Contrarian Stock Market Investing News - Featuring Bargain Stocks » Government Funds

Galapagos Vacations? Politician’s Overseas Travel Is Up Almost Tenfold Since 1995

Contrarian Profits — Fri, 03 Jul 2009 18:00:38 +0000

“A review of travel and financial records showed that Gov. Mark Sanford did not spend public money improperly when he visited his mistress”, the chief of the South Carolina Law Enforcement Division, Reginald Lloyd, said this afternoon.

Thank goodness Governor Sanford’s fornicating was fiscally lawful!

But it shows you that there are hardly any limits to the perks, fringe benefits, and global sex romps that can be had on the taxpayer’s dime by our elected officials…

From the Wall Street Journal:

Spending by lawmakers on taxpayer-financed trips abroad has risen sharply in recent years, a Wall Street Journal analysis of travel records shows, involving everything from war-zone visits to trips to exotic spots such as the Galápagos Islands.

The spending on overseas travel is up almost tenfold since 1995, and has nearly tripled since 2001, according to the Journal analysis of 60,000 travel records. Hundreds of lawmakers traveled overseas in 2008 at a cost of about $13 million. That’s a 50% jump since Democrats took control of Congress two years ago.

The cost of so-called congressional delegations, known among lawmakers as “codels,” has risen nearly 70% since 2005, when an influence-peddling scandal led to a ban on travel funded by lobbyists, according to the data.

We’ve taken the liberty of inserting our own reactions to the reasons for these trips…

Lawmakers say that the trips are a good use of government funds because they allow members of Congress to learn more about the world [they can't do that on their own dime?], inspect U.S. assets abroad [what for?] and forge better working relationships with each other [haaa!]. The travel, for example, includes official visits to American troops in Iraq and Afghanistan [great footage for campaign videos...].

All we can say is that we’re glad the US empire is in decline. That’ll some day limit the free-travel options of our globe-trotting bureaucrats.

Investment News Briefs Wednesday, June 17, 2009

William Patalon III — Wed, 17 Jun 2009 13:33:42 +0000

BRIC Building; Bankruptcies Accelerate; Auto Parts Suppliers Denied Additional Government Funds; GM Sells Saab; Best Buy Misses Expectations; MySpace Cuts 1,000 Workers; Banks See Recession Ending in Late Summer

Members of the so-called “BRIC” nations – Brazil, Russia, India and China – met in Russia yesterday (Tuesday) for their first ever summit. The meeting was followed by the release of a joint communiqué that demanded a larger role for emerging nations. “The emerging and developing economies must have a greater voice and representation in international financial institutions,” the statement said. “We also believe that there is a strong need for a stable, predictable and more diversified international monetary system.” However, the statement did not mention a smaller role for the dollar and a supranational reserve currency, suggestions previously proposed by Russia and China as a result of the financial tidal wave that emanated from the United States.

U.S. corporate bankruptcies are accelerating, as eight public companies with assets of more than $1 billion filed for bankruptcy protection in the last four weeks, according to data compiled by BankruptcyData.com. That compares with five multibillion-dollar company bankruptcies in the prior four-week period, Reutersreported. “In the 12-month period ending March 31, 2009, there were approximately 1.2 million bankruptcy petitions filed – nearly double the number of petitions filed in 2006,” Barbara Lynn, chair of the bankruptcy committee of the Judicial Conference of the United States told Reuters.

A request from auto suppliers for as much as $10 billion in funding from the government was denied by the Obama administration,The Associated Press reported. An existing $5 billion in funds for auto parts makers was playing an important role in stabilizing the United States’ auto supply base, the Treasury Department said yesterday (Tuesday). The group of suppliers lobbied for the money to help them buy raw materials and pay employees as Chrysler LLC and General Motors Corp. (OTC: GMGMQ) resume production.

