are using the $10 billion funding gap in the Metropolitan Transportation Authority’s capital plan to advance congestion pricing, a policy proposed by Mayor Mike Bloomberg in 2007 that failed to win state approval.

But despite endorsements from a handful of outer-borough politicians, resistance remains, and no legislator has stepped up to sponsor a bill. One hurdle is that congestion pricing has an image problem: It’s seen more as a way to raise revenue on outer-borough and suburban commuters than as a solution to traffic problems.

Proponents need a strong supporter outside of City Hall. They are going directly to the Legislature in hopes of persuading outer-borough and suburban politicians to champion the idea of tolling entry into Manhattan from the other boroughs and northern Manhattan. State Sen. Daniel Squadron and Assemblyman Hakeem Jeffries, both Democrats, say they would support the plan if the concerns of their downtown Brooklyn districts were addressed.

“The MTA needs a more stable revenue stream,” said Jeffries. “In order to support its operating expenses and capital budget, it’s reasonable to consider some form of traffic pricing.”

Jeffries and other legislators whose districts abut the proposed toll areas had previously opposed congestion pricing because of concerns that drivers would park in those nearby neighborhoods rather than pay a toll to drive into Manhattan. Wary of empty promises, Republican state Sen. Marty Golden of Brooklyn says that the MTA would have to restore cut bus lines and further improve outer-borough service before he could sign on to a bill. London improved public transportation before it implemented its own congestion pricing plan.

Advocates of congestion pricing say they would support giving relief to suburban counties that pay into the MTA’s payroll mobility tax, as well as lowering tolls during nonpeak hours. Additional safeguards would have to be included to prohibit lawmakers from using MTA-dedicated funds for other purposes.

But even that may not be enough to win over opponents.

“I am not open to it,” said Assemblyman Rory Lancman of Queens. “It is fundamentally flawed from top to bottom.”

At A Glance

MOVING ON:  Carol Raphael is stepping down from the post of president and CEO of the Visiting Nurse Service of New York, which she has held for 22 years. She will stay with VNSNY until the first quarter of 2012 if necessary during the transition to a new leader. Spencer Stuart is conducting the search for a replacement.