Who’s Happy Now?

DBeacon128E As of Friday, August 29, 2014 the S&P 500 stood at a healthy 2,003.37, increased by 6.63 from the day before.  This figure is good news since the S&P was a pathetic 676.53 on March 9, 2009. [WSJ]  S&P uses a weighted average market capitalization to calculate its index, so this must be the most accurate measure of the state of the economy?  Maybe.   Feeling all comfy right now?  Maybe not.  Not to be too much of a bear dancing through the bullishness of the stock market reports, but there’s something troubling about the numbers.  Perhaps we should begin at the beginning.

The Truism of Yesterday Transformed into A Corporate Facade Today

In those days of yesteryear, before the late 1970s, corporations retained most of their earnings and invested them in new technologies, expanded facilities, more employees, or even – pay increases. [WP]  Indeed, in those ancient times the argument worked: If corporations could hold on to more of their earnings then plants would expand, and more workers would be hired.  What our numbers keep telling us now is that this old line is being applied to a new and quite different reality.

Not to put too fine a point to it, but it is as though the Captains of Corporate America are asking us to cling to the old reality while they saw the props out from under average Americans, creating a more profitable system for themselves.   And they have been sawing away vigorously, fueled by the new corporate reality since 1980  which  holds that the primary purpose of a corporation is to maximize shareholder value.

It is one thing to seek to enhance corporate profitability if the  old line is true, and quite another when the goals have changed, and the new line is “Corporate profits are important because they make shareholders richer.”   The pre-1980 truism is now a corporate facade covering a structure which places the demands of shareholders above customers, workers, and almost everyone else.

In some instances the facade is a very real false front inadequately covering the hollowing out of American industry.  Remember  Endicott, NY, the home of IBM?  Some 10,000 employees of IBM worked there in the 1980s, by 2013 employment at IBM was down to 700, and the vacant storefronts in the community bore witness to the diminishment of the real American economy.  [WP]

Since, Ferguson, MO has been in the news of late it’s appropriate to look at the moves made by Emerson Electric  to enhance shareholder value by offshoring  its operations – with its $44.68 billion market cap, and return on equity of 24.38% [YahFin]  Emerson was praised in at least one financial journal for its long term strategy of “transferring costs to a basket of low-cost countries,” yielding the accolade: “Emerson is well known among its peers to have benefited considerably from being earlier and bolder in its pursuit of cost mitigation.”  

That cost mitigation came with a price, but not for Emerson’s shareholders.   On January 18, 2002 Emerson announced it was closing 50 of its plants and offices in the United States and moving the jobs to China, India, and the Philippines. No sooner was the announcement made than Emerson’s stock price increased by 3.4%.  [SunSent]  The Emerson plant in Kennett, MO closed in 2005.  [DDD]  Another plant, in Columbus, NE, closed in 2009. [WOWT]  If it seems counter-intuitive to have share prices increase as people (consumers) are laid off that’s because most people have missed the point: It’s not how many people a corporation employs or how much their wages bring to our economy – it’s how costs can be “mitigated” so that shareholders get an increased portion of the pie being served.

Keeping the Shareholder Satisfied

If a decreasing number of people are enjoying an increasing share of the American economic pie, then why wouldn’t current stock market reports be indicating weakness in the economy?

Same answer.   Shareholders are happy.  One of the reasons for their happiness is that corporations are “mitigating costs” and propping up stock values.  One way to prop up the old shareholder value is to engage in stock buybacks.  Does Corporation X have lots of cash on hand?  The best way to keep those shareholders happy is to use it in a stock buyback which results in a decrease in the number of outstanding shares and drives up the price of the ones which are on offer.   [Forbes]  Yes, that cash could have gone into research and development? Or, plant expansion? Or, even increased wages?  However, those don’t make the shareholders happy, and since 1980 it’s been the primary job of corporations to make the shareholders happy, happier, and happiest.

