Remedies to help underwater homeowners not enough, PUSH panel says

BY MAUDLYNE IHEJIRIKA Staff Reporter mihejirika@suntimes.com February 25, 2012 8:36PM

Updated: February 25, 2012 9:42PM
Only strident remedies — such as a national moratorium on foreclosures and offering financial aid to “underwater” homeowners — can help stem a crisis sending severe reverberations through poor and minority communities, members of an Operation PUSH panel said Saturday.
Those communities will have to demand action through voting power and protest, seeking redress through legislative and legal means, because the recent settlement between the nation’s largest lenders and 49 state attorneys general shows they can’t count on government solutions, said the Rev. Jesse Jackson and other members of the panel.
“In the 1960s, we fought against restrictive covenants, then redlining, then for the Community Reinvestment Act. We finally get a rise in black and brown home ownership. Now this,” said Jackson, pointing to research showing the largest segment of “underwater” homes — where the amount owed exceeds the value of the home — are found in poor and minority communities.
“Much of this is race-based driven exploitation,” Jackson said. “We must now fight to recover our lost assets stolen from us and not protected by the government. We must connect our votes with our remedy.”
About 11 million households nationally are underwater.
The government bailout of banks that was supposed to help many of those households stave off foreclosure “have not helped nearly as much as it needs to,” asserted Woodstock Institute Vice President Spencer Cowan.
Nor, Cowan said, will the landmark $25 billion settlement reached last month with five top mortgage lenders, which helps only 1 million households.
“The $25 billion settlement is only a small aspect and doesn’t address the myriad other problems that led us to this point,” he said. “Nor does it address the two largest holders of mortgages, Fannie Mae and Freddie Mac.”
Others noted the crisis has pushed more of the middle-class into poverty.
“The only investment most middle-class people have is their home. Now these same people have no credit. If they can’t get a loan, their kids can’t go to college. You have a whole generation of people moving from middle-class to poverty,” said the Rev. Janette Wilson, PUSH Education Director.
The panel advocated criminal action against lenders who participated in the predatory and deceptive lending practices, issuing loans destined to fail.
“Find the people who robo-signed these loans, and start going after them. The $25 billion settlement doesn’t rule out criminal investigation of the banks for some of these other problems,” said Cowan.
Research by his group found in the six-county Chicago metropolitan region, the average underwater homeowner owes $50,000 more than their home’s value.
The number of homes hit with foreclosures in the region rose 13.9 percent in January from December — to 13,750 homes, or one in every 276 homes.http://tourism9.com/    http://vkins.com/

Neighborhood Credit Union Breaks Ground in Grand Prairie, Expects to Serve Community by October

Grand Prairie, Texas (PRWEB) February 22, 2012
Great things are happening in Grand Prairie, according to Neighborhood Credit Union, which broke ground this morning on its new location in Grand Prairie.
“We are excited to be in Grand Prairie today to mark the official launch of a new branch that will be ready to serve the people of this community in the next few months,” said Gerald Townsend, Chairman of the Board for Neighborhood Credit Union.
The new branch, at the intersection of West Bardin Road and Great Southwest Parkway, is due to open October 1, 2012. The Neighborhood Credit Union not only will provide a better way of banking to the Grand Prairie community, but also will focus on engaging students at nearby schools to establish a firm financial foundation for their future.
“Our mission is to build financial relationships in your neighborhood,” said Townsend. “We are not another big bank simply pushing products and services. We are a not-for-profit credit union that wants to help people from all walks of life improve their own financial life.”
Chet Kimmell, president and CEO of Neighborhood Credit Union, said the credit union hopes to be a draw to other businesses looking at or locating in Grand Prairie.
“This groundbreaking is symbolic of what we hope will be a trend: the decision by companies and organizations to invest in Grand Prairie and be part of this neighborhood,” said Kimmell. “We believe Grand Prairie is going places, given its forward-thinking leadership and the community’s focus on growth and economic development.”
Neighborhood Credit Union board members and staff were joined by State Rep. Rodney Anderson; Grand Prairie City Council members Bill Thorn and Richard Fregoe; City Manager Tom Hart; Gail Cannon, District Director for State Rep. Barbara Nash; Grand Prairie Chamber of Commerce officials Bill Moser and Greg Cashman, and other business leaders.
About Neighborhood Credit Union
Neighborhood Credit Union, the oldest credit union in Dallas (chartered April 18, 1930), is a not-for-profit financial organization serving Dallas and Ellis counties, as well as the city of Arlington. With branches in South Dallas, North Dallas, Richardson, Arlington, Mesquite, Duncanville, Waxahachie and Lancaster (and soon to be in Grand Prairie) and assets topping $300 million, Neighborhood Credit Union has a membership of 30,000 and continues to welcome new members daily. For more information on Neighborhood Credit Union, call (214) 748-9393 or visit http://www.myncu.com/.
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State Pensions Find Private Equity Bites as Blackstone Cuts Jobs

