business

of free enterprise on which our country was built. According to the editorial, the facts often do not support the claim that President Obama's proposed changes to the estate tax would hurt small businesses.

Nearly 60 percent of small-business owners do not believe that Mr. Obama's administration understands what they need. According to a survey conducted last month by City Business Journals Network, 40 percent of small- business owners are less optimistic about the economy than they were when the president took office.

Raising taxes on small businesses is a bad plan; it is reckless and threatens to make a bad economy worse. Data from the National Federation of Independent Business affirm that as many as 9 percent of businesses will be hit by increased taxes. Most important, these businesses are the job creators for our nation, generating approximately seven of every 10 new jobs in America. Tax hikes will therefore kill any chance for job growth. The president likes to refer to small businesses as the backbone of the American economy. He should throw them a bone instead of fetching them a higher tax bill.
Small-business owners, do not be led astray: Plan for Mr. Obama's tax changes to take a bigger bite of your revenue and put you in the doghouse.

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Pine View High School students Caitlin Trani, Nick Basset and Braedon Porter attended the Future Business Leaders of America state competition and placed second in two categories, Global Business and Entrepreneurship. Their high placement qualifies them to compete at FBLA's National Leadership Conference in Anaheim, Calif., in June.

Competitions require students to take a written exam as a prequalifier to advance to a final round, where students are given a simulated business situation. Student teams must present their recommendations for solving the problem to a panel of judges, who then determines a winner.

Trani and Basset teamed up to win the entrepreneurship competition by providing winning advice to increase revenues for owners of a coffee shop. Porter joined the duo in the global business category, where the team of three students proved its knowledge of expanding a business' global market. Classmate Kelcie Dean placed second in business communications and will be attending nationals with them.

"To place in the top 10 is, in itself, an honor and includes the most outstanding students in the state. In each event, students compete against hundreds of others for an opportunity to represent Utah on the national stage. Pine View's students showed their broad comprehension of business concepts in more than one event, and I'm confident they'll do well competing against the top in the nation," said Dianna Moore, FBLA advisor.

This will be Trani's second time traveling to California for academic achievement, having won first place in accounting at the DECA state competition in March.

DECA, the national association of marketing students, holds it's international competition later this month, and Trani will be the only student who qualified from Washington County School District to attend the event. Trani has been a member of both FBLA and DECA business clubs for four years and has served as the FBLA president this year. Trani, along with a select group of outstanding seniors, will graduate from Pine View's elite School of Business program in May. Pine View High boasts the largest business program in the district, offering students the ability to graduate with a strong portfolio and a business major.

"We have a vision of what we would like our Pine View students to become and to achieve," remarks principal Mike Mees. "Caitlin Trani is a perfect example of that vision."

With current budget constraints, Trani and her peers will be required to pay the majority of their travel expenses to compete at the national level. The competitions cost each student about $600 out of their own pockets.

source :The spektrum.com

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By Jeff Gelles

If credit-card companies ever seem like they're playing a cat-and-mouse game with your credit limits or interest rates, remember the perspective of the mouse - to whom it can be a very costly game.

Consider the case of Marc Crawford, of Philadelphia's Mayfair section. Crawford says he rarely used his HSBC MasterCard, which had a credit limit of $9,200. But after he splurged on $1,500 worth of Christmas gifts for a new grandbaby, he found his credit limit had been cut to $2,500 - a change that could hurt his credit score.

Or consider what happened to Roxanne Reitmeyer, of Ardmore, who has two Bank of America credit cards with interest rates under 10 percent. Last week, Bank of America notified her that the rates on each card would rise next month, essentially doubling her monthly interest costs.

Both kinds of changes are happening with rising frequency. Bank of America, for instance, acknowledged last week that it was raising rates on four million U.S. cardholders with characteristics similar to Reitmeyer's: They carry a balance, and have rates under 10 percent.

Card issuers say they're simply managing credit-card accounts more conservatively in light of the nation's economic distress, which has forced them to write off more credit-card debt and raised their costs of funds.