And who else loves making shareholders happy? Bain Capital Management, which extolled the virtues of corporations which do the hard work of making shareholders, like Bain Capital, happy:

“In studying the offshoring practices of major industrial companies, we’ve found that Continental’s highly modular approach is shared by other supply-chain leaders like General Electric, Honeywell, Siemens International, and Emerson Electric. Rather than think in terms of entire factories when they make offshoring decisions, these companies focus on individual functions and products. They optimize, in a coordinated fashion, the location of every module of their supply chain, capitalizing on regional differences not only in costs but also in skills. As a result, they’ve been able to move quickly and with great agility, shifting activities among a wide array of regions and countries in a way that optimizes the cost and effectiveness of their entire operating system.”  [BainInsights 2005]

It’s worth noting that when Bain speaks of “optimizing costs” it means reducing production and service costs, as in closing factories and offshoring jobs.   Hence, the formula continues: Shareholder Happiness = Cost Mitigation + Propping Up the Stock Price.

The danger in not heeding this formula is the dreaded Takeover.  Should some shareholders find their yields too low, the vultures begin swarming over the still warm victim.

There is a reminder of the perils of the dreaded  takeover in north St. Louis.   The old Rexall Drug Company plant stands at the corner of San Francisco St. and Kingshighway, now the site of an automobile auction company.   The quick part of the  demise began in 1977:

By 1977, Dart Industries had sold all of its Rexall business, including franchised drug stores. A group of investors, including Howard K. Vander Linden, president of Rexall at the time, formed the Rosshall Corporation and bought the manufacturing laboratories in St. Louis and other facilities. [NYT]

As part of the process the Rexall Drug Store franchises were spun off, a familiar drug story could retain the name but now had no affiliation with the parent company.  It didn’t take long for the scheme to fall apart.  The retailers were under pressure from chains like Eckerd, the manufacturing under pressure from various manufacturers, and the grand experiment failed. The St. Louis factory closed, and the Arlington neighborhood lost another industry. Rexall wasn’t the first, nor the last takeover victim, brands like Sunbeam and Singer also changed dramatically in the face of both friendly and hostile takeovers.  The brand most closely associated with recent takeovers which have decimated a corporation remains Hostess, which was destroyed, not by its employees, but by the vulture capitalists who plucked it. [Salon]

True, there are unresponsive companies which fail because of a lack of vision, firms that falter because of poor management, and corporations which are takeover targets because there are some few valuable assets among a conglomeration of acquired flotsam and jetsam.   However, the end game should be the improvement of a company such that it can be profitable, not merely the M&A gamesmanship which too often plays strip and run, leaving little but debris in its wake.   However, those games will continue as long as there is a profit to be made by the investors – how much greater the danger to U.S. corporations in the prospect of upsetting those private investors than of disappointing the shareholders? 

This isn’t our parents (or grandparents) economy.  The days of cash allocation into research and development, plant expansion, higher wages, better facilities is as out of date as a Pontiac Firebird.   These are the days of the F-150, and the maxim: “If the shareholders ain’t happy, ain’t nobody happy” – unless you’re a taxpayer, consumer, salaried or wage worker? 

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Filed under Economy

Money Watch: Who’s playing in the Georgia Senate race?

campaign money There is a negative ad campaign being launched in Georgia against the candidacy of Democrat Michelle Nunn from the “End Spending” super PAC, the brain child of the former CEO of TD Ameritrade.  The group describes itself as an “independent 501(4)c” which is roughly analogous to describing the wheels as independent of the bicycle.

Open Secrets offers a more exact description:

“Ending Spending is a conservative 501(c)4 group that focuses on federal spending and the national debt. The group originally targeted earmarks, but broadened its message to include balancing the federal budget and paying down the national debt. The group was founded by Joe Ricketts, the former CEO of TD Ameritrade and a known conservative backer. Brian Baker, the current president of Ending Spending, was an adviser to former Sens. Robert Dole and Richard Shelby. The group does not disclose its donors, and its money goes towards electioneering expenses.”