A group led by Swedish sports car maker Koenigsegg Group ABagreed to buy General Motors Corp.’s (OTC: GMGMQ) troubledSaab Automobile AB unit. Saab has been a part of GM since 2000, but was put up for sale earlier this year as the government-supported GM attempts to return to profitability. GM unloaded its Saturn unit last week, which was sold last week Penske Automotive Group (NYSE: PAG).

Shares of Best Buy Co. (NYSE: BBY) fell more than 7% in trading yesterday (Tuesday) after the company’s first quarter profit missed Wall Street’s revenue forecasts. The No. 1 electronics retailer in the United States posted a net income of $153 million, or 36 cents per share on sales of $10.1 billion. That compares to a net income of $179 million, or 43 cents per share on sales of $8.9 billion. Declining sales of video game products, digital cameras, movies and appliances offset stronger sales of mobile phones and notebook computers, Best Buy said.

News Corp.’s (Nasdaq: NWS) social networking siteMySpace.com has laid off 1,000 workers in response to sagging ad sales and large user gains by rival Facebook Inc., Bloomberg News reported. “Our staffing levels were bloated and hindered our ability to be an efficient and nimble, team-oriented company,” said MySpace Chief Executive Officer Owen Van Natta, adding the move was “necessary for the long-term health and culture of MySpace.”

The largest banks in the nation expect the worst recession in more than 60 years to finally end late this summer, but expect the economy to remain weak until next year. “The economy will return to growth but not to health,” Bruce Kasman, chief economist forJPMorgan Chase & Co. (NYSE: JPM) and chairman of theAmerican Bankers Association’s Economic Advisory Committee, said yesterday (Tuesday). The committee expects gross domestic product to increase 0.5% in the July-September quarter, after falling a projected 1.8 percent previous period, The Associated Press reports. Despite the expected recovery, jobs will remain hard to come by going into the first quarter of 2010, the committee said.

Source: Investment News Briefs Wednesday, June 17, 2009

Obama Administration Wants New “Pay Czar” and Shareholder Vote to Reign in Executive Compensation

Don Miller — Thu, 11 Jun 2009 15:02:43 +0000

The Obama administration yesterday (Wednesday) continued its assault on highly paid Wall Street executives, announcing plans to appoint a “pay czar” to oversee compensation at financial firms receiving Troubled Asset Relief Program (TARP) funds.

The government also will create a new program to give shareholders at nonparticipating firms a vote on executive pay packages.

President Barack Obama has targeted executive pay practices as part of a larger effort to overhaul regulations and prevent a repeat of the worst financial crisis since the Great Depression.

Obama will unveil a “series of specific proposals” on June 17 designed to streamline and reorganize regulations, White House spokesman Robert Gibbs told Bloomberg News.

The administration originally proposed regulations in early February to put a $500,000 per year lid on the salaries of executives at firms that tapped into the government’s $700 billion TARP rescue fund. The only exceptions would be in the form of restricted stock or other long-term incentives.

But the plan was compromised when Senate Banking Committee Chairman Christopher Dodd, D-CT, spearheaded a provision that limited bonuses to no more than one-third of executive compensation. The provision was eventually tacked on to the $787 billion stimulus legislation, along with another stipulation that made it easier for banks to repay TARP funds and avoid the new regulations.

The two-pronged approach announced by the Obama administration Wednesday was designed to reconcile the administration’s initial pay policy with the Congressional bill and prevent financial companies that pay back the government funds from circumventing the guidelines.

Leading the administration’s charge has been Treasury Secretary Timothy Geithner who has repeatedly pointed to executive compensation policies based on short-term profits as a key factor in the financial crisis.

Geithner, who has said compensation practices became “divorced from reality,” met with Securities and Exchange Commission (SEC) Chairman Mary Schapiro, Federal Reserve Governor Daniel Tarullo and other compensation experts, to further discuss how to put the clamps on the practice.

“A centerpiece of sensible reforms will be to tie compensation to better measures of long-term investment and return, and to adjust them to reflect the risk” incurred by executives’ decisions, Geithner said recently during a hearing at a Senate Appropriations subcommittee.