Bank of America spokeswoman Betty Riess says the four million cards represent fewer than 10 percent of the bank's U.S. cardholders. She says the bank is raising prices on cardholders whose cards are "underpriced relative to current market conditions."

Consumer advocates have a more skeptical view of lenders' recent changes. They believe financially stressed banks are trying to squeeze more profits from a relatively healthy segment of their businesses.

A case in point: Until it backed down last month under pressure from the New York Attorney General's Office, JPMorgan Chase & Co. had sought to impose a brand-new $10 monthly service fee on more than 300,000 cardholders. Chase agreed to refund $4.4 million.

For consumers facing any change in credit limits or terms, the most important thing is to understand what's happening and the choices you have in response. If you're already feeling financial stress, any changes in terms can make a bad situation worse.

Crawford had few options beyond the one he took: complaining to HSBC and to its federal regulator, the Comptroller of the Currency.

It's not clear what the comptroller can do. Credit cards are are open-ended extensions of credit, and banks say they need to respond swiftly to signs of increased risk. No advance notice is required.

Still, Crawford's complaints got some traction. Last month, HSBC bumped his limit up to $5,000.

Crawford was right to be concerned about his credit score, says Linda Sherry of the California group Consumer Action. She says the key worry is a "domino effect": Lower credit scores can prompt lenders to raise cardholders' interest rates, which in turn can boost balances and expose consumers to over-limit fees and penalty interest rates.

Sherry believes lenders should at least be required to notify cardholders of reductions in credit limits - as new federal rules will require next year in some circumstances. Crawford discovered his limit had changed when he went online to pay his February bill.

"It's a key term - along with interest rates, it's the term that matters most to people," Sherry says.

If they can't afford higher interest payments, Bank of America cardholders such as Reitmeyer face similar risks, but have another option: They can formally decline the change in terms - if they're willing and able to close their accounts.

That doesn't mean they must immediately pay off their balances. They simply have to continue to meet the terms of the old agreement and make timely payments.

But it does mean that they can't use their cards, because making additional charges constitutes "acceptance" of the new rates.

That seems fair enough. If you have an account you're closing to reject changed terms, the best thing to do is cut up the card, or tuck it in a drawer.

But there's a trap that snares many consumers: unintentional charges, such as recurring fees for online services or magazine subscriptions. If you use your card for such payments, make sure you provide another card or request a different payment method. Accidental or not, credit-card banks will treat any subsequent use as an excuse to reactivate the account at the higher rates - another trap that will disappear when new rules take effect in July 2010.

At that point, or perhaps sooner if Congress intervenes, cardholders won't face such stark choices. For instance, lenders won't be able to change rates on existing balances if cardholders are current with payments.

But for now, stressed consumers are being buffeted by unfriendly market conditions - including less opportunity to take the time-honored step of taking their business elsewhere.If credit-card companies ever seem like they're playing a cat-and-mouse game with your credit limits or interest rates, remember the perspective of the mouse - to whom it can be a very costly game.

Consider the case of Marc Crawford, of Philadelphia's Mayfair section. Crawford says he rarely used his HSBC MasterCard, which had a credit limit of $9,200. But after he splurged on $1,500 worth of Christmas gifts for a new grandbaby, he found his credit limit had been cut to $2,500 - a change that could hurt his credit score.

Or consider what happened to Roxanne Reitmeyer, of Ardmore, who has two Bank of America credit cards with interest rates under 10 percent. Last week, Bank of America notified her that the rates on each card would rise next month, essentially doubling her monthly interest costs.

Both kinds of changes are happening with rising frequency. Bank of America, for instance, acknowledged last week that it was raising rates on four million U.S. cardholders with characteristics similar to Reitmeyer's: They carry a balance, and have rates under 10 percent.

Card issuers say they're simply managing credit-card accounts more conservatively in light of the nation's economic distress, which has forced them to write off more credit-card debt and raised their costs of funds.

Bank of America spokeswoman Betty Riess says the four million cards represent fewer than 10 percent of the bank's U.S. cardholders. She says the bank is raising prices on cardholders whose cards are "underpriced relative to current market conditions."

