China Grabs A Slice Of Africa

China Grabs A Slice Of Africa
Parmy Olson, 10.25.07, 12:40 PM ET

LONDON -
China's ambitions to get a foothold in resource-rich Africa took a significant step forward Thursday after the state-run Industrial and Commercial Bank of China Limited (ICBC), announced it was buying 20% of Africa's biggest bank, Standard Bank, for $5.5 billion.

The deal with the South African lender is the biggest-ever foreign direct investment into South Africa and ICBC's biggest-ever investment outside China. The deal, which has to be approved by South Africa's regulators and ICBC shareholders, will nearly double foreign ownership of Standard Bank to some 40%. It will also see the two companies set up a $1 billion private equity fund for making joint investments in emerging markets. ICBC is China's biggest bank.

The deal will help give the Chinese government, which has influence over some of the country's biggest companies, important influence and credibility when making investments in Africa. Standard Bank is in 17 countries in Africa, and has investments in many African firms. (A common strategy for investing in Africa is to buy into South African companies with exposure to rapidly-growing economies, like Nigeria, as it is less risky than investing in firms with more local exposure.)

The investment also makes it a lot easier for ICBC's corporate clients in China (there are a whopping 2.5 million of them) to get access to banking services for their businesses in Africa, of which there are many. Walking down streets in Lagos, Nigeria for instance, it is not unusual to see numerous shops run by Chinese entrepreneurs.

"Chinese corporations are extremely interested in Africa across every sector, and clearly many of those have an interest in Africa, where Standard Bank is very strong," Chief Executive of Standard Bank International Rob Leigh told Forbes.com. "We've been talking to ICBC for some time around business cooperation. That's how this deal was born."

ICBC Chairman Jiang Jianqing said many of the bank's "large clients" sought African investments, and the demand for cross-border financial services is accelerating.

Rapidly-industrializing China has increasingly relied on Africa for commodities like copper, zinc, gold and iron, which are abundant. About 13% of Africa's exports now go to China, and trade from Africa to China is growing by 50% every year. It's partly why the state-run China Development Bank last July bought a chunk of Barclays, a British bank that, thanks to its longstanding colonial roots, has a strong foothold in African trade finance. CDB said then that the investment would help "facilitate international commerce for Chinese companies." In May China created a $5 billion investment fund for Africa. (See: "Say It With Investment")

Similarly to the Barclays investment, the Standard Bank investment will see China tap into long-established expertise. "By making the acquisition, ICBC gets to learn from one of the best banks in Africa," said Robert Levitt, chief investment officer of Levitt Capital Management, which has shares in Standard Bank. "It will learn about financing the mining industry. It will learn about African FX. It is a very good move."

"Probably the best financial systems of any emerging market are in South Africa," said Jan Randolph, head of sovereign risk at Global Insight. "Their banks are as good as ours, and their capital markets are as developed as anywhere else in the West, or Japan."

The Chinese government, with more than $1 trillion in foreign currency reserves, has managed to build an impressive sovereign wealth fund it is now using to make investments in companies like Barclays and Standard Bank, in order to fulfill China's short term and long term economic needs. Africa is a particularly attractive market and not just because it churns out 30% of the world's gold, half the world's diamonds, and half of the world's platinum, but also because its economy is growing rapidly.

Sub-Saharan African countries grew by 6% in 2006 for the third year in a row, largely due to rising commodity prices. Remove India and China, and the sub-Sahara has grown faster than most of Asia.

China also likes Africa because it's relatively uncomplicated. "They're interested in investing in other emerging markets because there are far fewer political issues," said Richard Ferguson, director of global emerging markets research at Nomura. "They don't have to deal with things like the U.S. Congress or the European Commission, and all the problems that go with that.”

With its myriad investments in other African companies, Standard Bank can also act as a source of credibility and influence for future business that China may do in Africa. "Every empire does this–make overseas investment to safeguard its own strategic interests. In terms of lending and in terms of the projects in which it can invest, it does bring influence,” said Ferguson.

The two banks have already worked out an impressive system for cooperation. For a start, Industrial and Commercial Bank of China will have the right to nominate two non-executive members of the Standard Bank Group board of directors, with one of the non-executive directors being nominated as the Vice Chairman of Standard Bank Group. There will also be an ICBC/Standard Bank Group Strategic Cooperation Committee.

Perhaps most intriguing of all is the so-called "global resource fund," which Standard Bank and ICBC are planning to set up as part of their new tie-up. Essentially it is a private equity fund, with a joint management team, into which both banks will provide seed money before inviting further investment. The banks aim to create a $1 billion fund focused on emerging markets.

"We've been talking about specific areas of cooperation with ICBC, and we believe there is a very compelling story of bringing Standard Bank's expertise and access to investment opportunities throughout emerging markets, together with ICBC's ability to bring their Chinese client base and Chinese investment interest in these opportunities," said Leigh. (See: "African Stock Safari")

In one way, ICBC could act as the vanguard for other Chinese companies and banks to move into Africa and make similar investments. “There are four big banks in China and what they do can be can be dictated by the minister of state responsible for them. These things tend to happen almost like a confluence of thinking,” said Ferguson.

For instance, someone from China could well go for MTN Group, the hugely successful African cell phone company. The state-run China Mobile is one potential suitor, and though MTN has a market cap of $30 billion, it's not exactly out of China's budget range. Cell phone use in Africa is growing faster than anywhere else in the world, according to a 2005 study by the Centre for Economic Policy Research.

In terms of locales, Nomura's Ferguson cites Chinese government sources as saying they have South Africa (which accounts for a quarter of Africa's GDP), Nigeria, Cameroon, Zambia, Congo-Brazzavill and Angola, in their sights, mostly due to their rich natural resources. MTN has a presence in five of those markets. Standard Bank can now act as a gateway to these countries, and much more.

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Why Some Hard Workers Just Squeak by Financially

Why Some Hard Workers Just Squeak by Financially

No one could argue that you're unmotivated or underqualified. You work harder than most everyone you know and you've got professional credentials to spare. So why are you just squeaking by financially while the competition keeps getting further ahead?

You may be an undiagnosed underearner, says Barbara Stanny, author of the book "Overcoming Underearning."

Underearners aren't underprivileged, nor are they people who have made a conscious choice to pursue a line of work that offers more emotional rewards than financial payoffs, like teachers. Underearners are bright, dedicated, tenacious folks who seem unable to break out of the cycle of paycheck-to-paycheck living, in spite of their many gifts.

Think you might fall into this category? Here are five signs that you're an underearner:

1) Underearners consistently underprice their services. Underearners have a tendency to devalue their skills and services and this is reflected in their paychecks. "[They] give away their time, knowledge, skills, experience for free or at bargain prices, because they don't believe they're worth more," Stanny writes. Solution: Give yourself a reality check. Is your work on par with people in your field who are charging more for their services? If so, stop lowballing yourself.
 