February 23, 2012, 12:58 AM EST
By William Selway and Martin Z. Braun
Feb. 23 (Bloomberg) — Shirley Kimber walked off the production line from her $17.56-an-hour job at a Birds Eye Foods plant in Fulton, New York, for the last time in November.
The new owners, Pinnacle Foods Group LLC, a company held by the private equity firm Blackstone Group LP, closed the factory and fired 270 workers. Kimber, 64, got eight weeks severance for her 12 years on the job and lives with her 37-year-old unemployed daughter in the rust-belt town of about 12,000, northwest of Syracuse.
“They just used us. That’s exactly what they did,” Kimber said. “And then they kicked us to the curb.”
While the closing killed union jobs, it may also help protect the retirement benefits that organized labor bargained for on behalf of public employees.
In addition to Blackstone, the world’s largest buyout firm, New York State’s two public employee pensions and four New York City pensions stand to gain from the drive for higher profits at Pinnacle foods. The retirement funds poured $920 million into the $20 billion Blackstone fund that owns Pinnacle, which took over Birds Eye in 2009.
Public pension funds — seeking to boost returns after failing to secure the 8 percent annual investment earnings needed to pay benefits for teachers, police officers and other civil servants — are the biggest source of cash for private equity firms.
Faster Pace
Companies owned by New York-based Blackstone added jobs at a faster pace than the U.S. economy for the past two years, said Peter Rose, a spokesman for the firm. Private equity’s investment returns “are one of the few ways that pension funds can help keep the promises that they have made to their retirees,” he said.
Pinnacle Foods closed the Fulton plant to cut transportation costs by moving operations closer to suppliers, said Michelle Weese, a spokeswoman for the company.
While firms such as Blackstone and Bain Capital LLC, co- founded by Republican presidential candidate Mitt Romney, have drawn scrutiny for their paring of jobs and the low tax rates enjoyed by executives, the role of taxpayer money in financing their acquisitions has received less notice.
By September 2011, public pensions with at least $1 billion in assets had an average of 11 percent of their money in private equity, more than triple their investments a decade earlier, according to Wilshire Associates, a Santa Monica, California- based consulting firm.
Rising Investment
Such funds have about $400 billion with private equity, 29 percent of the total, according to Prequin Ltd., a London-based private equity research firm. That’s more than twice what was put in by private pension funds, the next biggest investor.
Public pensions “have been the investors that have really fueled private equity’s rise,” said Steven Davidoff, a professor of law and finance at Ohio State University’s Moritz College of Law in Columbus, Ohio. “For those people who complain about private equity, the money is really coming from pension funds.”
Private equity firms buy companies and seek to trim costs, improve operations, boost profits and resell them. The takeovers are typically financed by debt taken on by the purchased companies.
The business has been drawn into the presidential contest as Romney parried attacks from Republican rivals who suggested he built a fortune of as much as $250 million with takeovers that cost workers their jobs. He has disputed this characterization.
Private equity executives, including Blackstone managing director and Pinnacle Foods director Prakash Melwani, have helped stock Romney’s campaign war chests. Melwani declined to comment.
Mayor Objects
Fulton Mayor Ronald Woodward, a Republican, said the Birds Eye takeover has devastated his town, adding that he is troubled to learn that New York pension money helped finance the acquisition.
“Isn’t that a slap in the face to the people in Fulton that are losing their jobs and paying the salaries of those union workers and they’re using their investments there,” Woodward said. “It’s like biting the hand that feeds you.”
Her severance exhausted, Kimber now lives off unemployment benefits of $1,620 a month, plus $100 a month in pension payments, she said. She pays 22 percent of that for health insurance. Her daughter, also named Shirley, has a biology degree but can’t find a job using that specialty. To make a few extra dollars, she babysits and sells books online.
Executive Compensation
Robert Gamgort is chief executive officer of Parsippany, New Jersey-based Pinnacle Foods, which also makes Dunkin Hines cake mix, Vlasic Pickles and Hungry Man frozen dinners.
Gamgort was awarded compensation valued at $5.5 million in 2010 and $11.6 million in 2009. Sara Genster Robling, head of the Birds Eye division, got pay packages worth $1.5 million in 2010 and $2.1 million the previous year. Most of the pay was in company stock. Gamgort and Robling weren’t available for comment, she said.
After the collapse of 1990s Internet bubble left pensions reeling from investment losses, state and local government funds poured money into private equity firms. The financial crisis of 2008 and subsequent recession left U.S. state public pensions $694.2 billion short of having enough assets to pay future benefits by the end of their 2010 budget years, according to data compiled by Bloomberg.
Higher Returns
Private equity deals promised higher returns than stocks and bonds. The 15-year median return on stocks for public pension funds with more than $1 billion assets, before fees, is 5.5 percent annualized as of Dec. 31, 2011, while the median return for private equity in that time period is 9.8 percent, according to the Wilshire Trust Universe Comparison Service.
The deals have served pensions well. New York state’s teachers pension’s private equity investments delivered an annual rate of return of 11.8 percent as of June 30, 2011. New York City’s private equity investments in four of its five pension funds have returns ranging from 9.2 percent to 11.1 percent.
That helps save taxpayers money. For workers and the acquired companies, the benefits can be harder to discern.
A study led by the University of Chicago’s Steven Davis, based on 3,200 private equity deals from 1980 to 2005 and published in September, sought to quantify the impact. It found that employment at acquired companies dropped 6 percent in the next five years relative to stand-alone peers as they shuttered lagging businesses.
‘Creative Destruction’
Still, the companies also added workers by opening new business lines and through acquisitions. The study concluded that such deals accelerated the “creative destruction” of jobs, with a “modest” impact on total payrolls.
“Private equity investors are remorseless in their perspective on business,” said Robert Bruner, the dean of the University of Virginia’s Darden School of Business. “That is a manifestation of the rigors of the capitalist system,” he said. “It accelerates the process.”
Rose Pitcher, 50, experienced that first-hand. After working 25 years at the Birds Eye plant in Fulton, she wrapped up her last shift in November, with eight weeks severance, as Pinnacle moved the plant’s jobs to Wisconsin and Minnesota. Other employers in the area, like an apple-packing plant in Oswego, pay less than half the $17 an hour she was making overseeing the machine sealing packages of Voila! ready-made meals at Birds Eye.
“There just doesn’t seem to be anything out there,” she said.
Portfolio Companies
Blackstone says it has a record of boosting employment overall. In 2011, Blackstone’s portfolio companies added 4.6 percent to their payrolls by creating new jobs, rather than through acquisitions, and increased them 3 percent in 2010, said Rose, the company spokesman. That outpaced job growth in the economy, he said.
“Private equity is a vital source of capital to grow and strengthen companies where public capital cannot or is unwilling to invest,” said Rose.
New York Comptroller Thomas DiNapoli, the sole trustee of New York’s $140 billion retirement fund, declined to comment. New York City Comptroller John Liu declined to comment. John Cardillo, a spokesman for New York state’s Teachers’ Retirement System, declined to comment.
Drivers coming into Fulton are greeted by the red-brick Nestle chocolate factory, where for 103 years the company made condensed milk, semi-sweet morsels and Crunch Bars. It shut down in 2003.
The Nestle factory employed 1,500 people at its height. In 1994, Miller Brewing also shut down a plant just outside of town, putting 900 people out of work.
Taking Down Signs
A couple of years after Miller shut its operations, city officials took down signs on Routes 481, 48 and 3, the thoroughfares entering Fulton, that read: “City with a Future.”
It’s a far cry from the 1930s, when the New York Sun wrote a story about Fulton entitled “The Mystery of Fulton, N.Y., the City the Depression Missed.” Then, factories powered by electricity generated by the Oswego River, which bisects the town, churned out knives, textiles and shotguns. The Fort Stanwix Canning Co. opened a plant in Fulton in 1902. In 1938 it began packaging Birds Eye vegetables.
Two Decades
The Birds Eye plant had survived during the past two decades as it passed from General Foods Corp. to Philip Morris Cos. to Dean Foods Inc. In 1998, Dean Foods sold it to Agrilink Foods Inc. for $400 million. In 2002, Agrilink sold a majority stake in the company for $175 million to Vestar Capital Partners, a private equity firm where Melwani was a managing director. Melwani is now at Blackstone.
Vestar transformed the company. In 2006, it shifted focus to brand-named foods and developing new product lines. It announced that it would jettison most of its non-brand frozen food businesses, affecting five facilities, including three in western New York, that employed about 740. In 2007, Birds Eye borrowed money to pay Vestar and Agrilink a one-time $298.2 million dividend, according to corporate filings.
Vestar turned Birds Eye into a smaller, profitable company. By 2009, Birds Eye earned $54 million on sales of $936 million, compared with a $131 million loss and sales of $1 billion in 2002. Its workforce had shrunk to 1,700 from 4,000, filings show.
In November 2009, Pinnacle Foods, owned by Blackstone, agreed to buy Birds Eye for $1.3 billion. The purchase was financed by $1.15 billion of debt. Blackstone contributed $260 million in equity. Carol Makovich, a Vestar spokeswoman, declined to comment.
$17 Million
Blackstone affiliates were paid $17 million in acquisition fees for arranging the Birds Eye deal. Pinnacle has also paid Blackstone at least $15.5 million in management fees since it was taken over by the firm in 2007, according to company filings.
Under Blackstone, Birds Eye’s sales and profits have risen. In the quarter that ended in September, sales were $248 million, an 11.2 percent increase from the year earlier. The growth was driven by expanded distribution and demand for new products, in addition to lower new product distribution expenses, the company said in a filing.
Charles Murphy, 66, had worked at the Birds Eye plant in Fulton through a series of owners for 22 years before retiring at the end of 2010. He said employees were optimistic that the factory would survive.
Schumer Press Conference
In January 2010, U.S. Senator Charles Schumer, the New York Democrat, held a press conference with workers in Fulton, saying he would keep pressuring the company until all the jobs were safe. Schumer said he called Stephen Schwarzman, Blackstone’s chairman and co-founder, and asked him to spare the factory.
“No one expected that place to close,” said Murphy.
Then Pinnacle started cutting jobs. In mid-2010, it began closing down the Rochester, New York headquarters where 200 worked. That December it announced the closure of a Tacoma, Washington, plant that employed 160 and would shift production to Iowa.
On April 13, 2011, a Wednesday, employees coming to work at the Fulton plant saw a makeshift sign taped to a window: A mandatory meeting for all employees would be held at the Fulton War Memorial, the town’s exhibition hall and gymnasium on the 15th.
A Birds Eye lawyer told those gathered that the company would close the Fulton plant and move some of the jobs to Wisconsin and Minnesota.
Paul Robinson, a 59 year-old who ran packing machines remembered asking managers, “What can we do to keep the plant open?”
‘Minds Made Up’
Nothing, he said Pinnacle managers replied. “They had their minds made up.”
Wisconsin had offered Pinnacle $1.3 million in incentives to shift production to the state. Worker’s compensation costs were also lower — an average of $1,100 per employee in Wisconsin compared with $12,000 in New York, Mayor Woodward said.
While new jobs were added elsewhere, the closures cut the Birds Eye’s payroll by about 300, or 17 percent, as it eliminated more jobs than were added elsewhere, according to Weese, the Pinnacle spokeswoman. She said such costs are common after corporate mergers.
“Synergies are true with every deal. It’s not unique to this particular deal,” Weese said. “It’s less expensive to run one company than two.”
Not all public pensions have stood by as a private equity firms managing their money announced job cuts.
Hugo Boss
In 2010, after hearing that clothing-company Hugo Boss AG was planning to close a factory in a Cleveland suburb where it manufactured suits, threatening the jobs of 300 workers, Ohio’s public employee pension fund contacted Hugo Boss’s owner, London-based private equity firm Permira Advisers LLP.
Ohio’s Public Employees Retirement System had invested $80 million in the Permira fund that owned Hugo Boss. After writing to Permira and not getting a response, the pension fund followed up with another letter saying it would “think long and hard” about investing any more money with Permira, said Hugh Quill, a former Ohio pension trustees. The plant was never closed.
“These guys could have cared less about a plant in Cleveland, Ohio, but they did care about not having institutional investors for their next $500 million offering,” Quill said. “I think it was the right thing to do, given the amount of pain and suffering that was going on in the state.”
The California Public Employees’ Retirement System and public pensions from Maryland and Pennsylvania, which invested in Permira, also lobbied the firm. So did New York City’s pension funds.
Liu’s Letter
“New York’s pension funds do not wish to be investing in job loss or in a global ‘race to the bottom,’” New York City Comptroller Liu wrote in a letter to Permira.
Chris Davison, director of communications for Permira, declined to comment.
In Fulton, Charles Murphy’s wife, Donna, had been out on medical leave since October 2010 when the Birds Eye closure was announced. Still struggling with lung cancer, she lost her job when she couldn’t return to work for the factory’s last two months. That meant she didn’t get any severance pay. She worked there for 25 years.
Pinnacle’s Weese said details about medical leave and severance pay were worked out in negotiations with the employees’ union, Workers United Local 1822.
‘Devoting Your Life’
“You spend that many years devoting your life to the company, coming in to work every day, and they think nothing of you,” said Murphy, who lives in nearby Oswego. “This hurt a lot of people’s livelihoods.”
Fulton mayor Woodward, who was a maintenance supervisor with Nestle when the plant shut in 2003, said his story is another sign of the times.
“What you’re doing by doing that — you are systematically eliminating the middle class,” he said. “You’re going to be rich or you’re going to be poor. There’s no in between.”
–Editors: Jeffrey Taylor, Larry Edelman
To contact the reporters on this story: William Selway in Washington at wselway@bloomberg.net; Martin Braun in New York at mbraun6@bloomberg.net.
To contact the editor responsible for this story: Jeffrey Taylor at Jtaylor48@bloomberg.net
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Pat Robertson: We Need To Jail The Bankers Who Caused The Financial Crisis