The Washington Post reported that as of August 1, 2014 ES Action Fund had ladled $345,000 for air time in August. The Nunn campaign made a $331,000 ad buy.  And where might all the the ES Action Fund money come from, even if the donors aren’t published the New York Times ferreted out some from the 2012 campaign, and the names ought not to be any surprise.

First, of course, there’s Mr. Ricketts who put $11.7 million in the pot in 2012, and then to absolutely no one’s surprise the next two names on the list are Nevada’s own Sheldon and Miriam Adelson, who each donated a half million each in the 2012 cycle.   [NYT] It shouldn’t come as any more of a surprise to find the name of Linda McMahon on a 2014 donor listing. [CPI]  Given the generosity of its donors, and their deep pockets, state elections aren’t off the table, the organization has already ventured into state elections in the Wisconsin recall, and  the 2012 Nebraska Senate race. 

Thus, when the end of the ad says – brought to you by the ES Action Fund, be advised this is the old GOP/Koch/Adelson Gang showering ultra conservative candidates and causes with thousands of reasons to vote in favor of more breaks for millionaires and billionaires.

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Filed under campaign finance reform, campaign funds, Politics

Justified, Necessary, or Both?

The police action in Sparks, NV might be controversial, but the Washoe County District Attorney has ruled the officers were justified in shooting, and killing, an armed 45 year old woman with a blood alcohol level of 0.127 in October, 2013. [RGJ]  The wounding of the woman’s daughter may generate more controversy, but the incident illustrates some of the major issues surrounding the use of lethal force by police officers.

The woman in question was threatening suicide.  There may be no more frightening situation for law enforcement personnel than facing someone who feels there is nothing left to lose. Individuals have been reported as deliberately assaulting officers while unarmed or while brandishing a variety of lethal and non lethal weapons. Some, perhaps up to 100 per year are intent upon having the police officer assist a suicide. [PSMag] Whatever the woman’s intent, let’s avoid using the catch-phrase “suicide by cop,” because it’s an undefined, unclear, categorization into which altogether too many incidents can be inserted which may or may not resemble one another in detail. [Slate]

What is reasonably clear from the report is that the woman was pointing her gun at her own head at one point in the confrontation, and threatening to end her life.  Suicidal ideation is one symptom of mental illness, and in entirely too many cases we are asking the police to serve as mental health professionals, a task for which they aren’t trained.

The fatal shooting of a homeless, mentally ill, man by the Albuquerque, NM police generated criticism of the officers’ use of lethal force last March, but it also highlighted the growing number of instances in which mentally ill individuals – lacking adequate local mental health services – are coming into contact with police agencies. [NYT]

There are training programs available for police officers, such as the NAMI Crisis Intervention Team model.    The Las Vegas Metro PD is working with NAMI-Southern Nevada to develop a collaborative pre-arrest diversion program based on the CIT model. [NAMI-SN] The Reno Police Department also has such a program. [UMemphis]  Smaller, more rural, Nevada counties may or may not have a CIT program in place. [UMemMap]

There is research indicating that the training works.  CIT trained responders were more likely to be engaged in “referral or transport” than in an arrest, and only 12% of the encounters in the study escalated to the level of physical force, and CIT trained personnel “were significantly more likely to report verbal engagement or negotiation as the highest level of force used.” [AJP pdf]

However, it would be remiss not to ask: How much effort is being put into alleviating the necessity of having expansive CIT programs? How many resources does the community provide for the mentally ill?

We also know the unfortunate woman had a blood alcohol concentration level well above Nevada’s general 0.08% limit.  We don’t know whether in this specific case alcohol was a constant or a periodic problem, and it really doesn’t matter individually, but collectively speaking it does raise the question of how well resourced and available alcohol treatment programs  are in the area?  Are they plentiful and affordable? Are they convenient in terms of access or are there long waiting lists and limited treatment facilities?