Consumer advocates have a more skeptical view of lenders' recent changes. They believe financially stressed banks are trying to squeeze more profits from a relatively healthy segment of their businesses.

A case in point: Until it backed down last month under pressure from the New York Attorney General's Office, JPMorgan Chase & Co. had sought to impose a brand-new $10 monthly service fee on more than 300,000 cardholders. Chase agreed to refund $4.4 million.

For consumers facing any change in credit limits or terms, the most important thing is to understand what's happening and the choices you have in response. If you're already feeling financial stress, any changes in terms can make a bad situation worse.

Crawford had few options beyond the one he took: complaining to HSBC and to its federal regulator, the Comptroller of the Currency.

It's not clear what the comptroller can do. Credit cards are are open-ended extensions of credit, and banks say they need to respond swiftly to signs of increased risk. No advance notice is required.

Still, Crawford's complaints got some traction. Last month, HSBC bumped his limit up to $5,000.

Crawford was right to be concerned about his credit score, says Linda Sherry of the California group Consumer Action. She says the key worry is a "domino effect": Lower credit scores can prompt lenders to raise cardholders' interest rates, which in turn can boost balances and expose consumers to over-limit fees and penalty interest rates.

Sherry believes lenders should at least be required to notify cardholders of reductions in credit limits - as new federal rules will require next year in some circumstances. Crawford discovered his limit had changed when he went online to pay his February bill.

"It's a key term - along with interest rates, it's the term that matters most to people," Sherry says.

If they can't afford higher interest payments, Bank of America cardholders such as Reitmeyer face similar risks, but have another option: They can formally decline the change in terms - if they're willing and able to close their accounts.

That doesn't mean they must immediately pay off their balances. They simply have to continue to meet the terms of the old agreement and make timely payments.

But it does mean that they can't use their cards, because making additional charges constitutes "acceptance" of the new rates.

That seems fair enough. If you have an account you're closing to reject changed terms, the best thing to do is cut up the card, or tuck it in a drawer.

But there's a trap that snares many consumers: unintentional charges, such as recurring fees for online services or magazine subscriptions. If you use your card for such payments, make sure you provide another card or request a different payment method. Accidental or not, credit-card banks will treat any subsequent use as an excuse to reactivate the account at the higher rates - another trap that will disappear when new rules take effect in July 2010.

At that point, or perhaps sooner if Congress intervenes, cardholders won't face such stark choices. For instance, lenders won't be able to change rates on existing balances if cardholders are current with payments.

But for now, stressed consumers are being buffeted by unfriendly market conditions - including less opportunity to take the time-honored step of taking their business elsewhere.If credit-card companies ever seem like they're playing a cat-and-mouse game with your credit limits or interest rates, remember the perspective of the mouse - to whom it can be a very costly game.

Consider the case of Marc Crawford, of Philadelphia's Mayfair section. Crawford says he rarely used his HSBC MasterCard, which had a credit limit of $9,200. But after he splurged on $1,500 worth of Christmas gifts for a new grandbaby, he found his credit limit had been cut to $2,500 - a change that could hurt his credit score.

Or consider what happened to Roxanne Reitmeyer, of Ardmore, who has two Bank of America credit cards with interest rates under 10 percent. Last week, Bank of America notified her that the rates on each card would rise next month, essentially doubling her monthly interest costs.

Both kinds of changes are happening with rising frequency. Bank of America, for instance, acknowledged last week that it was raising rates on four million U.S. cardholders with characteristics similar to Reitmeyer's: They carry a balance, and have rates under 10 percent.

Card issuers say they're simply managing credit-card accounts more conservatively in light of the nation's economic distress, which has forced them to write off more credit-card debt and raised their costs of funds.

Bank of America spokeswoman Betty Riess says the four million cards represent fewer than 10 percent of the bank's U.S. cardholders. She says the bank is raising prices on cardholders whose cards are "underpriced relative to current market conditions."

