Caixin Online: China pension funds closer to stock investing

By Lan Fang
BEIJING (
Caixin Online
) — China’s struggling securities market is getting a psychological shot in the arm on rising expectations that pension funds may soon provide hundreds of billions of yuan in new investment cash.
Since his appointment in late October, China Securities Regulatory Commission (CSRC) Chairman Guo Shuqing has mentioned several times that he wants to widen securities market access for pension and housing provident funds.
Chen Liang, director of fund oversight at the Ministry of Human Resources and Social Security (MHRSS), said a consensus could be reached soon among key parties involved in pension fund investment talks.

 About Caixin
Caixin is a Beijing-based media group dedicated to providing high-quality
and authoritative financial and business news and information through
periodicals, online and TV/video programs.
• Get the Caixin
e-newsletter

/conga/story/misc/caixin.html
61611

Various government authorities including the CSRC, MHRSS and the National Development and Reform Commission have been discussing since late last year broad issues such as investment target qualifications, government policies, fund operations, market oversight and legal responsibilities, Chen said. They’ve also discussed opening the stock market to housing provident funds, which companies manage for employees’ future housing purchases.
A “breakthrough development” that would let urban pension funds — government-run social security funds for most workers in China’s cities — buy and sell stock was recently reached, said Ji Ning, deputy head of the Employment and Income Distribution Department at the National Development and Reform Commission (NDRC).
Discussions are likewise continuing over whether private insurance schemes for rural workers, few of whom are eligible for social security, will be allowed to follow suit.
Neither securities regulators nor fund managers have set a possible timetable for unleashing the full power of pension funds on the nation’s stock exchanges. For now, the government limits market access to certain social security and annuity funds, which can invest up to 40% of their assets in securities.
As of the end of 2010, the nation’s urban pension funds controlled a cumulative 1.5 trillion yuan ($238 billion), including 857 billion yuan managed by the National Social Security Fund Council. The rural insurance plan, an option for farm workers and other self-employed launched in 2009, held 42.3 billion yuan.

Two sides

Supporters and skeptics of pension fund stock investing are among those participating in the ongoing negotiations. The former include government officials, who say funds would help stabilize the nation’s securities markets, which weakened in 2011. Doubters include State Council members, who call stock investing too risky for public funds earmarked for retirees.

A hard landing for the Chinese economy

Mark Faber, Editor and Publisher of The Gloom, Boom & Doom Report in Hong Kong, talks to Barron’s Michael Santoli at the 2012 Barron’s Roundtable conference about the consequences of a coming economic slowdown in China.

These and related disagreements have brewed for years while, according to reports, some pension-linked insurance funds have gone ahead and invested in stocks.
The State Council’s official position is that any change in pension investment policy should put safety first. The cabinet wants strict supervision of stock trading by pension funds, for example, and has called for tighter laws and regulations before regulators broaden investment channels.
For officials at MHRSS and NDRC, however, a main sticking point has been a disagreement over which government agency would actually invest pensioners’ money.
Caixin has learned MHRSS, NDRC and other agencies have reached a basic consensus on most pension-securities issues. For example, they’ve agreed individual accounts and a trust model should be used for all stock investing.
http://tourism9.com/    http://vkins.com/