video
The 700 Club‘s Pat Robertson discussed the banking crisis and glowingly spoke about how Iceland jailed many of the bankers who devastated their nation’s economy by taking out fraudulent loans. Robertson hailed the Nordic nation for its actions and said that Americans should deal with the financial crisis in the same way. “Guess what country is getting itself out of a financial problem by some draconian measures?” Robertson asked his co-host Terry Meeuwsen. “Greece?” she asked. “No, not even close. Iceland!” Robertson exclaimed. “They are putting people in jail. Prime ministers are being indicted. They are going after banks. The people said the banks are ripping us off. We don’t like what they did, and they brought our country to ruin. Suddenly, Iceland is turning around and they look like a big success story!”
“Think we could learn something?” Meeuwsen asked.
RELATED: Alan Grayson Gets Standing Ovation While Bill Maher Panel Mocks Occupy Wall Street ‘Hippies’
“We sure could!” Roberson continued. “We could start putting all of those bankers in jail. There was not one banker prosecuted and so many people were lying, and so-called “no-doc loans” and liars’ loans, and none of them have been held accountable. I’m not for putting people in jail. I’m sick of these — we’ve got too many penalties. Too many penalties, too many criminal sanctions, too many people in prison. But here is an opportunity for the people who wanted, you know, to enforce laws, to enforce that one. There must be some laws against lying on documents. I’m sure there are.”
“Lying to banks is a super no-no,” he added. “It has criminal sanctions, but nobody so far has had to pay the price, but Iceland is leading the way and their GDP is growing, and all of a sudden, they were in a terrible mess, terrible mess, and look what is happening!”
Watch the segment below via CBN:
(h/t Republic Report via Reddit)
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Ceptaris Secures $15M in Venture Debt Financing

MALVERN, Pa.–(BUSINESS WIRE)–
Ceptaris Therapeutics, Inc., a privately held specialty pharmaceutical company, today secured $15 million in venture debt financing from Silicon Valley Bank and Oxford Finance.
The New Drug Application (NDA) for Ceptaris’ drug candidate, mechlorethamine gel, is currently undergoing review by the U.S. Food and Drug Administration (FDA) for the treatment of early stage (stages I-IIA) mycosis fungoides, a type of Cutaneous T-Cell Lymphoma (CTCL).
Ceptaris received $7.5 million at closing and has access to the remaining $7.5 million if the NDA is approved by the FDA. The funding will be used for ongoing operational expenses and preparation for commercialization of its investigational drug, mechlorethamine gel. Ceptaris’ primary venture capital investors include Vivo Ventures, Palo Alto Investors, Burrill & Company, Osage Ventures, Aperture Venture Partners, and BioAdvance.
“We are very pleased with our venture debt relationships with both SVB and Oxford and the additional capital it provides Ceptaris for pre- and post-launch activities,” said Stephen Tullman, President and CEO at Ceptaris. “Management has worked with both lending institutions in prior companies, including Ception Therapeutics and Vicept Therapeutics, and we look forward to continuing these relationships.”
About Ceptaris Therapeutics
Ceptaris Therapeutics, Inc. is a privately held, specialty pharmaceutical company that is developing a proprietary gel formulation of mechlorethamine hydrochloride for the treatment of early stage (stages I-IIA) mycosis fungoides, a type of Cutaneous T-Cell Lymphoma (CTCL). If approved, Ceptaris’ investigational drug would be the first topical mechlorethamine product available to treat the signs and symptoms of this rare cancer. Please visit www.ceptaris.com for more information.
About Silicon Valley Bank
Silicon Valley Bank is the premier commercial bank for companies in the technology, life science, cleantech, venture capital, private equity and premium wine industries. SVB provides a comprehensive suite of financing solutions, treasury management, corporate investment and international banking services to its clients worldwide. Through its focus on specialized markets and extensive knowledge of the people and business issues driving them, Silicon Valley Bank provides a level of service and partnership that measurably impacts its clients’ success. Founded in 1983 and headquartered in Santa Clara, Calif., the company serves clients around the world through 26 U.S. offices and international operations in China, India, Israel and the United Kingdom. Silicon Valley Bank is a member of global financial services firm SVB Financial Group (Nasdaq: SIVB – News), with SVB Analytics, SVB Capital and SVB Private Bank. More information on the company can be found at www.svb.com.
About Oxford Finance
Oxford Finance is a specialty finance firm providing senior secured loans to public and private life sciences and healthcare services companies worldwide. For over 20 years, Oxford has delivered flexible financing solutions to its clients, enabling these companies to maximize their equity by leveraging their assets. In recent years, Oxford has originated over $1.5 billion in loans, with lines of credit ranging from $500 thousand to $50 million. Oxford is headquartered in Alexandria, Virginia, with additional offices in California, Illinois, Massachusetts and North Carolina. For more information visit http://www.oxfordfinance.com/.
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Student loans always are due, no matter how long overdue

By  Kathy Lynn Gray
The Columbus Dispatch Monday February 13, 2012 5:24 AM

If you think the student loan you took out years ago but never repaid won’t come back to haunt you, think again.
The debt could land you in federal court, pleading your case before a U.S. district judge.
“There’s no statute of limitations on student loans,” warned Assistant U.S. Attorney Deborah F. Sanders. “That debt is growing, and you still owe it.”
Sanders handles the student-loan default cases that come through the U.S. attorney’s office for the southern half of Ohio. Her office is pursuing about 400 cases.
“We get them because the (federal) Education Department has not been able to collect after many, many attempts,” Sanders said. “If it comes to our office, borrowers have had a lot of chances to pay.”
Defendants fall into two camps: those who don’t pay, and those who can’t, she said.
Usually the loans are years overdue, sometimes as long as 20 years. By that time, a large chunk of the money owed is interest that has accrued and compounded over the years.
In one case filed last year, the defendant owed $160,000, including nearly $25,000 in accrued interest on the 10-year-old loan. On another 10-year-old loan, nearly $40,000 of the $101,000 owed was interest.
If federal lawyers obtain a judgment against a debtor, the government can collect the money in a variety of ways. Wages and savings and checking accounts can be garnisheed, and tax refunds can be diverted, Sanders said. “We have a pretty good rate of collection.”
The court also can set up payment plans once a judgment has been made.
Unlike many other types of debt, student loans cannot be dismissed through bankruptcy except in rare situations, said Stephanie Dailey, a Columbus lawyer who specializes in bankruptcies.
“It’s almost impossible to get out of student-loan debt,” Dailey said. A debtor has to have a dire hardship, such as being completely disabled, she said.
About half the people who come to her with financial difficulties have student-loan debt, Dailey said. She advises them to approach the lender and try to get on a payment plan so that interest doesn’t continue to pile up.
“A lot of people will just stick their head in the sand and hope it’ll go away,” she said. “ Instead, they should let the creditor know they’re having trouble paying and ask for help.”
Dailey herself has nearly $100,000 in student-loan debt from law school. She has deferred her loans — postponed paying them with the blessing of the lender — when paychecks were lean. Interest continues to accrue during a deferral, but the lender won’t turn the loan over to collectors.
The number of student-loan defaults that went to federal court rose significantly in the late 1990s as the Justice Department pushed for collection. Nationwide, 1,142 default cases were filed in 1995; that number surged to 24,404 by 2000. But the number has fallen back since then as the Education Department has set up other ways to collect the debts, Sanders said.
At the same time, students are taking on more debt to attend college. In 2010, the average was $25,250, up 5 percent from the previous year, according to a study by the Project on Student Debt. The average in Ohio was $27,713. An estimated $1 trillion in total student loans is outstanding nationwide.
The default rate in 2009, the most-recent data available, was 8.8 percent. That includes borrowers with loan repayments due between Oct. 1, 2008, and Sept. 30, 2009. An estimate of the total amount of loan money in default is not available.
A survey released last week by the National Association of Consumer Bankruptcy Attorneys found that 81 percent of bankruptcy lawyers said the number of potential clients with student-loan debt has increased “significantly” or “somewhat” in the past three or four years.
The association thinks that student-loan debt could create an economic threat to the country as serious as the home-mortgage crisis did in the late 2000s.
kgray@dispatch.com

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5 bad financial fumbles by NFL players

Hall of Fame quarterback John Elway often escaped trouble on the field. But in 2010, Elway and a business partner invested $15 million with a hedge-fund manager who was arrested on charges that he ran a Ponzi scheme, The Denver Post reported. Elway lost $3 million.
Athletes can fall victim to Ponzi schemes if they do a poor job vetting the people who are handling their investments, says Michael Chasnoff, chief executive of Truepoint Inc., a wealth management company in Cincinnati.
Athletes often think they can trust the person investing their money if he or she was recommended by someone the athlete respects.
Investors have to perform their own due diligence no matter how much they trust the person who recommends an investment adviser, Chasnoff says.
The National Association of Personal Financial Advisors offers a questionnaire to help investors interview potential advisers. Before signing on, an investor should also contact the adviser’s other clients as a reference.
Look for advisers who are known in the community and give back to the community through charities or nonprofit groups. “They are usually very professional, high-integrity people,” Chasnoff says.
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Cohen Said to Plan Donating Gains From SAC Spinout as Investors Flag Risk

Steven A. Cohen plans to donate to charity any profits he makes from the former private-equity arm of the SAC Capital Advisors LP hedge fund, according to three investors.
Some limited partners and prospective investors in Siris Capital Group LLC have expressed concern that the New York-based spinout’s ties with Cohen left it vulnerable to “headline risk,” or negative news, the people said. Two former employees of SAC Capital have pleaded guilty to insider trading in the U.S. government’s five-year probe of hedge funds, and last month a technology analyst at one of the $14 billion firm’s units was accused of the crime.
Prior to the close of the first fundraising stage in September, Cohen decided against investing in the Siris fund, whose general partners are seeking $400 million, the people said. Cohen also decided to hand over his cut of future profits to charity, according to the investors. Siris had agreed at the time of the spinout to give Cohen 20 percent of its slice of profits, or carried interest, from the first fund, the investors said.
Frank Baker, co-founder of Siris, declined to comment, as did Jonathan Gasthalter, a spokesman for SAC Capital at Sard Verbinnen & Co. No allegations of wrongdoing have been levied against Cohen or SAC.

