Author: muckety

  • FDIC chair Sheila Bair likes a story with a happy ending Muckety.com

    Rock and Brock are twins. Brock is a saver. Rock is a spendthrift.

    When their grandfather hires them to do chores, promising to match every penny they save, Brock accumulates hundreds of dollars, while his brother goes on a buying spree.

    Brock eventually shares his fortune with his twin, who learns his lesson. The story ends with the brothers as adults, both millionaires and both understanding compound interest.

    The author of this children’s book, called Rock, Brock, And the Savings Shock, is Sheila Bair, who no doubt hopes that the current financial crisis will have a similar happy ending.

    Bair is chair of the FDIC, which seized Washington Mutual, the nation’s largest S&L, on Thursday. The agency is likely to have to bail out more banks in coming months, straining FDIC finances in a way that hasn’t occurred since its inception in 1934, in the midst of the Depression.

    The FDIC backs all all accounts up to $100,000 at member banks, and it has never failed to pay up.

    In the current climate, banks will billions of dollars in assets are at risk. Thirteen banks have failed thus far in 2008 and the agency maintains a list of more than 100 other endangered institutions.

    As of June 30, the FDIC’s insurance fund totalled $45.2 billion for claims – not enough to cover the collapse of several major banks. Even if the proposed bailout plan receives congressional approval, it won’t address FDIC’s need for cash.

    Bair has said the FDIC is preparing for a likely succession of bank failures, and plans to raise insurance premiums paid by the banks.

    More importantly, she says, there are plenty of buyers interested in buying up the distressed institutions. As she told CNBC:

    I have people calling us every day, interested in investing in banks. There is a lot of market interest out there and that’s good, because that is good to try to move these banks. You don’t want to close them, but if they have to be closed, move them back into the private sector as quickly as possible, with minimal cost to us. And if we have multiple bidders that helps us get the price we need.

    Bair was appointed to a 5-year term as FDIC chair in June 2006. Before joining the agency, she taught at the Isenberg School of Management at the University of Massachusetts-Amherst. She previously served as assistant treasury secretary, senior VP at the New York Stock Exchange, and counsel to Bob Dole.

    Her husband, Scott P. Cooper, is the lobbyist for the American National Standards Institute.

  • Paul Newman dead, at 83

    Actor Paul Newman died yesterday of cancer. He was 83.

    Newman was known not only for his many films, but for his philanthropic and political activities.

    Newman’s Own, which manufactures salad dressings, sauces and other foods, donates profits to charities. The organization reports having given away more than $250 million since 1982. Newman was a major benefactor of his alma mater, Kenyon College.

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    He was also a contributor to Democratic candidates such as Barack Obama and Hillary Clinton, and wrote occasionally for the liberal magazine, The Nation.

    Newman won an Oscar for his role in the 1986 movie, “The Color of Money,” and received two honorary Oscars for his contributions to film.

    He is survived by his wife, Joanne Woodward, who co-starred with him in “Mr. and Mrs. Bridge” and the made-for-TV movie, “Empire Falls.”

  • McCain adviser Nancy Pfotenhauer learned ropes as lobbyist, crusader

    Her short, blonde hair is perfectly coiffed; she smiles beatifically through Chris Matthews’ tirades and wields John McCain’s latest talking points like a sword in battle.

    Nancy Miller Pfotenhauer, senior adviser to GOP presidential nominee John McCain, has prepared for this role for 20 years.

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    She honed her skills as a conservative poster-girl by working her way up through the trenches of GOP politics, conservative think tanks and private industry – apprenticing herself as a young, graduate student to conservative economic star Walter E. Williams at George Mason University, working for the Republican National Committee, and then learning political hardball as in-house lobbyist for Koch Industries, the world’s largest private company run by conservative mogul Charles G. Koch.

    Some have suggested that the McCain campaign has put her out front to make the Republican ticket seem more female-friendly – a strategy that may also be reflected in the White House’s choice of Dana Perino as spokeswoman.

    Pfotenhauer, however, is no Sally-come-lately to the GOP; her connections to the politically active Koch brothers, in particular, go back two decades.