This case in Sparks, NV also requires some reflection on several other issues. For example, is the “suicide by cop” categorization appropriate, or not?  Are we adopting and implementing consistent training programs throughout Nevada cities and counties which might reduce the escalation of incidents into lethal territory?  Are we asking police departments and law enforcement agencies to assume too much of the burden of initial interaction with mentally ill or suicidal individuals?

As with all such tragic incidents, we’re always left with more questions than answers.

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Filed under Gun Issues, Health Care, Mental Health, Nevada politics

Stripping Doesn’t Have To Happen In a Bawdy House

Stripping is associated in most people’s minds with one of two things, either dancing while steadily removing garments accompanied by music by David Rose, or taking layers of paint and varnish off some surface.  In the financial world it means roughly the same thing, only better – for the bottom line. And since we’re not talking our our bottoms, but those of U.S. corporations with overseas affiliates, or those which want to shape themselves that way, let’s try to understand the language they are speaking.

The financial definition of Earnings Stripping is:

“A method of avoiding taxes by paying excessive amounts of interest to another party. For example, an American subsidiary of a foreign company might reduce its taxable income by paying an excessive amount of interest to its parent. The IRS has developed regulations that are intended to limit earnings stripping.”

Yes. the Internal Revenue Service is trying to do something about this highly dubious practice, in Section 163(j) of the law.  Implementing Section 163(j) means the IRS would require adherence to the “arms length” standard in intercompany indebtedness.  In one example, if 60% of an affiliated  firm’s assets are financed by debt, then the deduction for interest is limited to 50% of the firm’s operating profits. [TaxTR]

In order to carry out the law, the IRS has to be able to do two things. First, it has to evaluate whether or not there’s an arms length interest rate.  The key to arms length transactions is that neither side has any incentive to act against his or her own interest.  If I’m the banker I’m going to try to charge the highest interest rate for a loan I can, and if you are the borrower you are going to smile nicely, threaten to go to another bank, and work to get me to reduce the interest rate for the loan.  But, how to evaluate the arms length status of a loan made from the parent company to an affiliate?

Secondly, there has to be a way to determine if the operating profits truly reflect the “income attributable to the functions, assets, and risks incurred by the affiliate.” [TaxTR]  The affiliates credit rating helps determine if the interest rate is at least close to “arms length,” and the operating profits have to be such that the IRS can see that the intercompany interest rate at least has the appearance of propriety.*

And now the fun begins.  The current flap over corporate inversions plays is related to good old fashioned earnings stripping, the Wall Street Journal explains:

“When a U.S. company acquires a foreign firm, and decides to domicile overseas in a low-tax country like Ireland, it will often load the U.S. subsidiary up with debt that is “owed” to the foreign headquarters. Interest payments on this debt can often be deducted from taxable income. If the debt is considered “excessive,” the practice is known as “earnings stripping.”

The Bush Administration took a look at these dubious practices back in 2007.  The report (pdf) analyzed several proposals offered at the time to restrict the ability of foreign controlled domestic corporations to practice earnings stripping.  The report concluded that corporate inversions were associated with earnings stripping, and that the government needed to (1) look carefully at the arms length part of the problem, (2) update the regulations from those issued in 1968, and (3) new rules should be made to help determine the amount of income from a multi-national company is subject to U.S. taxation.

By August, 2014 not much movement had been made on restricting the global corporations from engaging in earnings stripping.  In what has become a familiar refrain,  the WSJ explains:

“The Obama White House has already proposed that Congress pass a law that would effectively end such earnings stripping arrangements, but Congress hasn’t acted. The Treasury Department could instead decide to act unilaterally to prohibit the practice, effectively by amending 163(j) in the tax code.”  (emphasis added)

The White House proposal is summarized by the analysts at CTJ:

“President Obama included two proposals in his most recent budget plan that would address the problem. The first would treat the entity resulting from a U.S.-foreign merger as an American corporation for tax purposes if it is majority-owned by shareholders of the original American corporation. The proposal would also treat the resulting entity as an American corporation if it has substantial business in the United States and is managed and controlled in this country.