2) Underearners are risk-averse. Moving ahead in your chosen field requires the ability to take calculated risks. Success means accepting that job you don't feel entirely qualified for, moving to a new company that recognizes your talents or taking on projects that are more demanding. Underearners often shy away from these challenges because they fear change, says Stanny. Solution: Stretch beyond your comfort zone. "We think when we get scared that we're on the wrong track, but that's usually a sign that we're on track for the next level," says Stanny.
 
3) Underearners are unfocused. Underearners frequently sabotage their success by spreading themselves too thin. "They unconsciously do things that make achievement impossible . . . like procrastinate, job hop, take on too much, become scattered and distracted," Stanny writes. This makes it next to impossible to keep their goals in clear focus. Solution: Make sure your everyday activities support your long term financial goals, rather than distracting from them.
 
4) Underearners prioritize the needs of others. Underearners have a habit of sacrificing their own needs to fulfill the needs of others. Don't mistake self sacrifice for nobility, warns Stanny; it's an unconscious way of sabotaging your goals. Solution: Recognize that the more resources you have -- both emotional and financial -- the more you'll be able to give back.
 
5) Underearners avoid dealing with their finances. Many underearners only have a vague grasp of where their money goes. They typically have trouble keeping tabs on their spending and are poor at planning for their own financial futures. This inability to grapple with money leaves underearners feeling out of control, and undercuts their ability to make informed choices about how to improve their financial picture, Stanny warns. Solution: Stop relinquishing responsibility for your financial life and take the necessary steps to improve it.

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Has the Mortgage Crisis Finally Peaked?

Has the Mortgage Crisis Finally Peaked?

Existing-home sales were down 8% in September, but the National Association of Realtors claims mortgage availability is finally improving

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In recent months, mortgage issues have been a main force hampering home sales but, according to a new report from the National Association of Realtors, mortgage availability is finally improving—even as home sales continue to slide.

The rate of existing-home sales dropped 8% in September to a seasonally adjusted annual rate of 5.04 million units from a downwardly revised rate of 5.48 million in August, according to the NAR study released Oct. 24. The national median price of existing-homes sold in September fell 4.2% year-over-year, to $211,700. September, 2007, marked the seventh consecutive month in which existing-home sales decreased.

This continuous decline in home sales has been predictable, to put it lightly. After existing-home sales fell 4.3% in August, the NAR advised realtors and homeowners to expect "similar results" in September and cited "temporary mortgage problems" as the main reason for poor home sales in August.

Jumbo Rates Down
A significant rise in jumbo loan rates resulting in a high number of postponed or cancelled sales was a particularly strong disruption to August home sales, according to NAR senior economist Lawrence Yun. On Aug. 15 the 30-year fixed jumbo mortgage rate hit 7.43%, according to data from Bankrate.com.

But now those "temporary" mortgage problems may have subsided. As of today, Bankrate.com reports that the jumbo mortgage rate is down to 6.59%. "Mortgage problems were peaking back in August when many September closings were being negotiated, and that slowed sales notably in higher-priced areas that rely more on jumbo loans," said Yun in a release. "The good news is that mortgage availability has markedly improved in recent weeks with interest rates on jumbo loans falling, and more people are applying for safer and conforming FHA mortgage products."

The bad news is that home sales are still dropping sharply in the wake of July and August's credit market turmoil, as existing-home sale figures typically reflect credit conditions during the month or two before closings. The September drop in homes sales and the median home price "left a report for the month that managed to prove even weaker in all respects than the market feared," said Mike Englund, chief economist at Action Economics.

More Resets On the Way
And, while it's possible that mortgage availability is improving as you read this, it's also possible that the credit situation could still get worse. "Compared to August, yes, the availability of mortgages is probably a little better now," said Moody's Economy.com (MCO) housing economist Celia Chen. "But I wouldn't say that mortgage problems peaked [in August] because there are still a lot of people with subprime mortgages facing resets right now."

But in some ways, the mortgage market's future is looking a little less grim. Some banks are even starting to help out borrowers in trouble. Major mortgage lender Countrywide Financial (CFC) said on Oct. 23 that it has come up with a new refinancing plan to help homeowners avoid foreclosure. The company has created a special finance unit of 2,700 employees that will work with borrowers who are likely to have difficulty making payments once their adjustable mortgages reset.

When will the bleeding stop? Mortgage problems will likely weigh heavily on October home sales, but the NAR's prediction may turn out to have some truth in it after all. "Sales in October may be as ugly as September's," said Global Insight economist Patrick Newport, who expects housing activity to hit bottom in mid-2008. "Afterward, the drops will be smaller."

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Which insurance policy is right for you?

Which insurance policy is right for you?

Here are some brief descriptions of popular insurance policies. The best things about these type of policies is that they combine insurance and investments to get capital appreciation. To find out which one is right for you and your family, consult your Tax Pros advisor. 

Universal Life Insurance
Universal life insurance is also permanent insurance as long as you pay your premium. This type of insurance is different from term and whole. Universal life insurance premiums and death benefits can be adjusted. It can also be purchase with a level death benefit or an increasing death benefit. Universal life insurance gains cash value which can be used for a number of reasons. You can surrender this policy for its accumulated cash value, or take a loan. You can also use the cash value to pay the premium for a certain length of time.

Equity Index Universal Life Insurance
Equity Index Universal Life Insurance or (EIUL) is a version of universal life insurance. It has all the features of universal life insurance such as flexibility of premiums and death benefits. What is unique about EIUL is that the cash value growth is linked directly to the equity index growth; the percentage credits in the account depend on the percentage increase for an equity index. If the index goes down by the end of the policy year, a minimum guaranteed interest rate will still be credited to the cash account.

Variable Life Insurance
Variable life insurance is a permanent life insurance as long as premiums are paid. The premiums of a variable life insurance policy are designed to stay level over time. V.L.I.’s accumulate cash value on a tax deferred basis with a chance for higher returns than other life insurance policies. V.L.I.’s vary with the investment results of funds chosen by the policy holder. Unlike other cash value life insurance policy’s that guarantee the cash value, V.L.I. does not guarantee the cash value. This type of life insurance carries more risk than the traditional life insurance policy because the money is invested in stocks, bonds, and money market accounts.

Variable Universal Life Insurance
Variable Universal Life Insurance or (VULI) is a permanent life insurance policy as long as premiums are paid. The difference between (VLI) and (VULI) is that the policy owner has flexibility to change premiums and death benefits.