Consumer financial watchdog to focus first on lending abuse

With its first chief now in place, the new Consumer Financial Protection Bureau will start enforcing rules aimed at reining in abusive mortgage servicers, student lenders and payday-loan companies.
It will be months, though, before the agency can police other areas of consumer finance, such as debt collection and credit-reporting bureaus.
Over Republican opposition, President Barack Obama used a congressional recess appointment Wednesday to install Richard Cordray to lead the consumer finance watchdog. The bureau was created in July as part of the 2010 overhaul of the nation’s financial regulations.
The idea behind the new agency was to prevent financial companies, such as mortgage servicers, from exploiting consumers. Such companies, facing scant federal oversight, committed some of the worst consumer abuses before the financial crisis that created the longest recession since the Great Depression.
In the past, only banks were subject to examination by federal financial regulators. And until now, with no permanent director, the bureau had authority to supervise only big banks.
Senate Republicans had vowed to block Cordray’s nomination until the agency’s structure was changed to allow closer congressional oversight. But Obama took advantage of the congressional break to install Cordray, a former Democratic attorney general of Ohio.
Cordray said he would immediately “begin working to expand our program to nonbanks, which is an area we haven’t been able to touch up until now.”
That change will likely start within weeks.
Agency officials who are supervising big banks have already been trained to examine nonbank financial firms.
Still, some areas of consumer finance will remain outside the bureau’s reach.
Aside from payday, mortgage and student loan companies, the consumer protection bureau can supervise only nonbank companies it defines as “larger participants” in their markets.
In June, the agency sought public comments on a proposal to supervise major debt collectors, credit reporting bureaus, check cashers, issuers of prepaid debt cards and debt-relief companies.
The comment period has ended, and the agency is reviewing the responses. It’s not clear how long the review will take.
Once the comments have been reviewed, the proposal must be revised, subjected to further public comment and then approved by the White House. This could take months or years.
If the agency’s proposal is approved, it will be able to send inspectors to credit bureaus and others that meet the “large participant” definition.
Here’s a guide to the powers that the CFPB now holds over different categories of companies:
Nonbank mortgage lenders and servicers: These companies have been subject to existing laws and rules, but the agency was unable to supervise them without a permanent director. With Cordray’s appointment, the CFPB can have officials monitor mortgage lenders and servicers.
That might discourage any from using “robo-signers” to foreclose on borrowers without doing the required paperwork. That practice became widespread over the past decade, and no federal agency was responsible for cracking down.
Payday lenders: Companies that make short-term loans to borrowers with weak credit already are governed by federal laws such as the Truth in Lending Act. But there’s been no federal oversight to make sure they comply.
The CFPB can now send examiners to payday firms it suspects of illegal or abusive practices. The agency wants to make sure they disclose the full cost of a loan up front so consumers can make an informed choice.
Private student lenders: CFPB examiners have gained the authority to examine these companies. The federal government has been cracking down on for-profit education companies whose graduates can’t find jobs and have little chance of repayment. The CFPB can now require these lenders to follow existing rules and write new ones intended to guarantee that they lend fairly.
Prepaid debit card companies, credit bureaus, money-transfer companies, check cashers, debt relief services: These companies are subject to federal laws. But they’ve faced little oversight in the past. The CFPB proposed in June identifying major participants in these markets to make sure they’re following the rules. It’s unclear when that proposal might take effect.
Big banks: Banks already are overseen by the bureau, so nothing much will change as a result of Cordray’s appointment. Since its creation, the agency has been placing full-time examiners in the nation’s biggest banks to enforce laws and rules. It can require them to file regular reports, monitor risks they might pose to consumers and write new rules.

http://tourism9.com/

Local Private Equity Fund Announces Merger of 5 Air Filtration Companies

Huntington Capital Fund II LP, a San Diego private equity fund, said it arranged a syndicated mezzanine loan for an undisclosed amount to Protect Plus Air Holdings LLC, a new holding company for five entities in the residential air filter space.
Huntington co-invested in the company with Plexus Capital Fund II LP, based in North Carolina.
Protect Plus was set up for the purpose of facilitating the roll up of five air filtration companies owned and controlled by the Hickory, N.C.-based Lackey Group. Combined, the companies make up the second largest air filtration company in the nation with a diverse portfolio of products, the company said.
Huntington, founded in 2000, invests in established lower middle market businesses with annual revenue of $10 million to $75 million in a broad range of industries, the firm said.
— Mike Allen

http://tourism9.com/

UC Funding Provides $16.8 Million of Capital for Chicago Portfolio

BOSTON–(BUSINESS WIRE)– UC Funding recently closed a $16.8 million investment on a portfolio of properties located in Chicago, IL and Tennessee. The transaction was underwritten and closed in under 30 days. The Investment is secured by a variety of different collateral structures including first mortgages, mezzanine positions, and equity. UC Funding’s capital solution assisted the borrower in refinancing and acquired ten properties; nine of which are multifamily assets, located in urban and suburban Chicago with 647 units. The tenth asset is a 245-key hotel located in Memphis, TN, in close proximity to the Memphis International Airport and Graceland, requires significant capital work. The sponsor has a proven track of acquiring and renovating well-located properties with significant upside potential. UC’s loan provides the sponsor with funds to continue its successful program on this new group of assets.
Dan Palmier, CEO of UC said, “This deal represents a majority of what UC does; helping great operators create unique financial solutions to fit the most complicated deals and fund them quickly.”
UC Funding LLC (www.ucfunds.com) is a national, diversified, real estate finance company, founded in 2010 and headquartered in Boston, with offices in New York and Miami. UC Funding provides commercial real estate financing solutions throughout the United States. Nearing 1 Billion in capital and a growing staff of 50 team members, UC Funding serves as one of the nation’s fastest growing real estate financing institutions. UC Funding was nominated company of the month during 2011 by both the New York Real Estate Journal and New England Real Estate Journal. UC Funding’s core belief is that real estate ownership and real estate financing should work together as a partnership. By working together, UC Funding shares each and every client’s vision of creating innovative financial solutions.
UC Funding provides financial solutions throughout the entire capital stack, including joint venture equity. UC Funding is one of the nation’s most entrepreneurial lending institutions focused on Multi Family, Retail, Office, Hotel and Industrial/Warehouse assets nationwide. For more about the UC Funding’s commercial real estate platform, visit (http://www.ucfunds.com/).

http://tourism9.com/