The president’s second proposal would address earnings-stripping by barring American companies from taking deductions for interest payments that are disproportionate to their revenue compared to their affiliated companies in other countries.”

The issue was beginning to get some traction by August 14, 2014 when Senator Charles Schumer (D-NY), a member of the Senate Finance Committee, proposed a four part bill to end the earnings stripping game. Republicans were unwilling to move, saying it might make U.S. companies more attractive for foreign takeovers. [WSJ]

Opponents of restricting the stripping also cite the “high” U.S. corporate tax rate of 35%, however, large corporations – as in Fortune 500 – on average paid only 19.4% of their profits in federal income taxes from 2008 to 2012, and 26 companies in the Fortune 500 paid nothing at all during the five year period.  In other words, no matter how low the U.S. corporate income tax is set there will always be some entity lower, say at an inviting 0% – or Tax Havens. It doesn’t seem at all practical to allow U.S. corporations to pretend their profits are earned in Cyprus, Luxembourg, Bermuda, the Cayman Islands, Switzerland, or Singapore, [TW] when it’s perfectly clear for all to see their major business operations are in the United States.

Another argument for doing nothing, or even doing something worse, is that taxing overseas profits gives corporations an incentive to become foreign.  Fact checks are necessary at this point. U.S. taxes on foreign profits are minimal and American companies get “a tax credit equal to any taxes they pay to foreign governments, and are allowed to defer U.S. taxes until they officially bring their offshore profits to the U.S.” [CTJ]

If anything is done at all by the Do Less Than Nothing 113th Congress we might count it as miraculous.  One peek at the official calendar for the House of Representatives demonstrates the point. The House Majority Leader’s calendar illustrates the point that there are only five days on which votes are scheduled for the entire month of September. (pdf) No voting will take place in the House during the month of October, except for October 2nd, thereafter all days are labeled “district work week” – the district work being getting re-elected.    The Senate calendar isn’t much more full.

While Congress fiddles, or the band continues to play “The Stripper,” the list of U.S. corporations which have availed themselves of tax havens and possibly earnings stripping continues to grow. And the band plays on.  The longer the music continues the more average American income earners will be expected to shoulder the burden of generating revenue, and the less will be expected from corporations – those other kinds of “people,” my friend.

*For a more technical look at some of the controversy around Section 163(j) see Morrison, “Section 163(j) and Disregarded Entities,” Bloomberg BNA.  April 6, 2011.

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Filed under Economy, Politics, Taxation

Alito’s Worst Decision?

On May 27, 2014 Justice Samuel Anthony Alito, Jr. wrote the opinion for the Supreme Court in the case of Plumhoff et. al. vs. Rickard. (pdf)  Mr. Rickard was killed, along with a passenger in his car, by gun fire from police pursuing him after a traffic stop.  The decision found that the use of deadly force was justifiable considering the threat to public safety posed by Mr. Rickard’s reckless high speed getaway attempt, Rickard’s 4th Amendment rights were not violated, and “in any event, the officers were entitled to qualified immunity because they did not violate a clearly established law.” [scotusblog

But, there was more.  How about the number of shots fired in the attempt to halt Rickard’s escape?  Were 15 shots unreasonable? The decision thought not:

“We now consider respondent’s contention that, even if the use of deadly force was permissible, petitioners acted unreasonably in firing a total of 15 shots. We reject that argument. It stands to reason that, if police officers are justified in firing at a suspect in order to end a severe threat to public safety, the officers need not stop shooting until the threat has ended. As petitioners noted below, “if lethal force is justified, officers are taught to keep shooting until the threat is over.” 509 Fed. Appx., at 392.”