    After graduating from the University of Georgia, she got a masters degree in economics at George Mason University, a major beneficiary of Koch family largesse. (No coincidence that Richard H. Fink, executive vice president of Koch Industries, is a member of the board of visitors of George Mason, and also president and director of two of the family’s charities – the Claude R. Lambe Charitable Foundation and of the Charles G. Koch Charitable Foundation.)

    One of her mentors at George Mason was Williams – a darling of the conservative movement who appears as a substitute host on “The Rush Limbaugh Show,” and sits on boards of Koch-funded think tanks such as the Cato Institute.

    She got her first job in Washington as a senior economist at the Republican National Committee in 1987, and was promoted to chief economist in 1988.

    Leveraging her association with Williams, at age 24, she won a spot on the transition team for then-incoming President George H.W. Bush, according to a story in Daily Kos, where she advised on appointments to both the Federal Trade Commission and the Interstate Commerce Commission.

    For the next two years, she worked as economic counsel to then-Sen. William Armstrong, a member of the Republican leadership who served on both the Finance and Budget Committees. In 1990, she was appointed chief economist of the President’s Council on Competitiveness, where she worked with Dan Quayle, among others.

    Soon thereafter, she moved to the Washington office of Koch industries, becoming the company’s chief in-house lobbyist.

    “At Koch, Pfotenhauer experienced first-hand the legislative and regulatory labyrinth that faces American companies and ultimately has an impact on consumers,” according to her own profile.

    Gas pipelines were a major issue during her tenure there. In early 2000, Koch Industries agreed to a landmark $30 million civil settlement with the federal government, in an effort to resolve claims related to more than 300 oil spills from its pipelines and oil facilities in six states.

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    In 2001, Pfotenhauer left Koch Industries to become president of the Independent Women’s Forum, a conservative research group that also received funding from Koch foundations.

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    Founded by Rosalie (Ricky) Gaull Silberman in 1992, the women’s forum grew out of “Women for Judge Thomas,” which was created to defend Clarence Thomas against allegations of sexual harassment and other improprieties during his confirmation hearings for the U.S. Supreme Court.

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    The group has been described as “a virtual Who’s Who of Washington’s Republican establishment” – besides Silberman, its directors emerita include Wendy Lee Gramm, Lynne Cheney and Midge Decter.

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    Its stated goals are to build support for “a greater respect for limited government, equality under the law, property rights, free markets, strong families, and a powerful and effective national defense and foreign policy,” according to its website.

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    The liberal-leaning People for the American Way, which is critical of the organization, describes it as “a secular counterpart to Religious Right women’s groups like Eagle Forum and Concerned Women for America….”

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    It was through the women’s forum that Photenhauer was appointed by then-Attorney General John Ashcroft to join the National Advisory Committee on Violence Against Women in 2002 – though her group had vigorously opposed the law the committee was supposed to oversee.

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    The appointments infuriated feminist groups, according to a Washington Post column by Dana Milbank:

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    “I’m appalled but I’m not shocked,” said Kim Gandy, president of the National Organization for Women. She said the IWF “makes light of violence against women on a regular basis.”

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    Pfotenhauer said in an interview yesterday that her purpose was “not at all” to undo the law but to give states more flexibility in implementing it.

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    “You have to look at domestic violence as a culture of intimacy,” she said, rather than a “one-size-fits-all, men-beat-up-women” framework.

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    Pfotenhauer said it was the first time her organization has been invited to join the committee. “I’d hope we’ve been asked to participate in this because we have a different view but one that’s constructive,” she said.

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    In October 2003, the women’s forum announced an affiliation with Citizens for a Sound Economy, now Americans For Prosperity – also Koch-funded groups – with which it shared staff and premises for several years. For a while Pfotenhauer was also president of Americans for Prosperity and executive vice president for Citizens for a Sound Economy.

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    Pfotenhauer left those groups last year to become an adviser to John McCain’s presidential campaign.

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    She is married to Kurt Pfotenhauer, a former top lobbyist for the Mortgage Bankers Association who now heads the American Land Title Association.

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  • William Gross, stamp collector and bond king, ready to advise the Treasury

    William H. Gross, the billionaire “King of Bonds,” has never been reluctant to give advice.

    He has written two books on investing as well as numerous op-ed pieces on the markets. And he’s usually available for interviews on matters economic.

