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Showing posts from May, 2010

Financial Reform passes!

In another stunning victory for the Obama Administration, the US Senate passed the financial regulatory reform bill by a vote of 59-39 on Thursday night. (A summary of the legislation can be found on the Senate Banking Committee website.)

We are optimistic that this legislation will begin to address the "trust issues" that now dominate the equity marketplace. It was these "trust issues" that caused a 1,000 point intra-day fall in the Dow Jones Industrial Index on May 6. Until now, rational, fair or effective solutions to the practices that caused so much turmoil in 2007, 2008 and 2009 had not been enacted in any Western economy or market system.

Market mechanisms are simply stressed to the breaking point, given the sharp rise in transaction costs. Transaction costs increased as marketplace ethics decreased. Financial market institutions, recognizing that a decline in ethical standards eventually leads to a decline in trust and an increase in transaction costs, atte…

ShoreBank's Rescue Gives Community Lenders Hope

Summary version from The American Banker Newspaper. Wednesday, May 19, 2010. Story by Robert Barba.

Sources said early Tuesday that the struggling $2.3 billion-asset lender had secured $140 million in capital commitments, well exceeding the $125 million it needed to become eligible for a $75 million investment from the Treasury Department.

Though most of the companies on the roster have been solid supporters of community development financial institutions, Goldman Sachs Group Inc. and General Electric Co.'s GE Capital were two newcomers. They also were among the biggest investors in the group, kicking in $25 million and $20 million, respectively.

Another headline investor in ShoreBank is Citigroup Inc., at $20 million. Others include Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., U.S. Bancorp, Morgan Stanley, Northern Trust Corp. and PNC Financial Services Group Inc. Also on board were State Farm, the Ford Foundation and the John D. and Catherine T. MacArthur…

Corporate Governance Research

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Pursuant to Request for Proposal No. 2009-5330, the California Public Employees’ Retirement System intends to award the contract for Corporate Governance Research Spring-Fed Pool to: Creative Investment Research, Inc. See: http://www.calpers.ca.gov/j2/data/ei/contracts/files/2009-5330/Intent-to-Award.pdf
Related articlesFact and Fiction in Corporate Law and GovernanceCorporate GovernanceCorporate Governance

Investment Trends Summit

Opal Financial Group's Investment Trends Summit is designed to meet the needs of senior pension fund officers, trustees and other institutional investors who prefer smaller, more structured programs. By limiting the number of managers in attendance, participants will be able to more carefully examine a distinct set of topics specifically tailored to their interests.

This year's Summit will take place June 16-18, 2010 at the fabulous Four Seasons Resort, The Biltmore, in Santa Barbara, CA.

Topics of Discussion Include:
• Challenges Institutional Investors Are Now Facing
• Post Crisis Hangover - Lower Risk or Raise Returns?
• Real Asset Investing
• The Changing Regulatory Environment
• Ongoing Education for Plan Fiduciaries and Participants

Register here. Institutional investors registrations are complimentary.

Punishing Goldman Sachs

According to news reports, most prominently a report by Charles Gasparino, Goldman Sachs is looking to settle SEC charges that the firm willfully mislead and defrauded investors in selling an investment product based on subprime mortgages. This is, of course, the smart thing for them to do, if they can. I am not sure that the SEC will let them off the hook lightly. Even a billion dollar fine would be of little consequence to the firm. What to do? Here is what I said in 2005:

"One thing I would note about the (Global Research Analyst) settlement itself is our belief that the penalties should have been income based. I know that's a settled point, but our suggestion would have been that the settling firms be stripped of all income for a 12-month period as a way of ensuring that they would not engage in these egregious actions again. What you do is let the firms run themselves for a 12-month period, you take a look back at how much money they made, and you take all of that money o…