Siris Fundraising

Siris, the private-capital group that spun off from SAC Capital early last year, has raised $175 million for its first buyout fund, said two of the investors, who asked not to be identified because the information isn’t public. The fund, Siris Partners II LP, will invest in technology, telecommunications and health-care companies.
Public pension plans have been sensitive to any bad press around investments they make.
“The nightmare scenario for any public pension manager is getting a call from a board member one morning because a negative story involving a fund in their portfolio is on page one,” said Jake Elmhirst, a managing director at UBS Investment Bank in New York.
Cohen’s decision not to invest in the fund has alleviated concerns about potential headline risk, one of the people said. Another possible limited partner said his investment firm wouldn’t be troubled if Cohen’s had participated in the fund because that would represent a “validation” of the Siris team.
At SAC, Cohen acted as the sole backer of deals by the private-capital group and helped Siris get started.
Siris gathered $125 million in the first phase of fundraising, according to one investor. Teachers’ Retirement System of Illinois committed $45 million in August.

Tekelec, Applied Discovery

In January, Siris led a group that bought Internet services company Tekelec (TKLC) in a deal valued at about $780 million. The firm purchased LexisNexis’s Applied Discovery unit, a provider of electronic legal services, in December.
Siris was founded by Baker, Peter Berger and Jeffrey Hendren, who have worked together for more than a decade. They were colleagues at private-equity firm Ripplewood Holdings LLC before joining SAC Capital in 2007.
SAC’s private-capital group invested in Cosmos Bank Taiwan (2837), network infrastructure company Airvana and MedQuist Holdings. The deals have produced an average of about two times invested capital, according to another person familiar with Siris.
To contact the reporter on this story: Sabrina Willmer in New York at swillmer2@bloomberg.net
To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net
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2011 U.S. Venture Capital Investment in Cleantech Steady at $4.9 Billion Despite Tough Economy

BOSTON, Feb. 1, 2012 /PRNewswire/ –  US venture capital (VC) investment in cleantech companies reached $4.9 billion in 2011, flat in terms of deals and down 4.5% in terms of capital invested compared to 2010, according to an Ernst & Young LLP analysis based on data from Dow Jones VentureSource.  However, this represents a 29% increase from the $3.8 billion raised in 2009. In Q4 2011 VC investment in cleantech reached $940.5 million with 70 rounds of financing.
“Cleantech is still in the early stages of a long-term journey,” said Jay Spencer, Ernst & Young LLP’s Americas Cleantech Director. “We’ve reached a point where new products and services are ready to be launched, and as these products come to market, we’re seeing renewed interest, innovation and opportunity in cleantech.”
Energy/Electricity Generation segment leads annual growth
The Energy/Electricity Generation segment led investment in 2011 with $1.5 billion raised through a total of 71 rounds, representing a 5% decrease in dollars invested from 2010. The Solar sub-segment received the lion’s share of capital in Q4 2011 with $284.5 million, accounting for 91% of the sector’s total investment of $312.9 million. The top Solar deal for this quarter was completed by Stion Corp., a San Jose-based a manufacturer of high-efficiency, thin-film solar panels, which raised $130.0 million.
The Industry Products and Services segment completed 2011 with the second largest amount raised at $1.0 billion, down 34% from 2010. In Q4 2011, the segment raised $256.2 million, with strong support from the Transportation sub-segment, which raised $203.2 million or 79% of the Q4 2011 total, a 36% increase from the amount raised in Q4 2010. The largest deal was for the quarter was completed by Better Place, a Palo Alto-based provider of electric car networks, which raised $201.0 million.
The Energy Storage segment ranked third in terms of total amount invested in 2011, with $932.6 million through 28 deals representing a 253% increase from 2010 in dollars invested and a 47% increase in number of deals. In Q4 2011, the segment raised $35.0 million, all of which can be attributed to the Batteries sub-segment. With $30.0 million raised, VIA Motors Inc., a Utah-based electric vehicle development and manufacturing company, secured the largest battery transaction in Q4 2011.
Companies in the Energy Efficiency segment attracted $646.9 million in 2011, a 29% decrease from 2010. The segment, however, led both the year and quarter in rounds of financing with 78 deals and 21 deals respectively. Q4 2011 investments in this segment were led by the Energy Efficiency Products sub-segment with $57.5 million raised through 10 deals.
Revenue generating companies lead with investments received
Cleantech companies in the revenue generation stage of development accounted for 69% of dollars invested, up from 50% in 2010.  Total dollars invested in companies at this stage of development reached $3.4 billion, a 31% annual increase.  
Capital market activity
Growth in the US cleantech market in 2011 was supported by five cleantech IPOs – up from three in 2010. Three of the 2011 deals were completed by companies focused on biofuels: Solazyme Inc., Gevo Inc. and KiOR Inc. Two more IPOs were completed in Q4 2011, one by Intermolecular Inc., a San Jose-based research and development company for the semiconductor and clean energy sectors that raised $96.5 million, and another by Rentech Inc., a Los Angeles-based provider of clean energy solutions, that raised $136.8 million.  A total of $688.3 million was raised through cleantech IPOs in 2011.
“There’s a strong appetite among cleantech companies to go public and we see tremendous opportunity as this industry continues to mature,” said Spencer. “The growing IPO pipeline shows viable, long-term potential.”
In terms of other capital market activity, there were 13 mergers and acquisitions (M&A) with a disclosed value of $150.5 million in Q4 2011, according to Bloomberg New Energy Finance. Total M&A activity in 2011 reached 79 deals with a total disclosed value of $2.8 billion.
Additionally, in Q4 2011, the US recorded 39 new–build clean energy asset financings with a total deal value of $1.8 billion, according to Bloomberg New Energy Finance. New-build asset financing in 2011 totaled $23.2 billion in 234 deals, of which the $2.5 billion financing of the 855MW NRG Energy Project Amp PV plant was the largest.
Corporate activity in solar and wind
Corporate activity was especially focused in two areas: solar and wind. In the solar market, Google Inc. and Kohlberg Kravis Roberts & Co. (KKR) invested $189.0 million in four California solar farms totaling 88 MW of capacity. The projects will be built by Recurrent Energy Inc., a unit of Sharp Corp.  Additionally, NRG Energy Inc. acquired solar-power developer Solar Power Partners, deepening NRG’s involvement in the solar power market.
On the wind front, MidAmerican Energy bought 49% of the $1.8 billion 290 MW Agua Caliente project based in Yuma County, Arizona, which is being developed by NRG Energy. Duke Energy Corp. and American Transmission Co. bought a power line project to bring wind energy from Wyoming to the US Southwest.  MidAmerican Energy acquired three wind power projects with a combined capacity of 404.8 MW in Iowa.
Cleantech partnerships across multiple segments
Vestas is teaming with IBM to improve return on wind power investment by using the IBM BigInsights analytics software and an IBM Firestorm supercomputer to increase energy output. Honeywell is teaming up with AliphaJet to boost the development and eventual commercialization of renewable jet fuels from plant and animal matter. Mascoma is teaming up with Valero Energy to develop its first commercial-scale cellulosic ethanol plant at an expected cost of $232.0 million.
Additionally, key players in the EV space are collaborating to expand the accessibility of EVs. Walmart will participate in ECOtality’s EV Project, which is tasked with overseeing the installation of 14,000 hosted charging stations at select stores in 18 metropolitan areas. ECOtality will integrate its Blink EV charging stations with Silver Spring Networks’ Smart Energy Platform to enable utilities to offer customers more EV charging options globally.
Regional highlights
California continues to lead national cleantech investment in 2011 with $2.8 billion raised. In Q4 2011 alone, California garnered 67% of all dollars with $629.5 million through 26 deals. Massachusetts raised the second highest level of annual investments with $465.1 million, a 63% increase from last year. Colorado had investments of $363.3 million throughout 2011, a 28% increase from 2010, making it the state with the third highest level of investments.
About Ernst & Young‘s Strategic Growth Markets Network
Ernst & Young’s worldwide Strategic Growth Markets Network is dedicated to serving the changing needs of rapid-growth companies. For more than 30 years, we’ve helped many of the world’s most dynamic and ambitious companies grow into market leaders. Whether working with international mid-cap companies or early stage venture-backed businesses, our professionals draw upon their extensive experience, insight and global resources to help your business achieve its potential. It’s how Ernst & Young makes a difference.
About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 152,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.
For more information, please visit www.ey.com.
Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
This news release has been issued by Ernst & Young LLP, a US client-serving member firm of Ernst & Young Global Limited.
Note to editors:Data analyzed in the press release encompasses equity financings–including cash investments by professional venture capital firms, corporations, other private equity firms, and individuals–into cleantech companies that have received at least one round of venture funding.
Ernst & Young uses the following definitions to classify the cleantech industry and its sub-sectors:
Clean technology encompasses a diverse range of innovative products and services that optimize the use of natural resources or reduce the negative environmental impact of their use while creating value by lowering costs, improving efficiency, or providing superior performance.