Consumer advocates have a more skeptical view of lenders' recent changes. They believe financially stressed banks are trying to squeeze more profits from a relatively healthy segment of their businesses.

A case in point: Until it backed down last month under pressure from the New York Attorney General's Office, JPMorgan Chase & Co. had sought to impose a brand-new $10 monthly service fee on more than 300,000 cardholders. Chase agreed to refund $4.4 million.

For consumers facing any change in credit limits or terms, the most important thing is to understand what's happening and the choices you have in response. If you're already feeling financial stress, any changes in terms can make a bad situation worse.

Crawford had few options beyond the one he took: complaining to HSBC and to its federal regulator, the Comptroller of the Currency.

It's not clear what the comptroller can do. Credit cards are are open-ended extensions of credit, and banks say they need to respond swiftly to signs of increased risk. No advance notice is required.

Still, Crawford's complaints got some traction. Last month, HSBC bumped his limit up to $5,000.

Crawford was right to be concerned about his credit score, says Linda Sherry of the California group Consumer Action. She says the key worry is a "domino effect": Lower credit scores can prompt lenders to raise cardholders' interest rates, which in turn can boost balances and expose consumers to over-limit fees and penalty interest rates.

Sherry believes lenders should at least be required to notify cardholders of reductions in credit limits - as new federal rules will require next year in some circumstances. Crawford discovered his limit had changed when he went online to pay his February bill.

"It's a key term - along with interest rates, it's the term that matters most to people," Sherry says.

If they can't afford higher interest payments, Bank of America cardholders such as Reitmeyer face similar risks, but have another option: They can formally decline the change in terms - if they're willing and able to close their accounts.

That doesn't mean they must immediately pay off their balances. They simply have to continue to meet the terms of the old agreement and make timely payments.

But it does mean that they can't use their cards, because making additional charges constitutes "acceptance" of the new rates.

That seems fair enough. If you have an account you're closing to reject changed terms, the best thing to do is cut up the card, or tuck it in a drawer.

But there's a trap that snares many consumers: unintentional charges, such as recurring fees for online services or magazine subscriptions. If you use your card for such payments, make sure you provide another card or request a different payment method. Accidental or not, credit-card banks will treat any subsequent use as an excuse to reactivate the account at the higher rates - another trap that will disappear when new rules take effect in July 2010.

At that point, or perhaps sooner if Congress intervenes, cardholders won't face such stark choices. For instance, lenders won't be able to change rates on existing balances if cardholders are current with payments.

But for now, stressed consumers are being buffeted by unfriendly market conditions - including less opportunity to take the time-honored step of taking their business elsewhere.Consumers can shop online for credit cards at sites such as www.LowCards.com. But those who rely on solicitations from card issuers, which topped 5 billion in 2007, are likely seeing fewer offers.lern more BestCredit: How to Win the Credit Game, 2nd Edition


source :Pilly.com

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By Dan Eggen

In a remarkable illustration of the power of lobbying in Washington, a study released last week found that a single tax break in 2004 earned companies $220 for every dollar they spent on the issue -- a 22,000 percent rate of return on their investment.

The study by researchers at the University of Kansas underscores the central reason that lobbying has become a $3 billion-a-year industry in Washington: It pays. The $787 billion stimulus act and major spending proposals have ratcheted up the lobbying frenzy further this year, even as President Obama and public-interest groups press for sharper restrictions on the practice.

The paper by three Kansas professors examined the impact of a one-time tax break approved by Congress in 2004 that allowed multinational corporations to "repatriate" profits earned overseas, effectively reducing their tax rate on the money from 35 percent to 5.25 percent. More than 800 companies took advantage of the legislation, saving an estimated $100 billion in the process, according to the study.

The largest recipients of tax breaks were concentrated in the pharmaceutical and technology fields, including Pfizer, Merck, Hewlett Packard, Johnson & Johnson and IBM. Pfizer alone repatriated $37 billion, representing 70 percent of its revenue in 2004, the study found. The now-beleaguered financial industry also benefited from the provision, including Citigroup, J.P. Morgan Chase, Morgan Stanley and Merrill Lynch, all of which have since received tens of billions of dollars in federal bailout money.