Related Articles
1) How EIUL works (includes diagrams)
2) EIUL Overview (text only)
3) What you need to know about Equity Based Insurance Products

For more information contact Tax Pros Investors.
Click here

 

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Countrywide to Refi $16 Billion (before ARMs Reset)

Countrywide to Refinance Up to $16 Billion of Loans

CFC - today announced a comprehensive home preservation program to reach out to borrowers at-risk of default.  Countrywide will launch an outbound calling initiative to refinance or modify up to $16 billion of Countrywide loans for borrowers who are facing an adjustable-rate mortgage reset through the end of 2008.

Oct. 23 (Bloomberg) -- Countrywide Financial Corp., the biggest U.S. mortgage lender, plans to refinance or restructure as much as $16 billion of debt for home buyers facing higher payments on adjustable-rate mortgages before the end of 2008.

Countrywide has already refinanced $5 billion of loans and plans to contact 52,000 subprime borrowers with $10 billion of debt to offer new loans, the Calabasas, California-based company said today in a statement. It may modify terms on as much as $6.2 billion of mortgages for borrowers ineligible for refinancing.

Countrywide's stock has fallen 63 percent this year amid the worst housing slump in 16 years, which left the mortgage lender short of cash in August. Homeowners with poor credit histories risk losing their homes as mortgage payments jump.

``Countrywide believes that none of our subprime borrowers that have demonstrated the ability to make payments should lose their home to foreclosure solely as a result of a rate reset,'' David Sambol, the company's president and chief operating officer, said in the statement.

Last week, Countrywide said it will take a pretax restructuring charge of as much as $150 million to cut operations and as many as 12,000 jobs because of slower lending. About $57 million of the expense will be booked in the third quarter with the remainder in the fourth.

Subprime mortgages are available to borrowers with bad or incomplete credit histories. They made up about 20 percent of home loans issued last year and about 11 percent in the first half of this year, according to Inside Mortgage Finance, an industry newsletter.

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Homeowner Bankruptcies Surge (credit crunch #2)

Bankruptcies surge among US homeowners

Homeowners who fall behind on their mortgages are increasingly turning towards bankruptcy in order to stay in their homes; while Chapt 7 filings are still the most common, there is an increasing amount of chapt 13 filings.  "an increasing number of homeowners have filed for bankruptcy under Chapter 13, which staves off foreclosure proceedings while the homeowner works out a plan to pay off mortgage debt and other obligations over time -- usually three to five years. To qualify, debtors must have a regular income and must stay current on their new bills. About four in 10 filers today are filing under Chapter 13 -- up from three in 10 two years ago. The 2005 change in bankruptcy laws was designed in part to shift more filers to Chapter 13, which forgives less debt than Chapter 7" - WSJ

The number of Americans filing for bankruptcy soared 23 per cent last month as homeowners fought to prevent their homes from being repossessed - London Times

Bankruptcies surge among US homeowners

The number of those seeking protection from creditors rose over a fifth last month as more fight to keep their homes

The number of Americans filing for bankruptcy soared 23 per cent last month as homeowners fought to prevent their homes from being repossessed.

According to the American Bankruptcy Institute, around 69,000 people applied for two types of bankruptcy, one of which protects homeowners from being evicted from their homes if they can present a feasible plan to keep on top of their debt repayments and have a regular income.

The Institute, a national non-profit research group whose members include bankruptcy attorneys, judges and lenders, said that more homeowners had applied for bankruptcy in states where the property slump was more severe.

The figures reveal the impact of the housing recession in America, which marks the worst real estate slowdown for 16 years. They also raise pressure on the US Federal Reserve Bank to cut rates again when it meets next week. In September, the Fed reduced the cost of borrowing by a half percentage point to avert a deepening credit crisis in the US. It is expected that Ben Bernanke, chairman of the Fed, will cut rates again before Christmas.

Over a nine month period, the number of personal bankruptcies rose almost 45 per cent compared with the same period last year.

Traditionally, most borrowers who filed for bankruptcy, did so under under Chapter 7 of the federal Bankruptcy Code. Under that provision, debtors have to give up certain assets, often a chunk of equity in their homes. Those assets are sold to pay off borrowings. Typically, while the measure stops the foreclosure process, it just buys a borrower time, and most lose their home.

However, according to The Institute, an increasing number of Americans are opting for bankruptcy under Chapter 13, where a homeowner is often given three to five years to stick to an agreed repayment plan and keep their homes.

Court papers in Washington show that the number of personal bankruptcies under Chapter 13 doubled in California during the second quarter of the year, rose by 40 per cent in Ilinois and 70 per cent in Massachusetts.

There are rising concerns that the blight affecting American property prices will travel across the Atlantic to Britain. Only last week, the International Monetary Fund warned that Britain was vulnerable to an American-style property slowdown, as it argued that homes in the UK were overpriced by 40 per cent.

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State Street gets sued over retirement-plan losses

State Street Is Sued Over Fund Losses

By JENNIFER LEVITZ
October 18, 2007; Page C9

A New York publishing company filed a purported class-action lawsuit against State Street Corp. late yesterday over losses in fixed-income funds held in workplace retirement plans.

Unisystems Inc., which filed the suit, alleges that the Boston-based financial-services concern represented its lineup of actively managed bond funds as conservative options but instead invested the funds in "high risk" instruments and mortgage-backed securities.

State Street spokeswoman Hannah Grove said: "We deny any allegation that we didn't correctly communicate the investment objective of the fund."

State Street's investment arm, State Street Global Advisors, manages $2 trillion in assets, mostly for institutional investors. The company says $36 billion of that is in actively managed fixed-income funds.

In the lawsuit, filed in federal court in New York, Unisystems alleges that 25 of its employees had $1.4 million in State Street's Intermediate Bond Fund, an unregistered institutional fund.

The lawsuit alleges that between July 1 and Sept. 1, the fund declined by 25% in value while the index it "purported to track actually increased."

State Street's own documents provided to institutional investors say the objective of the Intermediate Bond Fund is to "match or exceed the return" of the index of U.S. government and corporate bonds.

State Street told institutional investors in a recent report that as of July 31, the Intermediate Bond Fund was leveraged more than 4-to-1 -- meaning the fund borrowed to increase its portfolio to about four times the amount of money clients invested. The footnote says the investments included Treasury futures, options on futures, interest-rate swaps and a complex investment vehicle known as interest-rate "swaptions."

"My client doesn't understand why they would do this when the reason people were in the fund was to have a conservative, predictable investment," said Gerald Silk, a lawyer with Bernstein, Litowitz, Berger & Grossmann LLP, which is representing the purported class-action.

Earlier this month, a unit of Prudential Financial Inc. sued State Street over $80 million in losses that 165 retirement plans it manages suffered in State Street fixed-income funds -- one of them the same fund Unisystems is suing over. Prudential says State Street didn't disclose that the money was in "highly leveraged" investments. Attorneys general in Alaska and Idaho are also looking into possible legal action against the company over losses in state retirement funds.