There are some problems here.  First, is the Supreme Court really saying that if an officer fires once in the face of a “severe threat to public safety” that all subsequent shots are justified?   The Court did recognize that if initial volleys had incapacitated Rickard, subsequent shots might not be justified.  However, what of Allen, the passenger in the vehicle?

“Allen would be of central concern. But Allen’s presence in the car cannot enhance Rickard’s Fourth Amendment rights. After all, it was Rickard who put Allen in danger by fleeing and refusing to end the chase, and it would be perverse if his disregard for Allen’s safety worked to his benefit.” 

Yes, it would be perverse if Rickard used Allen as something of a hostage.  Yet there is still the unresolved issue of who created that severe threat to public safety?  The police in hot pursuit or Rickard for behaving like a fool? Thus, our second question.

Secondly, what constitutes a “severe threat to public safety?”  Mr. Rickard was stopped for a traffic violation, in his instance a broken headlight.  The initial impression, given the state of the windshield and the dysfunctional headline, lead the officers to believe the car had recently been involved in an accident; Mr. Rickard’s decision to flee the scene and lead the police on a high speed chase didn’t do anything to dissuade the officers that this was the case.  The officers caught up with Mr. Rickard in a parking lot.  Rickard continued his attempt to flee this scene as well, 12 more shots were fired and both individuals in the car were killed. These facts seem to illustrate a tragic process with several moving parts.

Did the reckless high speed chase, in itself, create a severe threat to public safety?  And, does this, in turn hinge on the type of pursuit policy adopted by the police department or law enforcement agency.  There are two forms of pursuit policy – a restrictive policy limits the crimes for which a pursuit may be initiated, and a discretionary policy gives the officers only basic guidance as to when to initiate, conduct, and terminate a pursuit. [PCM

If the Supreme Court is assuming that a discretionary policy is perfectly acceptable, then what does this mean for law enforcement agencies such as Las Vegas, NV which shifted to a restricted policy in the wake of a series of high speed pursuits that ended badly? [LVSun] In fact, Las Vegas Metro went from almost being a poster child for high speed errors to an exemplary  41% reduction in the initiation of high speed pursuits in the three years ending in 2013.  Indeed, the LVMPD was given national recognition for its achievements in improving safe pursuits in October 2013.

Common sense would appear to support the decision of the Las Vegas police to adopt a restricted pursuit policy which lessens the dangers to the suspect, the public, and the police. However, if there is no legal incentive to adopt such a model, then why would ‘unreconstructed’ police departments do so?  And, this of course leads to the unfortunate third question: Did the police create the “severe threat to public safety” when a pursuit was initiated without determining if the pursued was a known felon, or suspected in a felony, or a reasonable conclusion drawn that the pursued must be apprehended immediately?

Some police departments such as the LVMPD have well defined articulated use of force policies (pdf) not that these policies haven’t generated some controversy. [LVRJ 11/29/11]  Others, like the TMCC report dated April 2011 are more general: “… that officers use only the force that reasonably appears necessary to bring an incident under control, while protecting the lives of the officer and others.”  Even this is amended to include a “reasonable fear of death or serious bodily harm, or to prevent the escape of a fleeing violent felon who the officer believes poses a serious threat of death or serious injury to the officer and others.”  The state of California has 56 pages worth of guidelines for pursuits, crafted in no small amount of detail as of 2006.  The Reno (NV) Police Department summarizes its policy as:

“Officers may pursue a suspect when they reasonably believe the suspect has committed a felony or poses an immediate threat to human life. Unless exigent circumstances exist, officers will normally not pursue a suspect who has committed a misdemeanor crime. Officers must articulate justifiable cause necessitating immediate apprehension of the suspect when pursuing for any offense.”