Kenneth Feinberg, who oversaw the government’s compensation to the survivors of the September 11, 2001, terror attacks, will take over the pay czar role, Reuters reported, citing a source familiar with the administration’s plan.

The pay czar, or “special master,” will review compensation structures for the top 100 salaried employees of firms receiving exceptional assistance, such as Bank of America Corp. (NYSE: BAC), Citigroup Inc. (NYSE: C) and insurer American International Group Inc. (NYSE: AIG), the source said.

“In the case of a company receiving exceptional assistance, the special master would have the authority to disapprove of a company’s compensation plan if he determined they were paying excessive and unjustified salaries to their top executives,” the official said.

The other initiative would give the SEC authority to force financial firms to allow shareholder votes on executive pay packages. The nonbinding vote would cover everything from bonuses and salaries to severance packages, and would need Congressional authorization.

Geithner has supported the so-called “say-on-pay” rules ever since he took office. In a May 18 speech in Washington, he said that giving shareholders a vote on compensation would bring a “kind of disclosure that can help a lot.”

“It clearly is going to force companies to be more transparent with their disclosure” on compensation, Irv Becker, national practice leader for Philadelphia-based Hay Group’s executive compensation practice toldBloomberg.

Even if the measure is implemented, it likely will take several years before shareholders begin to confront management, Becker predicted.

“It’ll kind of be novel the first year, maybe the first two, and then likely be a little bit more serious in future years,” said Becker, a former head of compensation and benefits at Goldman Sachs Group Inc. (NYSE: GS).

Nevertheless, Geithner vows to press ahead with the new measures, and perhaps others still on the drawing board.

“As you’ll hear from us in the next few days, the SEC has some important responsibilities and obligations in this area, and some tools and authorities they may seek,” Geithner said.

Source: Obama Administration Wants New “Pay Czar” and Shareholder Vote to Reign in Executive Compensation

American Express Now a Commercial Bank

Mike Caggeso — Tue, 11 Nov 2008 21:09:48 +0000

American Express Co. (AXP) today (Tuesday) won approval from the U.S. Federal Reserve to become a commercial bank, giving the credit card titan a crucial lifeline as the risk of defaults runs higher in the slowing global market.

American Express won the Fed’s approval unanimously and without the application’s standard 30-day waiting period because of “the unusual and exigent circumstances affecting the financial markets,” according to a Fed statement.

High unemployment and a severe drought of credit are plaguing the consumer market, causing them to spend less. Worse, it’s caused many to be unable to pay existing debts such as credit cards.

October was the first month in 15 years that credit card companies weren’t able to sell bonds backed by customer payments, Bloomberg reported. And this upgrade to commercial bank status allows American Express – the fourth-largest U.S. credit card company – access to government funds.
American Express becomes the third major institution to switch over to a commercial bank in as many months, joining Goldman Sachs Group, Inc. (GS) and Morgan Stanley (MS).

In the past year, American Express has lost nearly half its market value as it posted four consecutive quarters of declining profit.

Mixed Analyst Reactions

Oppenheimer Holdings, Inc. (OPY) analyst Meredith Whitney said that the approval will give American Express a more stable mix of funding and allow it to cut borrowing costs.

“Whether institutions like it or not, the only prudent thing to do is assume a protracted worst-case funding scenario,” Whitney said in a note to investors, Reuters reported.

While she maintained her “perform” rating on American Express’ stock, she said that “concerns for American Express and other consumer lending-related stocks continue to be worse-than-expected credit losses.”

Scott Valentin of Friedman, Billings, Ramsey Group, Inc. (FBR) wasn’t as generous, the Associated Press reported. While maintaining his “underperform” rating and $22 target price for American Express stock, Valentin said the company’s earnings and model “are under severe stress in the current environment.”

Source:American Express Now a Commercial Bank