In recent years, State Street changed strategies in some funds in its fixed-income division to find more attractive yields, according to a letter sent to institutional investors in August. And in its most recent annual report, the company explained that its average portfolio included fewer plain vanilla government bonds, and more "collateralized mortgage-backed securities" and asset-backed securities than a year earlier. The Intermediate Bond Fund had 25% of its portfolio in asset-backed securities, according to the report to clients.

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Subprime-mortgage meltdown: A series of bad bets

Subprime-mortgage meltdown caused by series of bad bets

The meltdown in the subprime-mortgage market was caused by lending decisions that were based on assumptions that left little room for error. The mortgage crisis is "a case study on the way that greed convinced everyone there wasn't risk," said Ivy Zelman, CEO of Zelman & Associates. Problems are spreading in dominolike fashion and could continue for some time.

Full article  |  Follow the Sub Prime Loan

• Behind Subprime Woes, A Cascade of Bad Bets
• One Loan's Journey Shows Culture of Risk
• The Fall of a Fund Whiz

By CARRICK MOLLENKAMP and IAN MCDONALD
October 17, 2007; Page A1

Three years ago, Colorado truck driver Roger Rodriguez was in the market for a new mortgage loan. With radio and Internet ads trumpeting easy approvals, he picked up the phone.

That call set into motion Mr. Rodriguez's descent into the subprime mortgage mess. Over the next several months, his adjustable-rate loan passed through many hands. These included a local Denver broker, Livingston, N.J., finance company CIT Group Inc. and a Greenwich, Conn., unit of Royal Bank of Scotland Group PLC. Eventually, a piece of Mr. Rodriguez's loan landed in mutual funds run by a Tennessee investor named James C. Kelsoe Jr.

Little good has come to any party that touched the loan. Mr. Rodriguez, now 61 years old, has lost both his job and his home. All the middlemen, from the broker to CIT to RBS, have either shuttered their mortgage businesses or are struggling. Mr. Kelsoe, once a star mutual-fund manager, has hit a career low as defaults on subprime mortgages decreased the value of his investments.

The paper trail from Mr. Rodriguez to Mr. Kelsoe illustrates how the mortgage market meltdown scalded millions of homeowners and investors. It also foreshadows how the domino effect stands to continue.

Much of the mortgage lending of the past several years, as well as investments in mortgage-backed securities, was based on assumptions that left little room for error. As a result, even slight deviations from a perfect world -- in which people act prudently, unemployment stays low, lenders keep lending and house prices rise -- pose risks in the form of more defaults, foreclosures and other investment losses.

Behind the market turmoil of recent months: Lending standards were more lax than most people imagined, a fact that surfaced when house prices stalled.

The mortgage crisis is "a case study on the way that greed convinced everyone there wasn't risk," says Ivy Zelman, CEO of Zelman & Associates, an independent real-estate research firm.

Should house prices fall by 10% over the next two years -- an outcome analysts see as entirely possible -- losses stand to be staggering. Thomas Zimmerman, head of mortgage credit research at UBS in New York, estimates that in such a scenario losses due to defaults could wipe out as much as 16% of the nearly $600 billion in subprime-backed securities issued in 2006. In August, such losses were equivalent to less than 1% of the total.

The jobs market also plays a key role. If the unemployment rate ticks upward by a percentage point or more, Mr. Zimmerman believes losses due to defaults could easily exceed 20% -- enough to hit even some of the most highly rated securities.

Back in 2004, Mr. Rodriguez didn't realize he was meandering into trouble. Two decades earlier, he had moved from Powell, Wyo., to start a new life in Colorado after struggling as a sugar-beet farmer. He, his wife, Irene, and two grandchildren, now 4 and 12, took up residence in a modest development called Prospector's Point in the town of Westminster, where their home boasted unobstructed Rocky Mountain views. Mr. Rodriguez held a steady job driving a recycling truck for Waste Management Inc.

Sometime in the fall of 2004, Mr. Rodriguez decided he could use some money for debt consolidation. He turned to a company called EquityRelief.com, which promoted itself on the radio and the Internet with slogans such as "Debt relief is stress relief at EquityRelief.com."

The Denver company already had handled his $70,000 mortgage two years earlier, he says. Still suffering from marginal credit, he enlisted the mortgage broker once again.

Within a matter of weeks, Mr. Rodriguez had secured a new mortgage, for $88,000, from finance company CIT Group. That was enough to settle his outstanding home loan, as well as cover auto debts and a few home repairs. His income -- about $4,000 a month before taxes -- enabled him to pay the $544.70 initial monthly note, plus living expenses and installments on his credit-card debts. But with hardly any savings, he had little wiggle room in case something went wrong. Beyond that, the monthly payment was scheduled to reset after two years, most likely to a higher level -- a common feature of so-called adjustable-rate mortgages, or ARMS.

Mr. Rodriguez's low credit score meant it would have been difficult for him to obtain a prime loan. He says he chose an ARM, with an introductory rate of 6.3%, because that's what the broker offered. "I just went along with it," he says. "They made it so easy." At the time, a prime, 30-year fixed-rate mortgage had an interest rate of 5.87%. But the introductory rate on Mr. Rodriguez's ARM would apply for just two years before resetting -- up to a maximum of 12.3%.

Bryon Veal, who ran the brokerage, says he typically warned customers to use adjustable-rate products only if they planned to be in a property for a short period of time. Mr. Veal also says his firm advised borrowers that rates would increase.

Around this time, hundreds of thousands of borrowers, and the lenders who served them, were beginning to make even more optimistic assumptions about their ability to handle subprime debt. Lenders frequently approved borrowers for loans based only on their credit score and often without verifying income and they effectively ignored the fact that monthly notes would later reset. The universal, hopeful assumption: With house prices rising, borrowers would be able to refinance before the rate increases hit.

Back in 2004, lenders in the subprime sphere had little reason to worry whether borrowers were getting in over their heads. That's because they often quickly resold some of the loans at a profit. Wall Street banks snapped them up, packaged them into securities and sold them on to investors. CIT was no exception. In 2004, the company, which offers loans for everything from heavy equipment to college tuition, was building its business of originating and selling home mortgages.

Within five months, CIT had sold Mr. Rodriguez's loan along with others to RBS Greenwich Capital, a unit of the Royal Bank of Scotland located in the tony financial hub of Greenwich. To obtain such loans, RBS had to outbid other investment banks active in the mortgage market, such as Lehman Brothers Holdings Inc., J.P. Morgan Chase & Co., Deutsche Bank AG and Bear Stearns Cos.

RBS was making an aggressive bet on the mortgage business, sharply boosting its capacity to buy and package loans. By 2005, it had risen to third place among investment banks by volume of U.S. residential mortgage-backed securitizations, according to Thomson Financial. That was up from sixth place in 2000.