• Alternative Fuels – Biofuels, natural gas
• Energy / Electricity Generation – Gasification, tidal/wave, hydrogen, geothermal, solar, wind, hydro
• Energy Storage – Batteries, fuel cells, flywheels
• Energy Efficiency – Energy efficiency products, power and efficiency management services, industrial products
• Water – Treatment processes, conservation & monitoring
• Environment – Air, recycling, waste
• Industry Focused Products and Services – Agriculture, construction, transportation, materials, consumer products

Peter O'Malley teams with South Korea investor in bid for Dodgers

Peter O’Malley’s bid to buy back the Dodgers is supported by financing from the South Korean conglomerate E-Land, two people familiar with the Dodgers’ sale process said Monday.
If the O’Malley bid is successful, E-Land Chairman Song Soo Park will become a major investor in the Dodgers, one of the people said.
The ownership group also would have investors from Los Angeles. O’Malley has had discussions with Tony Ressler, a minority owner of the Milwaukee Brewers and co-founder of Los Angeles-based Ares Capital, according to a person familiar with the talks.
O’Malley would be the Dodgers’ chief executive. Foreign investment is not necessarily an obstacle to MLB ownership; the Seattle Mariners’ ownership group includes a significant Japanese presence.
An E-Land spokesman confirmed Tuesday the company is involved in the Dodgers bidding but would not elaborate. O’Malley declined to comment.
On Tuesday, as South Koreans woke up to the news that local investors might own one of America’s most storied baseball teams, the Korean Baseball Organization — the top professional league in South Korea — had no comment.
Among the baseball fans in chat rooms and on bulletin boards, the reaction leaned negative.
Rather than being proud of owning a foreign franchise as a way to extend Korean cultural and economic influence abroad, many fans here wondered why their moneyed elite didn’t invest their millions in Korean clubs. And, despite the experience of the Mariners, the fans expressed skepticism that foreign-backed ownership would be permitted.
“If an outsider could purchase a Major League Baseball team, then Chinese companies would’ve gotten their hands on it already,” wrote one bulletin board contributor.
Wrote another: “Why won’t they invest in finding a new Korean Baseball team instead?”
The people who liked the idea said it would pave the way for more Korean talent to make its way to the major leagues.
“Having a hand in the Dodgers will allow Korean players to more easily make the jump. It’s good marketing,” wrote one fan.
O’Malley is one of at least eight prospective owners to make last Friday’s first cut.
The others include East Coast investment baron Steven Cohen, St. Louis Rams owner Stan Kroenke, and groups led by Magic Johnson, Beverly Hills developer Alan Casden, Los Angeles developer Rick Caruso and former Dodgers manager Joe Torre, investor and civic leader Stanley Gold and the family of the late Roy Disney, and New York media investor Leo Hindery and investor Tom Barrack of Santa Monica-based Colony Capital.
Frank McCourt, the Dodgers’ departing owner, expects the team to sell for at least $1.5 billion. That would be almost double the previous record price for a major league club, set when the Ricketts family bought the Chicago Cubs for $845 million in 2009.
Under O’Malley, the Dodgers were pioneers in international baseball, particularly in Asia. In 1994, three years before O’Malley sold the team to News Corp., Dodgers pitcher Chan Ho Park became the first Korean player to appear in a major league game.
In November, O’Malley joined Park and former Dodgers pitcher Hideo Nomo — the second Japanese player to appear in the majors — in an investment partnership to own and operate the Dodgers’ old spring home in Vero Beach, Fla. Park and Nomo agreed to use their homeland connections to help lure teams, camps and clinics to Vero Beach.
E-Land, a dominant fashion retailer in South Korea, has expanded its business interests into such areas as hotels and resorts, restaurants and construction, according to the company website. The company is family-run and privately held.
According to the E-Land website, the company opened its first U.S. retail store in 2007 at a mall in Stamford, Conn., under the brand name “Who A.U.” The slogan for the brand: California Dream.
bill.shaikin@latimes.com
twitter.com/BillShaikin
Shaikin reported from Los Angeles and Glionna reported from Seoul.


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China govt debt 'controllable,' says PM Wen

Chinese Premier Wen Jiabao said government debt was “overall safe and controllable” and key projects would continue to receive funding to avoid “systemic risks”, state media said on Monday.
An explosion in lending in recent years has fuelled concerns that local governments, which borrowed heavily to build roads, bridges and luxury apartment buildings, will default as the world’s second largest economy slows.
China’s audit office said earlier this month that it had uncovered 530.9 billion yuan ($84 billion) in misused funds involving local government debts.
That compares with an estimated 10.7 trillion yuan in local government debt at the end of 2010 — or about one quarter of China’s 2010 gross domestic product — but analysts believe the real figure could be much higher.
“Currently our government debt is overall safe and controllable,” Wen told a government financial work conference earlier this month, according to the People’s Daily, the mouthpiece of the ruling Communist Party.
“We are taking the issue of managing local government debt very seriously. Through clean-ups and regulation, the trend of expanding investment vehicles has been effectively contained.”
Local governments, which are not allowed to borrow directly from banks, have set up thousands of investment vehicles to finance infrastructure and other projects.
But there are concerns that Beijing’s efforts to contain inflation and property prices by restricting lending and hiking interest rates could trigger widespread defaults and destabilise the economic giant.
Policymakers have started to ease lending restrictions but have indicated they will move slowly to open the credit valves to avoid reigniting inflation, which hit a more than three year high of 6.5 percent last July.
“We need to actively solve the financial risks but also ensure financing for major projects under construction,” said Wen.
“We shouldn’t simply slam on the brakes.”
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China Financing Slowdown Reduces Systemic Risk, Moody’s Says

January 23, 2012, 6:19 AM EST
By Bloomberg News
(Adds comments from report starting in third paragraph.)
Jan. 23 (Bloomberg) — China’s slowing non-bank financing growth will help the economy achieve a “soft landing” and reduces concerns about systemic risk, Moody’s Investors Service said in its Weekly Credit Outlook.
Preliminary data released last week from China’s central bank on financing in 2011 suggests an estimated drop in non-bank funding growth to 25 percent from 45 percent the previous year, Moody’s said. That is a credit positive for banks, the ratings company said.
“China’s ability to slow non-bank financing growth to its current pace is helpful to the prospects of a ‘soft landing’ in the economy and a development that diminishes our concerns about systemic risk,” Yvonne Zhang, a Beijing-based vice president and senior analyst for Moody’s, wrote in the report.
Chinese investors and borrowers have increasingly turned to non-bank products such as trusts, with investors seeking higher returns than bank deposits offer and borrowers looking for financing as China’s government slowed down new lending growth beginning in 2010. Ratings companies, including Moody’s and Fitch Ratings Ltd., said the rise in non-bank lending created added risks to the financial system in part because trusts often invest in assets tied to the real estate market or buy loans that banks want to move off of their balance sheets.
“Although these products are not on banks’ balance sheets, banks play an important role in making the transactions happen,” Zhang wrote.
Slowing Growth
Growth in China is slowing as the government seeks to curb inflation and rising home prices and refocus the engine of economic growth away from investment toward consumption. Gross domestic product expanded by 8.9 percent in the fourth quarter of 2011 from a year earlier, the slowest pace in more than two years. Foreign direct investment fell for the second straight month in December, with November’s decline the first since 2009.
Moody’s Zhang said at a Beijing conference in November that off-balance sheet risks at Chinese banks were rising fast and that the country’s lenders needed better management of credit and liquidity.
China’s aggregate financing, which includes bank lending, off balance-sheet loans and bond and stock sales, fell 1.11 trillion yuan ($175.1 billion) to 12.83 trillion yuan in 2011 from the previous year, the People’s Bank of China said in a Jan. 18 statement.
–Editors: John Brinsley, Patrick Harrington
To contact the reporters on this story: Benjamin Purvis in Sydney at bpurvis@bloomberg.net; Michael Forsythe in Beijing at mforsythe@bloomberg.net
To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net
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Gold Investment Demand Grows Faster Than Jewelry And Tech Demand – Elizabeth Collins – Morningstar, Inc.