The Reno policy also incorporates other considerations like traffic conditions, weather, pedestrians in the area, time of day, and the identity of the subject being pursued, among others similar to the California standards.   

If the decision in Plumhoff v. Rickard can be faulted for providing cover for law enforcement officers who may well have contributed to the “severe threat to public safety” in an ill-advised pursuit, and further criticized for justifying all the force necessary until the “threat is over,” then can it also be faulted for allowing police departments to meet the lowest possible standards?

Have Justice Alito and his colleagues sanctified the mediocre or worse, while disparaging the efforts of other jurisdictions to articulate and standardize their use of force and pursuit policies?  If so, then this may well be one of  Justice Alito’s worst decisions. 

[See NYT for more]

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Filed under Politics, public safety

Swiping Away Toward the Next Debacle?

banker 2 The Las Vegas Sun reports that residents of the Las Vegas metropolitan area have run up $3.88 billion – yes, that’s billion with a B – in credit card debt as of June 2014.  The residents are not alone. There’s more credit card indebtedness piling up in Texas.  The Dallas Morning News lists the increases in credit card debt for Houston is up 5.45%, for Dallas-Fort Worth up 4.70%, and just for good measure there are other increases around the country.  Orlando’s credit card debt is up 4.89%, Atlanta up 4.21%, Tampa-St. Petersburg up 3.75%.   There’s good and bad news here.

Remember the mantra in this blog? One man’s debt is another man’s asset?

Somewhere, somehow, in the maw of the Wall Street financial institutions, those accounts receivable are being sliced, and diced, and traded.  They are being securitized.  They are becoming Asset Based Securities.  Read bonds. They are being priced and sold.  And, of course, someone is making a tidy profit. Synchrony, the largest issuer of private label credit cards for large retailers in the United States,  recently earned a Morningstar rating of BBB for its new issue.  Profits are good news, if the products being transferred are valued properly.  If not, then we have the 2007-2008 Mortgage Meltdown Debacle Redux.

The replication of that debacle will be a bit more difficult if the Security and Exchange Commission succeeds in enforcing rules under the 2010 Dodd Frank Act. The rules now call for firms issuing the securities to file reports with the SEC on the underlying loan data, including credit scores and debt levels.  The SEC plans on providing potential investors with debt to income ratio information and metrics which would help with the assessment of loan/credit quality.  [WSJ]

We should possibly recall at this point that both the Heritage Foundation and the American Enterprise Institute have called for the repeal of most, if not all, the provisions of the Dodd Frank Act.  The ultra-conservative think tanks have already declared the Act an imposition of unreasonable regulatory burdens on financial institutions.  [AEI]  It should also be remembered that Nevada Senator Dean Heller has called for the repeal of the Dodd Frank Act and its attendant regulations. [NVProg]

It’s also within recent memory that then-Representative Heller voted against the House version of the Dodd Frank bill on December 10 and  11, 2009 when Representatives Berkley and Titus voted in favor of it.  [govtrack]  Then on the final vote, December 11, 2009 Heller voted against the measure as one of 176 Republicans to do so. [govtrack]

When the conference report came back with the changes made to the bill from the Senate, once again Heller voted against it, on June 30, 2010. [govtrack] Heller also voted against H.R. 4173 (111th) on the conference report. [govtrack]  Four “nay” votes certainly should indicate that Heller was not in favor of financial regulatory reform.

Once in the Senate, Senator Heller teamed with Senator Jim DeMint (R-SC) to fully repeal the Dodd Frank Act in 2011. [DB]  And, lest he be considered inconsistent —  Senator Heller has now signed on as a cosponsor of Senator Bob Corker’s (R-TN) bill (S. 1217) which would make the FMIC (Federal Mortgage Insurance Corp) an independent agency of the federal government – read: Out from under the provisions of Dodd Frank.