RBS and CIT declined to say how much they profited at various points in the mortgage-securitization process. Generally speaking, as the loans progress through the chain, buyers and sellers skim a bit from each sale. Profits from the securities are usually determined by a complex set of factors, including cash flow -- which is affected by timely payments from borrowers like Mr. Rodriguez.

In February 2005, RBS packaged Mr. Rodriguez's loan -- along with 4,853 others -- into a trust called Soundview 2005-1. The trust slices the cash flows from the loans into notes with different levels of risk and return. Within five days, RBS's sales team had sold $778 million in Soundview 2005-1 notes to investors around the world.

One buyer was Mr. Kelsoe, a senior portfolio manager at the asset-management unit of Morgan Keegan & Co., a Memphis, Tenn., investment firm and unit of Regions Financial Corp. At the time, Mr. Kelsoe was riding the housing boom by investing heavily in mortgage-backed securities. At the end of 2005, his RMK Select High Income Fund showed a five-year average annual gain of nearly 14%, according to Morningstar Inc. That performance beat all U.S. high-yield funds as well as the Dow Jones Industrial Average. His success brought him a bit of celebrity. He appeared on CNBC, was quoted in The Wall Street Journal and gave investing lectures at universities.

"He talked about the importance of identifying and assessing risk," says Wilburn Lane, head of the business school at Lambuth University in Jackson, Tenn. Mr. Kelsoe spoke there in October 2006 to some 300 local businesspeople over a chicken-and-vegetables lunch. Mr. Lane, who says he was impressed with the 44-year-old's track record, later invested in one of the seven funds managed by Mr. Kelsoe.

Mr. Kelsoe's big returns, though, depended heavily on the good fortune of borrowers such as Mr. Rodriguez.

Through various of his funds, Mr. Kelsoe invested nearly $8 million in one of the Soundview 2005-1 trust's riskiest pieces. The B-3 tranche, as it was called, offered a return of at least 3.25 percentage points above the London interbank offered rate -- a key short-term rate at which banks lend to each other. But if borrowers like Mr. Rodriguez began to default on their loans, any losses exceeding 1.25% of the entire loan pool could eat into the value of the B-3 tranche.

In February 2006, at least one borrower in the Soundview 2005-1 trust had a big piece of bad luck. After pulling into a Waste Management repair facility in the Denver suburb of Commerce City, Mr. Rodriguez detached the trailer from his 18-wheel rig but forgot to set the brake on the tractor. The tractor rolled across a street and hit a parked pickup truck, causing about $2,000 in damage. Soon afterward, says Mr. Rodriguez, Waste Management fired him. "They considered that a critical rollaway," he said. Waste Management confirmed that Mr. Rodriguez no longer works for the company, but declined to provide details.

"Ten seconds can change your whole life around," Mr. Rodriguez says a friend remarked to him recently.

Mr. Rodriguez took on odd jobs, working on a paving crew and in a bakery. But his income fell to about $1,800 a month in 2006. To make matters worse, the monthly note on his mortgage reset to more than $700 in November. He fell behind on the higher payments.

On Feb. 15, 2007, a Denver law firm, acting on behalf of the Soundview trust, began foreclosure proceedings against Mr. Rodriguez and his wife. The firm cited "failure to pay monthly payments of principal and interest" on an outstanding balance of $85,976.48, Colorado real-estate documents show. Mr. Rodriguez filed for bankruptcy protection on July 23, a move that extended the time he could remain in his home by several months.

Other borrowers in the Soundview trust also began to default on their loans. By June 2007, defaults had afflicted 3.44% of the loan pool, more than triple the level of a year earlier, according to people familiar with the trust's finances. About four in 10 loans were at least 30 days in arrears -- all in a period during which the U.S. economy was growing at a healthy pace and unemployment was low.

Because Mr. Kelsoe's investment in the B-3 tranche was so sensitive to losses, its market price plunged. In fact, as trading in subprime-backed securities dried up amid a broader panic, Mr. Kelsoe, like other investors with subprime holdings, had difficulty figuring out what the investments were worth.

At the end of June, the latest information available, Mr. Kelsoe's funds reported an estimated market value of the Soundview investment that was 35% below what they had paid.

A Morgan Keegan spokeswoman said Mr. Kelsoe wasn't available to comment because he was focused on managing his funds.

At the end of August, Mr. Kelsoe's Select High Income Fund posted a loss of nearly 28% for the month -- dead last among its peers for the year and for five years as well, according to Morningstar. The fund also postponed filing an annual report until earlier this month. When the fund filed the report with regulators on Oct. 4, Mr. Kelsoe said in a note to shareholders that the bond markets' "ocean of liquidity has quickly become a desert."

In a letter to a Memphis newspaper, Charles Reaves, an attorney who had invested in one of Mr. Kelsoe's funds, wrote that Mr. Kelsoe was "hiding under his desk" and "should have the fortitude to face the public and explain...what he intends to do."

Things haven't gone much better for the mortgage units at CIT and RBS -- though they did profit handsomely during the good times. CIT, citing a "problematic outlook" for the business, in July announced plans to shut down its mortgage business and lay off about 550 employees. A CIT spokeswoman says its mortgage portfolio performed better than peers.

Morale at RBS Greenwich had suffered in recent weeks as employees braced for layoffs. RBS Greenwich recently eliminated 44 of its 1,760 jobs.

In the first half of the year, total income for the company's U.S. asset-backed securities business, which includes mortgage-backed securities, fell 23% to $614 million. An RBS spokeswoman said, "In common with all players, our operations have been scaled back to reflect the lower volumes of business across the industry."

Late this summer, Mr. Rodriguez sat on a courthouse bench after his bankruptcy hearing. "I'm under a lot of depression to tell you the truth," he said a day earlier, tears brimming in his eyes. A worried Mrs. Rodriguez said she feared her husband was suicidal.

Soon afterwards, the couple had vacated their home of 22 years and moved into a low-income apartment in northwest Denver.

Full article  |  Follow the Sub Prime Loan

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Special Offer to reduce your cell phone bill

FYI - Special Offer to reduce your cell phone bill!
from Sprint PCS

Go to www.sprint.com/sero
This website requires that you enter a sprint employee's email address, the address is savings@sprintemi.com

After doing that, you go about selecting your phone and plan as if you were just getting a new phone.

When you go to the inital website you'll see some of their offers, namely the unlimted data and texting for most of their phones.

Have fun with your new phone.

Lenders lagged on addressing mortgage-market meltdown

Lenders lagged on addressing mortgage-market meltdown

Lenders were slow to react to signals that the easy lending standards of 2005 and 2006 were creating higher default rates, according to a report by investment bank Friedman, Billings, Ramsey. Lenders did not make policy changes until July or August, even though warning signs had emerged early this year. As a result, borrowers who took out loans in the first half of 2007 are falling behind payments faster than those who took out loans last year.