The researchers calculated an average rate of return of 22,000 percent for those companies that helped lobby for the tax break. Eli Lilly, for example, reported in disclosure documents that it spent $8.5 million in 2003 and 2004 to lobby for the provision -- and eventually gained tax savings of more than $2 billion.

"There's always been speculation that lobbying is a lucrative area," said Stephen W. Mazza, a Kansas tax-law professor who is one of the authors of the study. "We've been able to come up with quantifiable returns and show that it really is the case."

Mazza added that the results are "troubling" because they show how large companies can distort tax policy to benefit their bottom line.

Obama has made lobbying a key target of his ethics policies, sharply limiting the access of lobbyists to the administration and forbidding the appointment of many former lobbyists in the government without special waivers. The moves have angered many lobbying groups but have had little apparent impact on the ongoing boom in K Street business.

"It's always hard to measure the financial benefits of lobbying, but generally everyone knows it does bring in a lot," said Craig Holman, government affairs lobbyist for Public Citizen. "That's why corporations are pouring more and more money into lobbying every year. Clearly, they understand it has a very good rate of return."

The tax break in question was included as part of the American Jobs Creation Act of 2004, and was billed as a way to create jobs in the United States by requiring companies to use the money for specific purposes.

But the Congressional Research Service and others have since found that many companies cut jobs in the wake of the tax break and that nearly all the money was used for stock buybacks or dividends. Supporters failed in a bid to include a similar tax break in this year's stimulus legislation, and a Senate subcommittee has launched an investigation into how companies used their tax savings under the 2004 program.

The provision was championed in part by the Homeland Investment Coalition, a group of companies and trade associations that was formed to push for the repatriation holiday. The Pharmaceutical Research and Manufacturers of America (PhRMA), one of the disbanded coalition's members, said in a statement Friday that "repatriation of profits provided a new source of investment for American companies."

"PhRMA supported the legislation four years ago as part of a broad business coalition because of the additional economic benefits the bill would provide," senior vice president Ken Johnson said. "It meant jobs and skilled training for American workers, as well as a shot in the arm for local economies."

source:The Washigton Post

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By Shobhana Chandra

The number of Americans seeking jobless benefits last week climbed to the highest level in 26 years, providing a reminder that unemployment will keep mounting long after the economy stabilizes.

Initial jobless claims swelled by 12,000 to 669,000 in the week ended March 28, the most since 1982, the Labor Department said today in Washington. A Commerce Department report showed orders to factories improved in February for the first time in seven months.

Attention now turns to tomorrow’s monthly employment report that is projected to show the jobless rate climbed in March to a 25-year high. The biggest slump in profits in five decades means companies will cut more staff to reduce expenses in coming months, even as orders begin to trickle in.

“There are positive signs in the economy, solid signs that the downdraft has diminished,” said Ellen Zentner, a senior U.S. economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “But because the labor market lags, we don’t think we’ve seen the worst of that yet.”

Stocks gained, extending a global rally, as investors welcomed a change in regulation that may boost bank profits, and leaders of the most powerful nations, meeting in London, neared agreement on joint efforts to stem the recession. The Standard & Poor’s 500 index was up 3.8 percent to 841.86 at 11:19 a.m. in New York. Treasury securities fell and oil jumped.

First-time jobless claims were estimated to fall to 650,000 from 652,000 initially reported for the prior week, according to the median projection of 43 economists in a Bloomberg News survey. Estimates ranged from 630,000 to 682,000.

Job Cuts

The report from Labor also showed the total number of people collecting benefits soared in the week ended March 21 to a record 5.73 million. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, increased to 4.3 percent in the same week, the highest since 1983.

The jobless rate last month climbed to 8.5 percent, the highest level since 1983, according to the median forecast in a Bloomberg survey before tomorrow’s report. Payrolls probably fell by 660,000 workers, bringing total job losses since the downturn began to about 5 million.

Less employment and slowing incomes may thwart a rebound in consumer spending, setting back prospects for an economic turnaround in the second half of 2009.