67 WALL STREET, New York – January 18, 2012 – The Wall Street Transcript has just published its Gold and Precious Metals Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Investment and Central Bank Demand – Dividends Dependent on Gold Prices – Gold Producers vs. Gold ETF – Midcap and Small-Cap Consolidation Activity
Companies include: Endeavour Silver (EXK); Alacer (ASR.TO); Apogee Silver (APE.V); Barrick (ABX); Eldorado (EGO); and many more.
In the following brief excerpt from the Gold And Precious Metals Report, expert analysts discuss the outlook for the sector and for investors.
Elizabeth Collins, CFA, is the Associate Director of equity research for the basic materials team at Morningstar, Inc. Her responsibilities include oversight of coverage for companies in the following industries: agriculture, chemicals, coal, engineering and construction, metals and mining, steel, wood products and building materials. Before becoming an Associate Director, Ms. Collins was a Senior Analyst on the energy team, where she had oversight for Morningstar’s coverage of oil services firms, oil and gas companies, and coal companies. She earned her MBA from DePaul University in March 2005 and holds a B.A. in psychology from Boston College.
TWST: Gold is still trading at a high price. Should it be at this point?
Ms. Collins: I think, in the current economic environment, it makes a lot of sense for gold to be at such a high price. In the third quarter of 2011, we saw a very high level of demand for gold. Jewelry demand for gold was actually down and demand from the technology sector was flat, but we saw demand from the investment community be very strong because of the strong performance of gold to date, as well as because of worries about macroeconomic uncertainty.
TWST: You mentioned jewelry demand was down. Does that reflect the general economic weakness around the world?
Ms. Collins: I think it can reflect economic weakness and it can also just be a result of some response to the high price of gold. So somebody who is going to purchase jewelry, say in India, is going into a shop and they go in with the intent to spend a certain amount of money on gold jewelry. When the price of gold goes up, it means that they’ll be buying fewer ounces, but they’ll be spending the same amount.
TWST: Is it because of that equation they are getting less for their investment dollar, or is it because in a weak economy people buy less jewelry?
Ms. Collins: The year-over-year decrease in gold jewelry demand, say from India, was 26% in volume terms. But in terms of the amount of money they put into jewelry, it was actually up about 2%. So they are spending more. They are spending a little bit more in money, but getting that much less in gold ounces because of the higher price.
TWST: How important is technology segment demand?
Ms. Collins: It’s small. Number one is jewelry, number two is investment – those are relatively close to each other. And technology is a much smaller part of overall demand for gold on a global basis.
TWST: Has that been the pattern in the industry?
Ms. Collins: It wouldn’t necessarily be different than in the past. But I guess this round we haven’t seen as much M&A activity yet. We’ve seen a few big purchases. But Barrick (ABX), for example, their most recent purchase wasn’t even a gold company – it was a copper company. I guess when people are talking about M And A activity being one candidate for closing the disconnect between gold miners and gold prices, it’s probably smaller companies that are hopeful, and they are hoping to see more M And A activity.
TWST: Given your kind of cautious outlook, what are you telling investors to do?
Ms. Collins: As a group, a lot of our gold miners are fairly valued. We have one company that we think is slightly undervalued, and we think it’s worth taking a closer look at, and that’s Yamana Gold (AUY) ticker AUY in the U.S. and YRI in Canada. And that’s a company with a portfolio of low-cost South American mines, and they have some very attractive growth projects in the pipeline. And we think that the market is not fully factoring in their future production growth when there are signs that they should be able to bring those mines on line. And we think Yamana is attractively valued. It’s not a deep discount at these levels, but we do think it’s attractively valued. Yamana is one of the few gold miners whose share prices have kept pace with bullion so far in 2011.
The Wall Street Transcript is a unique service for investors and industry researchers – providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.
For Information on subscribing to The Wall Street Transcript, please call 800/246-7673
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Analysis – China has multiple choices to avoid hard landing risk

BEIJING (Reuters) – China faces what could be its worst year of growth in a decade with policy firepower that developed nations can only dream of.
A record-breaking tax take expected to top 10 trillion yuan ($1.6 trillion) in 2011 gives Beijing fiscal scope to support growth and financial system liquidity, while monetary policy is perfectly poised for easing after a near two-year tightening cycle.
Contrast that with deep deficits across Europe and the United States and the orthodox policies forced upon central banks on both continents in a desperate bid to avoid a slide into economic depression.
It adds up to China having every chance to steer its economy safely from its slowest quarter of growth in 2- years, and still avoid a hard landing that would reverberate globally.
“There are caveats, but compared to its counterparts, China has plenty of policy flexibility,” Tim Condon, head of Asian economic research at ING in Singapore, told Reuters.
The release of some 1.2 trillion yuan of fiscal deposits in December signals how roomy China’s policy pockets are.
That injection was the single biggest factor behind a jump in money supply and bank credit in December, according to analysts at China International Capital Corp, China’s biggest investment bank.
Chinese banks extended 640.5 billion yuan in new loans in December, up from 562.2 billion yuan in November, while M2 accelerated to 13.6 percent from November’s 12.7 percent.
CICC reckons the odds of a January cut in the ratio of deposits that commercial banks are required to hold as reserves (RRR) have been dramatically reduced as a consequence.
SYSTEMIC LIQUIDITY
The implications of China’s fiscal strength are crucial for money markets. An outflow of government deposits from the balance sheet of the People’s Bank of China (PBOC) can boost systemic liquidity far in excess of an RRR cut.
“It’s getting increasingly important as the size is getting bigger,” Xu Hong, an analyst with Daton Securities in northern Chinese city of Dalian told Reuters.
Government deposits fell 891 billion yuan in the last month of 2010, 954 billion yuan in December 2009, and 1,045 billion yuan in 2008, whereas a mere 350 billion yuan was estimated to have been injected into the system by the 50 basis point cut in RRR to 21 percent announced on Nov 30, 2011.
Economists polled recently by Reuters forecast a further 200 bps of RRR cuts to come in 2012, but the impact of that would far less than the 1.7 trillion yuan of injections implied if the government has turned an estimated 800 billion yuan surplus in 2011 into the 900 billion yuan deficit originally budgeted.
Released fiscal funds are a key factor underlying accommodative liquidity in the interbank market, according to Zhou Binglin, an analyst with Guosen Securities.
“That’s possibly why fund supply is not too tight despite capital outflows for two consecutive months and the absence of central bank liquidity injection,” he wrote in a client note.
China’s foreign exchange reserves, the world’s largest, fell $20.6 billion in the fourth quarter to $3.18 trillion as the trade surplus shrank and capital flows reversed.
That fall reinforced the views of many analysts and investors that a PBOC policy move was imminent, but a closer reading of fiscal deposit data would have been a better guide.
“It’s a key fact to pay attention to, particularly at the end of a year, and it’s role is becoming more visible,” a bond trader in the interbank market, who declined to be identified, said.
CHANGING DYNAMICS
China’s surging tax flows are also changing credit dynamics at the local government level, with regional banks being cajoled into providing loans to pet projects in return for the promise of a share of soaring fiscal deposits.
A notice on the website of the Rugao government in China’s eastern Jiangsu province said that the allocation of fiscal deposits would be linked to the credit offered by banks.
“Many small banks are in desperate need of deposits, and fiscal deposits are too big to miss, for which they have to make concessions,” a regional banker in Zhejiang province said.
Banks need the deposits because monetary policy settings were tightened so sharply over the last two years to fight the inflationary side-effects of massive stimulus that Beijing launched in 2008 to cushion the economy from the impact of the global economic crisis.
Twin bubbles in real estate and local government debt are still being battled by Beijing, and are arguably the only — if significant — policy constraint faced as the world’s second-biggest economy faces another economic slowdown.
It’s certainly a factor preventing the government using well-stocked fiscal coffers for outright economic pump-priming, or allowing explosive growth in still elevated leverage levels.
But relatively speaking, China has plenty of room to move.
“Every country has constraints. China was almost as unconstrained as it could have hoped for in 2008 when the crisis hit. The response to that has reduced the flexibility they have now, but they have far more than their counterparts in the West have,” ING’s Condon said.
(Editing by Kim Coghill)
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China property, other data, add to slowdown worries