Full Article

As Defaults Rise, Washington Worries
Foreclosure signs, like this one east of San Diego, are becoming more common as data showed a higher default rate on subprime mortgages taken out in 2007 than those in 2005 and 2006.

During the summer’s credit crisis, investors concluded that the default rates on subprime mortgages made last year would probably prove to be the highest in the industry’s history.

But there now appears to be another contender for that dubious honor: loans made in the first half of this year.

Borrowers who took out loans in the first six months of 2007 are falling behind on payments faster than homeowners who took out loans last year, according to a report by Friedman, Billings, Ramsey, an investment bank based in Arlington, Va. The data suggested that more Americans could lose their homes and that the housing market’s troubles might persist longer than many analysts have been predicting.

The report’s author, Michael D. Youngblood, a portfolio manager and analyst at Friedman, Billings, Ramsey, said that most mortgage companies and banks had not tightened lending standards for borrowers with weak, or subprime, credit until July or August, even though early this year regulators, analysts and mortgage investors knew that the easy lending policies of 2005 and 2006 were producing high default rates.

“There are $10.6 trillion of mortgage loans outstanding in the U.S., and even if the brakes had been slammed, it was going to take a long time to slow this locomotive down,” said Mr. Youngblood, who has researched home lending for more than 20 years. “And I don’t see that the brakes were slammed on or that the engineer had a new track to follow. That track only now seems to be appearing.”

He noted that Countrywide Financial, the nation’s largest lender whose practices are often emulated by smaller companies, did not significantly tighten standards until August. And it was only in mid-July that Moody’s Investors Service and Standard & Poor’s, the large ratings agencies, said they would make major changes in the assumptions that they use to evaluate pools of home loans sold to investors.

As of August, default rates on adjustable-rate subprime mortgages written in 2007 had reached 8.05 percent, up from 5.77 percent in July, according to Mr. Youngblood’s analysis of pools of home loans put together by Wall Street banks and sold to investors. By comparison, only 5.36 percent of such loans made last year had defaulted by August 2006. Default rates on fixed-rate subprime mortgages were lower, but were rising at a similar pace.

Data analyzed by Moody’s confirms the trend Mr. Youngblood has identified. Executives at Moody’s say they are monitoring the performance of recent loans, but were not yet ready to discuss their conclusions.

It is unclear whether loans made in the last couple of months are stronger, because lenders were making and securitizing far fewer of them and investors have grown wary of bonds backed by subprime mortgages.

“You may not hear that much about that stuff, because it’s not seeing the light of day,” said Evan Mitnick, a managing director at Westwood Capital, a boutique investment bank in New York.

In the first six months of the year, Wall Street securitized $215 billion in subprime loans, down 23 percent from the comparable period a year earlier, according to Friedman, Billings, Ramsey. By the end of August, the total had dropped by 33 percent from the comparable eight months of 2006.

The recent weakness in job growth and falling home prices in many parts of the country have probably contributed to the higher default rates on loans from early this year, specialists say.

Job losses in the housing industry have put pressure on the economies of formerly fast-growing states like Arizona and Florida. And declining home prices have made it harder for borrowers to refinance loans, especially in cases where the buyers could afford the homes only with the help of the low introductory rates on adjustable mortgages.

Those borrowers are expected to encounter further strain in the months and years ahead as their loans are reset to higher variable rates. When they try to refinance their mortgages, many of them will face stricter lending standards. Many lenders are now requiring borrowers to provide documentation of their incomes, and they will not lend more than 80 to 90 percent of a house’s value.

A survey of 500 borrowers with adjustable-rate loans released yesterday in Cleveland showed that the resetting of rates will put a significant strain on homeowners.

Among borrowers whose rates have already been reset, 41 percent said they were worried about their ability to make payments, compared with 18 percent of borrowers whose rates had not been reset yet. Nearly three-quarters of families with incomes less than $50,000 a year said that an increase in their rates would hurt them, compared with 40 percent with incomes above $50,000.

The survey was conducted by Peter D. Hart Research Associates on behalf of the A.F.L.-C.I.O., which is setting up a telephone help line for troubled homeowners.

Financing homes with adjustable mortgages was popular during the housing boom because the borrowers could enjoy lower rates in the first two or three years and then refinance. That worked when house prices were rising fast, but now that prices are flat or falling, it is proving unsustainable, said Keith Ernst, a senior policy counsel at the Center for Responsible Lending.

“Subprime lending had problems with underwriting for a while, and it was evident in weak housing markets — just ask the people in Cleveland,” Mr. Ernst said. “Now that the weakness is widespread, it has pulled the covers on all subprime loans.”

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Distressed US land grab

Distressed US land grab

After absorbing staggering losses on their land holdings in past housing downturns, home builders have learned to limit risk by buying options on property instead of purchasing it outright. This time around, they have left other investors holding the bag -- and the fallout has only just started.

US home builders have taken billions of dollars in write-offs this year after relinquishing deposits on property they no longer need. That land, which is worth far less than book value, is now stuck on the balance sheets of a disparate group of property owners across the country.

Full article

Distressed US land grab
Published: October 16 2007 08:56 | Last updated: October 16 2007 08:56

After absorbing staggering losses on their land holdings in past housing downturns, home builders have learned to limit risk by buying options on property instead of purchasing it outright. This time around, they have left other investors holding the bag – and the fallout has only just started.

US home builders have taken billions of dollars in write-offs this year after relinquishing deposits on property they no longer need. That land, which is worth far less than book value, is now stuck on the balance sheets of a disparate group of property owners across the country.

These investment groups, known as “land banks” and which include GMAC, Acacia Capital, IHP Capital and Hearthstone, are backed by some of the biggest US institutional investors. Land banks with sufficiently diverse holdings may be able to muster enough liquidity and flexibility from lenders to ride out the downturn without dumping properties. But some developers, and their speculative backers, may not have that option. In their eagerness to sponsor projects during the boom, many investors took on extra risk by accepting smaller deposits from builders or looser deal terms. They now have too much property on their books, paltry deposits to show for it, and bank lenders breathing down their necks.

Some investors will have to sell properties to stay solvent, causing huge tracts of land to hit the market at distressed prices. Discounted properties have already popped up for sale in hard-hit Phoenix, Arizona and southern California. Some builders may walk away from more land options, if similar plots are offered so cheaply that the amount saved would offset forfeited deposits. But, as a growing number of investment funds probing the market have realised, this will mostly allow opportunistic investors to buy distressed assets at big markdowns.

Full article

 

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Why Regular Retirement Plans Leave You Broke

The first Baby Boomer just applied for Social Security benefits. 

Do you know what giant sucking sound is? 

It's the sound of all the IOU money rushing out to the Social Security system. 