“It is difficult to sustain any rebound in consumer spending when you have such sharp declines in employment,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. “It’s getting harder to get a job once you lose it.”

Factory Orders

Orders placed with factories rose 1.8 percent in February, the first gain since July, reflecting a rebound in demand for construction machinery, computers and air-conditioning equipment that signals the worst of the manufacturing slump has passed.

The gain followed a 3.5 percent drop in January that was larger than previously estimated, the Commerce Department said.

A pickup in bookings, combined with plunging stockpiles, is setting the stage for gains in output in coming months that may stem the slide in factory employment.

“There are signs that the pace of decline in manufacturing activity may be slowing,” said Tim Quinlan, economic analyst a Wachovia Corp. in Charlotte, North Carolina.

The Commerce report showed demand for motor vehicles and parts rose 1.1 percent in February, and improving sales indicate gains may continue.

Auto Purchases

Auto purchases last month were stronger than forecast, rising to a 9.9 million annual pace from a three-decade low of 9.1 million in February, according to industry figures released yesterday. Carmakers were forced to spend a record $3,169 on incentives per vehicle on average, surpassing the previous mark set in September 2004, to entice consumers.

“It’s one month in a row, and it’s of interest and there may be a small sign of hope,” Chrysler LLC President Jim Press said on a call with reporters yesterday. “But if you look at the trends out there, there’s a lot of concern.”

President Barack Obama earlier this week gave General Motors Corp. and Chrysler deadlines to “fundamentally restructure” or lose government aid that has kept them running. He rejected the companies’ recovery plans and forced GM Chief Executive Officer Rick Wagoner to resign.

In addition to providing funds to the U.S. automakers, policy makers are trying to unclog credit. The Financial Accounting Standards Board voted today to relax fair-value rules that Citigroup Inc. and Wells Fargo & Co. say don’t work when markets are inactive.

The changes allow companies to use “significant” judgment when gauging the price of some investments on their books, including mortgage-backed securities. Analysts say the measure may reduce banks’ writedowns and boost their first-quarter net income by 20 percent or more.

source :Bloomberg

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By Greg Morcroft & John Spence

While he's seeing "mixed signals," Bank of America Corp.'s chief executive says he expects the U.S. economy to bottom in the second half of this year, and he doesn't anticipate the government to ask the company to raise more capital.
In a wide-ranging TV interview on CNBC, CEO Ken Lewis -- who spearheaded Bank of America's controversial acquisitions of Countrywide Financial and Merrill Lynch at the height of the recent credit crisis -- also said that the Charlotte, N.C.-based company (BAC:7.38, +0.33, +4.7%) remains willing to
work with customers to avoid mortgage foreclosure and that tens of billions of dollars of the bank's capital remains tied up in reserves for losses on consumer loans such as mortgages and credit cards.