BEIJING (Reuters) – China’s course through the most testing economic conditions since the global financial crisis is getting bumpier, as data on Wednesday showed stuttering investment flows, tight credit and falling home prices coinciding with a difficult trade outlook.
The final rush of indicators ahead of the Lunar New Year holiday reinforced the view that economic growth will slowdown further in the first three months of 2012, a trend that gathered momentum at the end of 2011 and resulted in the slackest quarter of expansion in 2- years.
Pro-growth government policies applied so far should help avoid an outright hard landing, but the risk remains that the scale of the slowdown engineered domestically in the once-rocketing real estate sector and the size of the drop-off in external demand from debt-ridden Europe have been underestimated.
“Headline GDP growth shows a soft landing definitely, but if you look at some of the underlying sectors — particularly real estate investment — we see lots of vulnerabilities. It could be a pretty rough ride,” said Ren Xianfang, senior China analyst at IHS Global Insight in Beijing.
“By the final quarter of last year I think the government started to lose its grip on the pace of the slowdown and that’s largely because of the external shock,” she added.
That shock has come in the form of both slower exports growth — which ended December at roughly a third of the year-on-year level seen in January — and capital outflows, which ended the year with the first quarterly outflow since 1998, calculations by Nomura analysts show.
Still, while trade and capital flows including foreign direct investment might be sagging, they are doing so from record highs.
Even so, the Ministry of Commerce warned in a regular news conference on Wednesday that the near-term outlook was difficult and that only a modest growth in trade was anticipated in the first quarter.
REAL ESTATE SCRUTINY
A number of indicators this week showed China’s economic growth weakened in the fourth quarter, but it is the real estate sector that economists are scrutinising most carefully to assess the scale of the domestic slowdown.
With Europe in danger of slipping into a recession and U.S. growth looking lacklustre, China’s role in the global economy is magnified — particularly its ability to generate domestic demand that could absorb exports from struggling developed nations.
Real estate is the backbone of China’s domestic growth story. Property investment was worth 13 percent of total output in 2011 and it links some 40 major industrial sectors.
Data on Wednesday showed China’s new home prices fell for the third straight month in December and may drop further as Beijing sticks to its campaign to bring housing costs back to levels that the government considers reasonable.
That followed data on Tuesday showing annual growth in China’s real estate investment slowed in December to its weakest pace in a year.
“Today’s report is consistent with the unambiguously deteriorating trends seen in property sales, construction, starts, and investments. The data just turned from bad to worse,” Yao Wei, China economist at Societe Generale in Hong Kong wrote in a note to clients.
“The economy as a whole has not felt much chill yet, but H1 2012 is going to be difficult not just for property developers. Contraction in sales and sharp deceleration in investments will send shockwaves along the industry chain, which is expected to drag overall growth below the 8 percent mark in H1,” she said.
Intriguingly, tight monetary conditions revealed by the central bank’s total social financing aggregate — the measure it developed to offer a clearer picture of money supply than simple M2 — underline credit constraints in the real economy.
Total social financing fell to 12.8 trillion yuan (1 trillion pounds) in 2011 from 13.9 trillion in 2010, even as an estimated 350 billion yuan was injected into the financial system after November’s cut of 50 basis points to the ratio of deposits banks must hold as reserves.
BATTLE OF THE BUBBLE
China tightened policy to deflate the twin bubbles created in real estate and local government borrowing by the 4 trillion yuan stimulus package launched in 2008 to help the country through the global financial crisis.
The battle to bring those bubbles back under control is still being fought, even as the government faces another downturn that delivered a fourth successive quarter of slowing growth in October to December.
That battle is a key factor uniting economists in the view that even though China’s economy will decelerate further in the months ahead, a cut to policy lending rates by the People’s Bank of China is not on the cards.
“China started a deflating cycle last year and it will be very dangerous, very risky for them to end it prematurely because if they end it too early it will be an even larger macro economic risk for China going forward,” said Ren of IHS.
Up to 200 basis points of bank reserve cuts are expected in 2012 by analysts polled recently by Reuters, as that helps keep money supply growth stable in the face of capital outflows.
Beijing is likely to stick to what Premier Wen Jiabao has called “fine-tuning” of economic policy settings to counter the downturn for now, rather than adopting more aggressive measures such as a interest rate cuts.
That leaves the main area of uncertainty for economists the question of how sharp the slowdown in GDP growth will be in the first quarter of 2012. Many expect the next 12 months to be the most sluggish growth for China in a decade.
The most bearish call in the latest Reuters poll is Deutsche Bank’s 7.3 percent. That’s too steep for many and an unfathomable call to the likes of Ting Lu, Hong Kong-based China economist at Bank of America/Merrill Lynch.
A fall to there from 8.9 percent in the fourth quarter implies a decline wiping some 6 percentage points off growth at an annualised rate that would leave the economy expanding at barely 3 percent.
“That’s just not going to happen,” Lu said. “I think the chance of growth slowing to below 8 percent in the first quarter is very low. Calls below that are just too pessimistic. There’s a slowdown yes, but not that dramatic.”
(Additional reporting by Zhou Xin and Langi Chiang; Editing by Neil Fullick)
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Back a Lawsuit, Get a Return

An investor-financed suit against Chevron won a judgment of $18.2 billion Lou DeMatteis/Redux

By Paul M. Barrett
The white-wigged sages of British jurisprudence outlawed investing in someone else’s lawsuit for fear that feudal lords would manipulate their subjects’ litigation for profit or mere sport. The 18th century British jurist William Blackstone condemned such investment, known as champerty, for “pervert[ing] the process of law into an engine of oppression.”
Restrictions on champerty faded as the law evolved. In the U.S., the Supreme Court held in the 1960s that civil rights organizations have a constitutional right to invest in other people’s lawsuits that further the advocacy groups’ aims. More recently, many states have loosened rules to allow consumer-finance firms to lend money for legal cases. The companies that have done litigation finance to date have mostly made loans to plaintiffs’ lawyers pursuing slip-and-fall and auto-accident suits, often charging interest rates of 20 percent or higher.
Now litigation finance is moving up the corporate food chain. Larger and more sophisticated investment outfits, such as Burford Group and Juridica Capital Management in the U.K. specialize in making bets on bigger-dollar cases. Parabellum Capital recently opened its doors in New York after being spun off from the legal finance group at investment bank Credit Suisse. “We’re looking at a company’s lawsuit against another company as an asset on the corporate balance sheet that can be monetized in the short run, while we take an interest in, and some of the risk in, the long-run outcome,” says Christopher Bogart, chief executive officer of Burford and a former executive vice-president and general counsel of Time Warner.
Working out of Manhattan offices so new the art is still indicated only by blue tape on bare walls, Bogart runs a $300 million fund that made new commitments to legal cases totaling $35 million in just the last three months of 2011. “Another way of understanding what we do is that we provide corporate finance for assets that traditionally weren’t subject to finance,” he says. “We’re making the litigation marketplace more efficient.” His investors include Invesco UK, Reservoir Capital Group, and Scottish Widows Investment Partnership.
No data exist on how much is invested in ligitation finance. Burford’s analysis of figures gathered by American Lawyer magazine shows that the 200 largest U.S. law firms bill about $33 billion annually related to litigation, Bogart says. That excludes the cost of verdicts and settlements as well as the billings of tens of thousands of smaller law firms.
Litigation finance, which fertilizes lawsuits that otherwise might settle quickly or die altogether, “is poised for growth worldwide,” Cassandra Burke Robertson, associate professor of law at Case Western Reserve, wrote in an article published in November 2011.
While Bogart doesn’t like discussing Burford’s investments for the record, he points to one widely publicized case that concluded in 2010. The firm invested $6 million in a breach-of-contract lawsuit between two Arizona real estate developers. The winner, Gray Development, paid more than $18 million to Burford—a 200 percent return. Gray would not have been able to afford its highly regarded New York law firm, Simpson Thacher & Bartlett, without an infusion of outside capital, Bogart says. A spokesman for Gray did not return a phone message seeking comment.
In another case, Burford provided $4 million in financing in November 2010 that helped keep alive a lawsuit filed against Chevron on behalf of residents of the rain forest in eastern Ecuador who allege large-scale contamination from a predecessor company’s oil drilling. The investment allowed the plaintiffs’ team to augment its legal firepower by hiring Washington-based law firm Patton Boggs, which normally represents large corporations. Burford quickly sold off its stake in the case, eliminating its downside risk while retaining an interest in any winnings. In February 2011, a provincial Ecuadorian court imposed an $18.2 billion judgment on Chevron; an appellate court has upheld that verdict. The oil company has said it will continue to contest the judgment.
The bottom line: Burford Group has raised $300 million to invest in litigation. It put $35 million to work in the last three months of 2011.
Barrett is an assistant managing editor and senior feature writer at Bloomberg Businessweek.
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Analysis: China developers launch funds to bridge finance gap

BEIJING (Reuters) – China’s fledgling real estate investment fund market could see a surge of activity in 2012 as property developers launch their own vehicles in a desperate bid to bridge an estimated $111 billion financing gap in the year ahead.
A government-led clampdown on bank, bond, equity and trust market financing for real estate has left developers with little choice other than to set up their own funds, which have raised barely 10 percent of the sum in the past two years that needs to be found to refinance maturing debt in 2012.
On the upside, China‘s high net-wealth families still favor property investment and funds give them an alternative to buying the physical asset while retaining exposure to the sector.
“Of course, it will take time, but in the next decade, you will see the Chinese property market become more institutionalized,” Frank Marriott, Savills’ senior director of real estate capital markets for the Asia-Pacific, told Reuters.
Time is not on the developers’ side. Slowing sales and falling prices are hitting just as refinancing pressures are soaring. Analysts widely expect industry consolidation to accelerate in 2012 and some players, even big ones, will have to sell assets and quit the market.
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Reuters China Property Watch http://r.reuters.com/deh85s
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About $2.2 billion of syndicated property loans and club deals will become due this year, according to Thomson Reuters data, while a further 117 billion yuan ($18.6 billion) needs to be found to repay maturing real estate trusts.
Add in the other credit lines that need repaying and developers need to find over 700 billion yuan this year, according to Hua Xia Times, a Chinese business newspaper in Beijing.
Major developers such as China Overseas Land & Investment , Gemdale Corp and Forte, are among the first firms to have launched their own funds.
Others including China Vanke , the country’s biggest listed property firm by sales, chose to set up funds jointly with their peers to help each other survive tough times.
And more will follow.
“We must make more friends and widen our financing sources. That will help our future growth,” Zhu Tong, chairman of Sun Real Estate, a mid-sized developer in Beijing, told an industry forum in Beijing last week.
A total of 29 property funds raised $4.1 billion in 2011, a big improvement on the $2.9 billion raised by 28 vehicles in 2010, according to consultancy Zero2IPO.
Industry analysts expect more than $6 billion will be raised in 2012 and that the property fund market will expand at an annual rate of 40-50 percent over the next few years.
The funds target wealthy entrepreneurs, with an investment threshold of 10 million yuan and above and are expected to offer annual returns of at least 25 percent, said Fu Zhe, a Zero2IPO analyst in Beijing.
“Private investors still have a strong interest in the property sector as there are really not many other options for them,” Su Xin, chairman of Go-high Investment, which invests in commercial real estate, told an industry forum last week.
His company’s recent survey in Wenzhou, Ordos and some coal-rich cities in northwestern Shaanxi province — places with some of the biggest speculative property bubbles in the last decade — shows that investment interest in property remains robust.
FUNDING CONSTRAINTS
That’s lucky for Chinese developers given the funding constraints in the wake of government pledges to pull home prices back to a reasonable level after a decade of rocketing real estate inflation that saw prices surge 10-fold in 10 years in key cities across China.
Not only have the major state-backed banks been told to cut credit lines, the government has also halted all financial innovations to channel money into its targeted property sector. These include non-public trust funds launched by Chinese trust firms in private placements to channel funds to the sector and the long-awaited exchange-traded real estate investment trusts (REITs).
But it’s going to take more than luck for developers to survive the financing drought.
Banks have prolonged mortgage loan approvals, forcing developers into a hand-to-mouth existence of surviving on downpayments and then seeing the bulk of the cash from sales going directly to the accounts of contractors and suppliers.
“That means even after you’ve sold residential units at a cheaper price, the cash in your hand still does not increase,” Ren Zhiqiang, the outspoken chairman of Huayuan Property , told a forum last week.
As a result, the balance sheets of many Chinese developers deteriorated in 2011. Greentown China , a major player in eastern China, is now struggling to survive and having to sell assets to do so.
Developers are compelled to dig deep into internal reserves for working capital. Internal funding, including new property funds raised, was 41 percent of total financing in the industry in the first 11 months of 2011, up from 38 percent and 33 percent in the same period of 2010 and 2009 respectively, according to the National Bureau of Statistics.
New loans to the property sector accounted for only 17.5 percent of banks’ total new local-currency lending in the first three quarters of 2011, down from 31.1 percent in the year 2007, according to data from the People’s Bank of China.
With Beijing showing no mercy in cracking down on property speculation, developers like Greentown China that expanded rapidly in the past few years and have the high gearings to prove it, will have to sell land and half-built projects to repay debt.
That is why the real estate fund route is considered to have so much potential. It helps developers keep control of their assets and gain control of their finances.
Cao Shaoshan, chairman of Orizon Capital, is excited about the outlook of Chinese property funds.
He believes China’s maturing real estate market means developers will specialize more on construction while outsourcing fundraising. But it won’t happen fast enough for many struggling developers.
“The Chinese property fund sector is still at an infancy stage,” Cao said. “It’s unable to change the financing landscape a lot in the short term.”
(Reporting by Langi Chiang and Nick Edwards; Editing by Matt Driskill)
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O'Malley proposes extra $15 million to help build rental housing, create jobs