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    Now, according to The New York Times, Gross is offering his advice to the U.S. Treasury.

    Gross says that he and his colleagues at Pacific Investment Management Company (Pimco) will evaluate the distressed mortgage securities the government will buy if a $700 billion bailout plan is approved by Congress.

    “I’d even be willing to say that if the Treasury wanted to use our help, it would come, you know, free and clear,” said Gross, who is Pimco’s founder and co-chief investment officer.

    It’s a little unlikely that Treasury Secretary Henry M. Paulson Jr. will take Gross up on the offer as Pimco might be seen as having a conflict of interest even if it doesn’t charge for its services.

    But there’s a good chance that any advice Pimco gave would have to be taken seriously, as the company has managed to remain relatively unscathed by the mortgage and credit crisis.

    Gross had argued for more than a year that the bubble was going to burst.

    And Pimco was so well positioned when the government stepped in that it made $1.7 billion when Treasury saved the mortgage giants Freddie Mac and Fannie Mae. Though, on the down side, Pimco was a large holder of bonds at the now bankrupt Lehman Brothers.

    Gross, 64, has long shown an ability to beat the odds. After his graduation from Duke University he spent a summer in Las Vegas playing blackjack. Starting with $200, he ended up with $10,000.

    After that summer, he served on a U.S. Navy destroyer off the coast of Viet Nam. Following his discharge, he earned an MBA at the University of California at Los Angeles.

    He then went to work for Pacific Mutual Life as an investment analyst.

    In 1982, Gross founded Pimco. The company now manages $830 billion, including $132 billion in the Pimco Total Return Fund, the world’s biggest bond fund.

    Gross has invested a significant portion of his own money in stamps, collecting rare issues.

    Last year, he raised $9.1 million for the charity Doctors Without Borders by selling some of his some of his British stamps at auction.

    The amount raised represented an astonishing return on investment, as Gross had spent a total of $2.5 million for the stamps between 1998 and 2001.

    “It’s four times profit,” Gross said after the auction. “It’s better than the stock market.”

    Gross will sell more of his stamps at auction on Oct. 3. The 138 British Empire stamps are estimated to bring at least $1.25 million. Gross and his wife, Sue, will donate the proceeds to the Millennium Villages Project.

    The couple has also donated millions of dollars to various causes through the California-based William and Sue Gross Foundation.

  • Rudy Giuliani puts together team to ‘guide’ firms on proposed bailout

    The vultures are already circling.

    The New York Daily News reports today that Rudy Giuliani is positioning his international law firm to get a stake in the proposed $700-billion bailout of Wall Street.

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    With a rescue deal still being hammered out in Washington, the former presidential candidate and New York mayor announced Thursday that Bracewell & Giuliani had put together a high-powered task force to assist financial institutions in selling toxic assets to the federal government.

    “Our team of former government officials and experienced attorneys in the fields of legislation, enforcement and finance are equipped to guide institutions in this quickly evolving and complex environment,” Giuliani said in a press release.

    Giuliani is not the only one preparing his firm to advise companies on the bailout. But he has been a high-profile surrogate for GOP presidential nominee John McCain. The fact that McCain has not signed off on the proposed bailout does not seem to have given the former mayor any pause before pursuing a new business opportunity.

    Members of Bracewell & Giuliani’s task force will include several partners with connections both to the financial world, the U.S. Treasury Department and to the George W. Bush White House, among them:

    • Robert L. Clarke, a former U.S. Comptroller of the Currency under the late Ronald Reagan, who also was a director of the Federal Deposit Insurance Corporation and the Resolution Trust Corporation.
    • Marc Mukasey, a former federal prosecutor in Manhattan and the son of U.S. Attorney General Michael Mukasey, a close friend of Giuliani’s.
    • John A. Brunjes, a member of the Connecticut Hedge Fund Association and a former assistant attorney general for the state of Connecticut.
    • Patrick C. Oxford, a longtime fundraiser for George W. Bush, who had served as a member of the board of regents for the University of Texas during Bush’s tenure as Texas governor.
    • Evan D. Flaschen, a leading bankruptcy attorney who has represented some of the world’s largest institutional investors.

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