Over the next few years, you can expect to hear great debates in Washington about "STOP GAP" measures to "strengthen Social Security".  But it's already too late.  Benefits will be reduced, or capped. Inflation will eat away the spending power of Social Security benefits. And retirees will find that Social Security check will dwindle, and may even disappear. 

The tables are turning. Now more than ever before, it's important for each individual to FULLY FUND their own retirement. Even financial advisers that are fully invested in the markets (stocks, bonds, mutual funds) are even at a loss.  Sudennly their portfolio allocations and projections just don't add up.

What went wrong?  Read this article to find out...

If you want real retirement solutions contact us: Tax Pros Investors.

Technology for retirement distribution falls short

A leading technology analyst says that the software programs currently available for financial advisers who are managing their clients' portfolios through retirement are not hitting their goals. The distribution stage of retirement is "an entirely different planning scenario than accumulation," said Robert J. Ellis, a senior analyst at Celent LLC. "It's a lot more complex and is underserved by the technologies available."

Full Article

Retirement income technology leaves much to be desired

Complaints range from a belief that the software is too simplistic to the products' being thinly veiled sales tools

By Davis D. Janowski
October 15, 2007

For the most part, the current crop of software programs aimed at helping financial advisers manage their clients' assets through retirement fall short of their goals, according to a leading technology analyst.

The distribution phase of retirement is "an entirely different planning scenario than accumulation," said Robert J. Ellis, a senior analyst at Celent LLC. "It's a lot more complex and is underserved by the technologies available."

Celent of Boston is putting together a report that assesses the technological tools aimed at retirement income distribution. The report is expected to be released early next year.

"This is really a calculus process," Mr. Ellis said. "There are so many moving parts that you can't look at any single technology in a vacuum."

To be sure, post-retirement planning isn't easy.

For starters, most clients enter retirement with multiple sources of income, including individual retirement accounts, 401(k) retirement plans and Social Security. In addition, advisers must take into account such variable costs as day-to-day expenses, health care and long-term-care insurance.

"You have to look at health, longevity, living expenses," Mr. Ellis said. "It really comes down to working on budgeting with the client."

Helping retirees prepare a workable budget is something that most advisers find particularly vexing, Mr. Ellis said.

"Advisers are not used to having to say, 'You shouldn't buy that car or that house or that $250,000 boat,'" he said.

At least one adviser admitted to being unimpressed with the retirement income software that is out there.

"What I've run into are programs that are too simplistic around taxes, for instance," said Marc E. Henn, senior vice president at Cincinnati-based Haberer Registered Investment Advisors, which oversees $800 million in assets.

"I've got an overabundance of complex tax rules to deal with," he said. "Most of the tools available say, 'Here's your average tax rate,' and that's it."

Another frequent complaint among advisers is that such products are little more than thinly veiled sales tools.

"We've found relying on prepackaged products has the potential to make the user a glorified message boy, having little-to-no understanding of what they're talking about," said Howard S. Haber, a certified financial planner, and president of Apollo Wealth Management Ltd., a fee-only financial planning and investment management firm in Lansdale, Pa.

Software makers face the challenge of avoiding making programs that are overly customized.

"We do handle a lot of tax rules and withdrawal ordering, but at the same time we must walk that fine line to maintain the regulations at the institutional level that have to be adhered to," said Lisa Burns, a product manager at FundQuest Inc. of Boston, which unveiled its own retirement income planning tool in August.

Programs intended to capture information about a client's health status, or future spending plans, can help advisers chart a course for their clients' retirement.

Several products are leading the way in that regard, Mr. Ellis said.

SunGard Data Systems Inc. of Wayne, Pa., for example, recently launched the Retirement Income Simulation Expert.

Among other things, the program features a tool that allows advisers to work through the subtleties of asset distribution with their clients, Mr. Ellis said.

Another solution is NorthStar 5.0, the latest version of wealth management software available from NorthStar Systems International Inc. of San Francisco. Users license software or gain access through the Internet.

This system is available through many broker-dealers and custodial companies, including BlackRock Inc. of New York, Legg Mason Inc. of Baltimore, Merrill Lynch & Co. Inc. of New York, Schwab Institutional of San Francisco and Wachovia Securities LLC of Richmond, Va.

Also, Boston's Fidelity Investments recently launched the Retirement Income Evaluator to a limited number of its advisers (InvestmentNews, Oct. 1). By yearend, the company expects to make the tool available to its more than 100,000 advisers.
The tool allows advisers to run client data through Monte Carlo simulations to see how their retirement plan will hold up against their post-retirement income needs. OppenheimerFunds Inc. of New York is another company that sees value in providing a retirement-income-distribution tool to advisers. The OppenheimerFunds Retirement Income Manager has been available since 2005, but version 2.0 was only unveiled last year.

So far, about 2,000 advisers have used the tool to create 5,000 plans, said Keith Hylind, a vice president with the retirement income group at Oppenheimer.

"Our tool really focuses on income needs post-retirement, and it is meant for the adviser to use in actively monitoring where the investor is throughout the distribution phase," he said. "We envision this being an interactive tool, probably reviewed with the client on an annual basis."

Another update, which will include additional inputs for sources of income, is slated for release during the first quarter of 2008.

Full Article

If you want real retirement solutions contact us: Tax Pros Investors.

 

 

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Coalition to Help Avoid Foreclosures

Paulson unveils coalition to ease mortgage woes

Treasury Secretary Henry Paulson has announced that a new mortgage-industry coalition made up of financial companies, investors, mortgage-counseling agencies and trade organizations including the American Securitization Forum has been formed to help homeowners avoid defaulting on their mortgages. "A combination of stagnant or falling house prices, low-down-payment mortgages and resetting adjustable-rate mortgage rates are creating real challenges for many American homeowners," Paulson said.

Video  |  Full Article 

Coalition to Help Avoid Foreclosures
By MARTIN CRUTSINGER – 23 hours ago

WASHINGTON (AP) — The Bush administration announced a new mortgage industry coalition on Wednesday aimed at helping homeowners avoid being trapped in a rising tide of foreclosures.

Treasury Secretary Henry Paulson said the initiative would help coordinate efforts by financial companies to help an estimated 2 million homeowners whose introductory mortgages with low rates are now resetting at much higher rates, greatly increasing the risk they will default on the loans.

"A combination of stagnant or falling house prices, low down payment mortgages and resetting adjustable-rate mortgage rates are creating real challenges for many American homeowners," Paulson said in a statement.

He said that 11 of the largest mortgage service companies, representing 60 percent of all mortgages in the country, had agreed to join the new coalition. Other members will include mortgage counseling agencies, investors and large trade organizations.

"These leaders recognize that by working together, coordinating and scaling up their activities, they will be able to work toward the goal to help more homeowners," Paulson said.