Gov. Martin O’Malley is proposing a $15 million increase in the state’s program to help build affordable rental housing, saying the bump would leverage $285 million in private investment and create 1,100 jobs in Maryland.
Surrounded by housing advocates, construction workers and local residents, O’Malley went to the site of a former public housing development in Annapolis to announce plans to double the state’s investment in loans to developers to help spur rental housing construction.
The governor said the increased spending would help address a shortage of affordable housing by providing gap financing for about 20 privately owned rental developments in the next fiscal year. But his emphasis was on the employment the money would bring.
“This announcement here today is about creating jobs,” O’Malley said at the site where the privately owned Obery Court complex is under construction with the help of existing state spending. “This is a time to go out in the market and try and put our people back to work.”
Senate Minority Leader E.J. Pipkin disagreed, saying the initiative “doesn’t make any sense.”
“We’re seeing more and more dollars going into things the private sector should be doing,” the Upper Shore Republican said.
The administration said it has maintained state spending on affordable housing programs at $15.5 million a year despite budget pressures. O’Malley is proposing to nearly double that to $30.5 million through what the administration is calling its “Rental Housing Works” initiative. The new state money would help offset the loss of federal stimulus funds, housing officials said.
The announcement comes at a time when the state is facing a $1.1 billion shortfall in its general fund budget — a gap that must by law be closed.
O’Malley said the additional housing money would be part of the capital budget. The extra spending would be financed through additional borrowing but would not push borrowing beyond Maryland’s debt guidelines, he said.
Like all of the governor’s budget proposals, the housing plan is subject to General Assembly approval. “I think the legislature will keep it intact,” O’Malley said.
State officials say there is a severe lack of affordable housing in Maryland, with the shortage expected to reach 127,000 units in 2015. Andy DeVilbiss, spokesman for the state Department of Housing and Community Development, said the Rental Housing Works program would use the $15 million for “shovel-ready” projects.
Housing Secretary Raymond A. Skinner said the money is typically used to provide gap financing to make up the difference between what a developer can raise through the private sector and the cost of the project. He said the state loan for an individual project is typically about $1 million to $1.5 million.
While Skinner said each $1 in state lending leverages $19 in private funding, the developer of Obery Court gave more a conservative estimate for that project.
Mark Dambly, president of Pennrose Properties, said the three phases of the project will cost about $39 million, about $8 million of which will come from the loan program. He said the project, the second phase of which is now under construction, will build 175 to 180 units and create 900 jobs.
The governor’s announcement drew praise from housing activists.
“This is a big deal for us,” said Trudy McFall, president of the Maryland Affordable Housing Coalition. “Federal resources are down. We were facing a very grim year ahead of being able to do just a handful of projects. Now this will allow us to do 20 new rental communities.”
McFall emphasized that the projects the new spending will spur are not public housing. “It’s housing that’s developed by the private sector. It’s owned and managed by the private sector,” she said. Typical monthly rents are about $500 to $700 for a two- or three-bedroom unit, McFall said.
michael.dresser@baltsun.com

Cabinet approves financial decrees

The cabinet meeting has approved issuing of four financial decrees relating to acquiring loans for rebuilding the country and flood prevention, Atchaporn Charuchinda, secretary general of the Council of State, said on Tuesday.
The four proposals were put forward by the strategic committees for rehabilitation and future development and for setting up a water resource management system.
They are needed to help restore the confidence of Thai and foreign investors and to ensure the prevention of a recurrence of the floods in the long term, Mr Atchaporn said.
The Council of State must give advice to the cabinet on whether the issuance of bills and decrees is constitutional. It was not clear why the announcement was made by the Council of State and not the cabinet spokesman.
They decrees relate to the management debt owed by the Financial Institutions Development Fund (FIDF),  empower the Bank of Thailand to provide 300 billion baht for low interest soft loans for flood affected manufacturers, allow the Ministry of Finance to seek 350 billion baht in loans for financing projects to rebuild the country, and establishment of a 50 billion baht insurance fund.
“The restoration of investors’ confidence, the rehabilitation and rebuilding the nation and preventing flooding of  future projects must be rapidly started and therefore the issuance of these four decrees is necessary,” said Mr Atchaporn.
The secretary general of the cabinet would submit these financial decrees to His Majesty the King for royal endorsement, he added.

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Eastday-Financial regulators to minimize systemic risks

BEIJING – China’s major financial regulators highlighted the necessity to curb systemic risks and maintain financial stability by all means in 2012 on Sunday, one day after the National Financial Work Conference concluded.
“We will strengthen the monitor over financial institutions while tracking domestic and international economic situation, to effectively counter economic and financial risks,” said People’s Bank of China (PBC), the central bank, in a statement after its annual work meeting ended.
It said it would research specific measures to reduce systemic risks among financial institutions and gear up to set up a deposit insurance system to serve the purpose.
“We must firmly hold on to the bottom line of no systemic and regional risks,” said Shang Fulin, head of China Banking Regulatory Commission on Sunday in a statement.
He said banking environment will become more complicated and increasingly competitive in 2012, along with stricter requirements of banking services from society. “The regulatory task will be more difficult.”
The government will focus on potential credit and liquidity risks this year, and prevent the off-balance sheet risk from spreading, said Shang.
In November 2011, the International Monetary Fund warned that China faces near-term domestic risks to the financial system, including the impact of the recent sharp credit expansion on banks’ asset quality, the rise of off-balance-sheet exposures and lending outside of the formal banking sector.
It said the financial system could be severely impacted if credit, property, currency and yield curve shocks occurred together.
Premier Wen Jiabao called for the banking institutions to set up a more complete and prudent risk-monitoring regime on Saturday to prevent systemic risk.
Although the local government debts made via financing vehicles are “generally safe and controllable”, the revenues and spendings through the vehicles should be included in the government’s budget management, and a mechanism will be established to control the gross local government debts, he said at the end of the two-day National Financial Work Conference in Beijing.
Prior to the conference, analysts expected a new financial State-owned assets regulator to be set up soon for better control on risks, as the European sovereign debt crisis worsens and the global economy faces rising uncertainty.
“Although such an institution hasn’t come into being as the market predicted, the government will probably establish a financial systemic risk regulatory commission directly led by a vice premier,” said Lu Zhengwei, chief economist at the Industrial Bank Co Ltd.
Li Yang, deputy head of the Chinese Academy of Social Sciences, a major government think tank, said earlier that systemic risks could be well curbed as long as the country maintains comparatively high economic growth.
China could probably achieve an economic growth rate of 8.8 percent in 2012, as macroeconomic adjustments start to show effects since the second quarter, said Cao Yuanzheng, chief economist at the Bank of China Ltd.
The country will continue to implement prudent monetary policy this year to promote stable and relatively fast economic development, and will enhance monitoring and fend off risk of cross-border capital flows, said PBC.
After the central bank cut reserve requirement for lenders for the first time since 2008 at the beginning of December, new yuan loans in December registered a higher-than-expected 640.5 billion yuan ($101 billion), and M2, a broad measure of money supply, rose by 13.6 percent, according to data released by PBC on Sunday.
In 2011, the new yuan lending totaled 7.47 trillion yuan. Cao expected the figure for 2012 to stand at about 8 trillion yuan

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