For the record, there are eight bills in the House and Senate which provide for the repeal or diminishment of the financial regulation reforms included in the Dodd Frank Act. [govtrack]  Among these bills are those  sponsored by (H.R. 5016) Rep. Ander Crenshaw (R-FL), (H.R. 4564) Rep. Patrick McHenry (R-NC), (H.R. 4304) Rep. Steve Scalise (R-LA), (H.R> 3193) Rep. Sean Duffy (R-WI), and in the Senate, S. 1861, sponsored by Senator John Cornyn (R-TX). [govtrack]

The efforts by the Securities and Exchange Commission and the Consumer Financial Protection Bureau to implement and enforce financial regulatory reform measures remain under a steady assault of lobbying interests, banking associations, wealth managers, and their allies in the U.S. Congress.  Senator Heller is certainly among this legion.

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Filed under Economy, financial regulation, Heller, Nevada economy

Can You Get There From Here? Northern NV Public Transportation

Reno Bus

 

There are many things one can find online, but there are also some topics which are difficult to research in Nevada using online sources. For example, how do members of the public research and evaluate the operational effectiveness of the Reno Transit Commission?

For example, according to the RTC every $1 billion in annual transportation expenditure yields a $3.6 billion sales boost, and supports approximately 36,000 jobs. [RTC] Of course, what we don’t know is whether these numbers are national averages or local figures.  The local numbers appear in the annual report (pdf 2013) for the fixed route transit system.

Ridership is recorded as 8,096,298 for FY 2013, with 240,643 para-transit rides, or 22,182 rides (631 para-transit) per day.  If we use the 2013 Census projections of 233,294 for Reno, and another 93,282 for Sparks, NV we have 326,576 residents of the Reno/Sparks cities who ride the buses at a 22,182 rate per day; or, about 7% of the local combined populations.  The goal is to have a system wide average of 30 passengers per service hour, the current rate is reported at 32.4.

As with too many public transit programs, the RTC can’t rely on fares for its total operating expenditures. RTC fares generate about 4.1% of total revenues, the bulk of which (48%) come from revenue bonds.  A note of caution should attend these numbers because the RTC is also heavily involved in street improvements, and alternative transport (bicycle route) infrastructure.

There is much to be gleaned from annual reports, but more might expected when the RTC operating statistics are available beyond those from 2010. (pdf)

It would also be interesting to access information coming from members of the Reno/Sparks community — granted that bus routes from various neighborhoods to local retail centers is highly desirable, but do the routes also facilitate transport from those neighborhoods to other place people need to go — for medical, legal, or other services?

Do ridership trends indicate a need to enhance routes between other areas, such as Carson City, Fernley, Gardnerville, and Incline? Do those ridership trends in the immediate Reno/Sparks area continue the downward lines illustrated in the 2010 statistics?

How do the RTC plans conform to the population trends in the area?  The 2010 Washoe County planning document estimates an increase in the number of residents over the age of 65 to increase from 12% (2010) to 17% by 2030, or just under 100,000 people.  According to the Census Bureau the figure has already hit 14%.

Finally, how does the RTC address the one issue which a recent study from the University of California found to be of singular importance to public transit riders — timeliness. Passengers were willing to endure overcrowding on smaller vehicles and willing to take longer routes, IF the result were trains and buses which ran on time, or more specifically had less than a ten minute delay. Technology didn’t seem to help ameliorate this issue because those who have smartphones or gadgets to keep track of bus operations were those less likely to use the buses in the first place. The article posits the ridership is reduced because people know of the delays, it could also be because those who can afford smartphones are less likely to be taking a bus in the first place.  [Governing]

Public transportation can make a city.  Imagining New York or Washington, D.C. without the subway or the Metro is inconceivable. However, the idea is often poorly translated to mid-major cities, all too often tied to retail shopping centers, and behind the sprawl curve.  It will be interesting to see what the 2015 report reveals about the Reno Transport Commission’s efforts, and if northern Nevada can set its goals higher in terms of congestion reduction and ridership increases.

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