The new initiative, which has been dubbed HOPE NOW, follows an announcement by President Bush on Aug. 31 that the administration was making changes in the Federal Home Loan Administration insured-loan program so that more people could qualify for FHA-insured loans.

Democrats, however, have criticized the administration, saying the actions so far have been too little and too late to significantly address a growing foreclosure crisis as homeowners struggle to deal with sharp increases in their adjustable mortgage payments.

The rising defaults, which started in the market for subprime mortgages — loans offered to people with weak credit histories — roiled global financial markets in August, prompting the Federal Reserve to cut interest rates last month to make sure the country did not get pushed into a recession.

Paulson said the new coalition had put together an "aggressive plan to reach more homeowners and help them find a way to stay in their homes."

He said that he was happy to see that the American Securitization Forum, which represents investors who buy mortgages that have been repackaged into securities, had agreed to join the alliance. He expressed hope the group would grow to represent more than 60 percent of outstanding mortgages.

"We need greater participation if we are going to get to all those that need help as quickly as possible," he said.

Estimates are that mortgages resetting from low "teaser" rates could mean an extra $250 to $300 in monthly payments on the typical $1,200 monthly mortgage payment.

Video  |  Full Article

 

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Vultures, others profit in credit crunch

Vultures, others profit in credit crunch

Distressed-debt investors -- also known as vultures -- have been doing well in recent weeks as the fallout from the credit crunch allows them to scoop up debt from companies that are in trouble. Also profiting are restructuring specialists and bankruptcy lawyers. The boom for the sector follows a period of lean years as markets soared.

Los Angeles Times (10/11)

High heating costs will burn wallets in '07 - CNN.com

High heating costs will burn wallets in '07 - CNN.com

We are definitely in an inflationary cycle. Basic commodities and goods have sharply increased. Take a moment to read this recent article on 20%+ increase in heating your home this winter.

Full Article

ACCION NY Small Business Seminars

ACCION NY Small Business Seminars

ACCION's Seminars featured in the New York Daily News!ACCION's credit seminars were thrown into the citywide spotlight on September 24in an article featured in the Daily News -- if you missed it, click here to view the article.

Workshops and Events in English

Let's Talk Money
Wednesday, October 10, 2007 from 9:00 a.m. to 12:00 p.m.
Fortune Society, 630 Riverside Drive (at 140th St.), New York, NY
For more information and registration please call Diebska Diaz at (212) 491-9640

Starting a Homebased Business: Put YOUR talents, skills and ideas to use!
Wednesday, October 10, 2007 at 6:00 p.m.
UMEZ, 290 Lenox Avenue, 3rd Floor, New York, NY
To Register please call (212) 387-0494 register online

New York Times Small Business Summit October 10, 2007.
More info and registration at www.nytimes.com/smallbusinesssummit

Upper Manhattan Business Solutions Center Financing Workshop/Panel
Monday, October 15, 2007 10:00 a.m. to 12:00 p.m.
Upper Manhattan Business Solutions Center,
215 West 125th Street, 6th Floor, New York, NY 10027
For more information and registration please call Marla Pettinato at (917) 493-7038

Preparing a Business Plan & Getting a Small Business Loan
Presented by Boricua College SBDC, Banco Popular, and ACCION New York
Tuesday, October 23, 2007 from 6:00 p.m. to 8:00 p.m.
Banco Popular, 166 Livingston Street, Brooklyn NY 11201
Registration is required as seating is limited.
Please call (718) 963-4112, ext 563 or (718) 596-1352

Union City Urban Enterprise Zone Business Seminar
October 25, 2007 from 6:00 pm to 8:00 pm
Jose Marti Middle School, 1800 Summit Ave, Union City, NJ 07087
For more information and to register contact Juan Carlos Rojas at (201) 271-2350

Workshops and Events in Spanish

Entendiendo Su Crédito: Patrocinado por Commerce Bank
Miércoles, el 3 de octubre 207 a las 6:00 p.m.
ACCION New York, 115 East 23rd St., 7th Floor, New York, NY 10010

Defending Your Business: Your Local Chamber of Commerce

Defending Your Business...

Why belonging to your local "Chamber of Commerce" can help your business thrive, and defend your hard-earned reputation.

Take a look at the recent debate caused by Bill O'Riely's comments about Sylvia's Restaurant (NYC eatery).

Watch the video

Analyzing O'Reilly's Remarks (2:17)

Flap Over O'Reilly's Remarks (1:53)

O'Reilly's Take On Harlem Eatery Stirs Pot

Fox News Host Says Sylvia's Is Same As Any Other Restaurant "Even Though It's Run By Blacks"

Fox News host Bill O'Reilly has raised some eyebrows by saying his experience at Sylvia's, a famous Harlem restaurant, was "exactly the same" as any other restaurant in New York City, "even though it's run by blacks, primarily black patronship."

O'Reilly also said: "There wasn't one person in Sylvia's who was screaming, 'M-Fer, I want more iced tea.' "

O'Reilly talked about his visit to Sylvia's last week on "The Radio Factor," his syndicated radio program. ("The Radio Factor" is distributed by Westwood One, which is managed by CBS Radio.)

"You know, I mean, everybody was -- it was like going into an Italian restaurant in an all-white suburb in the sense of people were sitting there, and they were ordering and having fun. And there wasn't any kind of craziness at all," O'Reilly said.

Media Matters For America, a liberal media watchdog organization, first reported the comments. Karl Frisch, a spokesman for Media Matters, told The Associated Press that O'Reilly's comments were "ignorant and racially charged."

On the Sept. 25 edition of "The O'Reilly Factor," his Fox News program, O'Reilly addressed the issue.

"Media Matters distorted the entire conversation and implied I was racist for condemning racism," he said.

O'Reilly added: "If a slime machine like Media Matters can get its far-left propaganda on CNN and NBC News, the nation is in trouble."

Bill Shine, senior V.P. of programming for Fox News, said discussion of O'Reilly's comments constitutes "nothing more than left-wing outlets stirring up false racism accusations for ratings. It's sad."

O'Reilly made the comments as part of a discussion of a dinner he shared with the Rev. Al Sharpton.

Sharpton spokesperson, Rachel Noerdlinger, said in an e-mail that Sharpton "was surprised that anyone would be surprised that blacks would act that way." She said Sharpton planned to ask O'Reilly onto his radio show Wednesday to discuss the issue.

Added Noerdlinger: "Nothing Mr. O'Reilly said at the dinner itself was offensive, according to Rev. Sharpton."

As part of his comments, O'Reilly said, "Black Americans are starting to think more and more for themselves. They're getting away from the Sharptons and the Jacksons and the people trying to lead them into a race-based culture."

O'Reilly contrasted his experience at the restaurant with the image "white America" has of a black culture "dominated by Twista, Ludacris and Snoop Dogg."

Full article & video

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