Regarding the government's recent investment in the company under the Troubled Asset Relief Program stabilization plan, Lewis said that he regretted taking a larger piece of government money than the company needed, adding that he's "anxious" to return at least some of those funds to the government.
Lewis said that the company is continuing to make "every good loan we can make," despite a continuing rise in consumer loan delinquencies.
He said that the next six months will be tough but that the current economic downturn is beginning to feel to him more like a typical recession than a freefall.
'Mixed signals'
Asked about the current state of the economy, Lewis said he sees mixed indications with some housing sales data coming in better than expected, and some auto sales not quite as bad as forecasted.
"When you see mixed signals, I think it signals that you're getting close to the bottom," the chief executive told CNBC.
He said he shares the consensus view that can have things moderate in terms of the declines and that the economy hits bottom in the second half 2009, with a recovery in the first part of next year.
"You can't throw as many things as we're throwing at it and not break the back of this thing," Lewis said.
He said the recent wave of mortgage refinancing will reduce monthly payments for many borrowers and help kick-start the economy.
Lewis said Bank of America is working on modifying home loans for strapped borrowers.
"Nobody wants to foreclose," he said. "It's bad for everybody, and it's particularly devastating for communities."
TARP regrets
Lewis said he erred by taking the second round of TARP capital from the government when it was closing the controversial acquisition of Merrill Lynch.
B. of A. took another $20 billion after earlier accepting $25 billion.
"That was my mistake," he said. "We took more than we needed. I regret having taken that much. That's why I'm so anxious to pay at least some of it back."
Lewis explained he didn't take the second capital infusion solely because of Merrill Lynch, but also to protect the bank from the economy worsening more than it actually did. He said the government didn't force the company to complete the Merrill Lynch deal, and that it was "the right thing to do" for both B. of A. and the American financial system. Lewis lauded the Merrill acquisition, saying the brokers have more banking products to sell now.
He said the purchases of Merrill and mortgage giant Countrywide "will prove to be two of the best acquisitions we've ever made if you judge us over two or three years, rather than two or three months."
'Earnings power'
When asked about B. of A. shares still trading below $8, the CEO said the stock price reflects "fear of the unknown," as well as questions over the economy and further write-downs.
"This is going to be a tough year for all institutions," Lewis said.
Yet a year from now, "we'll be coming out of this, and you'll be able to see a lot of the earnings power of the financial institutions and the unemployment rate should at least be holding steady if not starting to improve slightly."
Lewis is also optimistic the bank will pass the so-called stress tests being conducted by the government.
"The bad news is it creates a lot of uncertainty," he remarked. "The good news is we will get through it now and hopefully get that uncertainty behind us and get some closure."
He said he doesn't expect the government will ask B. of A. to raise additional capital.
Finally, he acknowledged the compensation system in the banking business is changing during the financial crisis. He expects salaries will represent a greater percentage of overall compensation relative to incentives, which can encourage too much risk-taking.Lords of Finance: The Bankers Who Broke the World


source :MArketWatch

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By Michael R. Crittenden

Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- American International Group Inc.'s (AIG) former chairman blamed the executives who replaced him for the company's collapse, refusing to accept any responsibility despite coming under fire from lawmakers on his role in fostering the firm's financial products division.

"I think they got greedy. I think they wrote considerably more business than they should have," Maurice Greenberg told the House Oversight and Government Reform Committee Thursday.

Greenberg, who headed AIG for 38 years before departing under pressure in 2005, said the U.S. government's effort to prop up the firm - to the tune of $ 170 billion in government aid - has "failed" and that the company should be restructured. Liquidating the firm and selling off its assets should be abandoned, he said, and the government should reduce its stake in the firm from 80% to 15%.

"My approach focuses on reconstructing and sustaining AIG so that it will in the future be a healthy and vibrant company once again," Greenberg said in his testimony before the House Oversight and Government Reform committee.

Added Greenberg: "Let me be clear: AIG's business model did not fail - its management did."

Lawmakers wanted more from Greenberg, pressing him on his ongoing litigation with AIG and what role he played in fostering AIG's financial products division, the unit that wrote vast amounts of credit-default swap contracts that ended up forcing the government's rescue of the firm.

"Mr. Greenberg's testimony should be taken with a grain of salt," Rep. Darrell Issa, R-Calif., said. "At the very least, we must acknowledge these biases."

Rep. Elijah Cummings, D-Md., was more direct, asking Greenberg during a heated exchange, "Do you take any responsibility at all?"

Greenberg, accompanied by high profile attorney David Boies, refused to accept any blame.

"No I don't," Greenberg said, referring to subsequent losses at the financial products division and downgrades of AIG's ratings. He said the management that took over when he left the firm "must have paid very little attention" to the growing problems that led to the firm's demise.

Additionally, Greenberg said billions in government funds should not have been paid to AIG's counterparties; giving other financial firms guarantees would've been a better option.

"These cash payments to [credit-default swap] counterparties should never have occurred," Greenberg said. "It would have been more beneficial for the American taxpayer if the federal government had walled off AIG Financial Products ... and provided guarantees to AIGFP's counterparties rather than putting up billions of dollars in cash collateral to those counterparties."

source :CNNmoney.com

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