“Slow going for Obama appointees - MSNBC” plus 4 more

Slow going for Obama appointees - MSNBC
Layoffs lead to fewer corporate blood donors in US - AOL
Risk-taking is back for banks 1 year after crisis - Salon
Profiles of MetroHealth System board members - Cleveland Plain Dealer Blog
Texas city marks anniversary of Hurricane Ike - Miami Herald

Posted: 13 Sep 2009 08:22 AM PDT

WASHINGTON - The White House has filled important policy jobs at the two departments essential to President Barack Obama's domestic priorities at a much slower rate than elsewhere in his administration after eight months in charge of the government.

At the Treasury Department, which is overseeing one of the largest financial rescue plans in history, just 12 of the 33 high-level posts requiring Senate confirmation are filled. At the Department of Health and Human Services, responsible for responding to a potentially deadly swine flu outbreak this fall, eight people have been confirmed among the top 20 posts.

Only the Justice Department has a lower rate of confirmation. Other departments, including Transportation, Agriculture and Interior, have more than 60 percent of their top policymaking appointees in place.

Concern about vacancies
While career employees temporarily fill some of the vacancies, there's concern that the president doesn't have enough of his own people in place to advance his ambitious agenda.

"It's just not a healthy thing to have a large number of vacancies in a particularly uncertain time," said Paul Light, a professor at New York University and expert on government bureaucracy. "It should concern us."

Treasury oversees the massive $787 billion financial stimulus; a bank bailout program and other emergency response efforts; a legislative push to overhaul financial regulation; and the government's coordination with other nations on the global economic crisis.

HHS is a nerve center for the government's response and preparation for swine flu, which could infect up to half of the U.S. population this year. Top officials are deeply involved in negotiations with Congress on health care and would have much of the responsibility of putting in place anything that gets passed.

Political appointees are nominated by the president and typically leave their posts when a new administration takes office. Career employees fill lower-ranking jobs and their tenure is unaffected by who's in the White House.

By the end of August, Obama had nominated 243 people to the 385 high-ranking policymaking jobs at the Cabinet departments that require Senate confirmation, according to the White House Transition Project. The Senate has confirmed 193 of them.

That's tracks with where Obama's predecessors were at this point in their administrations, said Terry Sullivan, executive director of the Washington-based, independent nonpartisan program that follows presidential appointments.

Obama's predecessor, George W. Bush, had 55 percent in place, though he had about 50 fewer jobs to fill.

High-level posts unfilled
The White House prefers to slice it a little differently to get themselves an even better grade.

The Obama White House says that by adding positions such as ambassadors and judges, who also require Senate confirmation, as well as lower-level political appointees that don't, the administration is filling jobs 50 percent faster than any of the previous three presidents at the same stage in their administrations.

The project doesn't track that list, and without Senate confirmation there is no way to follow them through votes in the Congressional Record.

Regardless of the Obama administration's overall success, however, the high-level vacancies at Treasury and HHS are particularly striking.

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Layoffs lead to fewer corporate blood donors in US - AOL

Posted: 13 Sep 2009 08:08 AM PDT

Visit Money & Finance for stock quotes, the web's best online portfolio manager and the latest business & financial news. Find out about every aspect of personal finance and money management, from finding the best mortgage rates and preventing identity theft to making money, saving money and investing money.

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Risk-taking is back for banks 1 year after crisis - Salon

Posted: 13 Sep 2009 08:15 AM PDT

Sep 13th, 2009 | NEW YORK -- A year after the financial system nearly collapsed, the nation's biggest banks are bigger and regaining their appetite for risk.

Goldman Sachs, JPMorgan Chase and others -- which have received tens of billions of dollars in federal aid -- are once more betting big on bonds, commodities and exotic financial products, trading that nearly stopped during the financial crisis.

That Wall Street is making money again in essentially the same ways that thrust the banking system into chaos last fall is reason for concern on several levels, financial analysts and government officials say.

-- There have been no significant changes to the federal rules governing their behavior. Proposals that have been made to better monitor the financial system and to police the products banks sell to consumers have been held up by lobbyists, lawmakers and turf-protecting regulators.

-- Through mergers and the failure of Lehman Brothers, the mammoth banks whose near-collapse prompted government rescues have gotten even bigger, increasing the risk they pose to the financial system. And they still make bets that, in the aggregate, are worth far more than the capital they have on hand to cover against potential losses.

-- The government's response to last year's meltdown was to spend whatever it takes to protect the financial system from collapse -- a precedent that could encourage even greater risk-taking from the private sector.

Lawrence Summers, director of the White House National Economic Council, says an overhaul of financial regulations is needed as soon as possible to keep the financial system safe over the long haul.

"You cannot rely on the scars of past crises to ensure against practices that will lead to future crises," Summers says.

No one is predicting another meltdown from risky trading in the near term. Rather, the concern is what happens over time as banks' confidence grows and the memory of the financial crisis of 2008 fades.

Will they pile on bets to the point that a new asset bubble forms and -- as happened with mortgage-backed securities -- its undoing endangers banks and the broader economy?

"We're seeing the same kind of behavior from the banks, and that could lead to some huge and scary parallels," says Simon Johnson, former chief economist with the International Monetary Fund.

Some risk-taking is good. When banks are willing to invest in companies or lend to home-buyers, that nurtures economic growth by generating employment and consumer spending, feeding a cycle of expansion.

The problem is when banks' quest for profits leads them to take on too much risk. In the case of the housing bubble, which burst last year, banks lent too freely to consumers with weak credit and wagered too much on complex financial instruments tied to mortgages. As real-estate prices turned south, so did the financial industry's health.

Because the largest banks' trading divisions make their bets with each other, their fortunes are intertwined. The collapse of one can threaten another -- and another -- if it is unable to pay off its debts.

This so-called counterparty risk is a major reason the Obama administration's regulatory overhaul plan calls for the creation of a "systemic risk regulator."

The administration is also seeking tougher capital requirements for banks, arguing that banks' buying of exotic financial products without keeping enough cash on reserve was a key cause of the crisis. Treasury Secretary Timothy Geithner has urged the Group of 20 nations -- which meets this month in Pittsburgh -- to agree on new capital levels by the end of 2010 and put them in place two years later. Geithner hasn't said how much extra capital banks should be required to keep on hand.

Data from the April-June quarter show that the banks are leaning heavily again on their trading desks for revenue.

-- During the fourth quarter of 2008, when the financial crisis made even the shrewdest bankers risk-averse, Goldman's trading of risky assets nearly stopped. But in the second quarter of 2009, trading revenue had climbed to nearly 50 percent of total revenue, closer to where it was two years ago before the recession began. JP Morgan's reliance on trading revenue has exhibited a similar pattern.

-- Also in the second quarter, the five biggest banks' average potential losses from a single day of trading topped $1 billion, up 76 percent from two years ago, according to regulatory filings.

The government hasn't just watched banks resume their freewheeling ways and prosper. It has been an enabler in the process. The Federal Reserve, the Treasury Department and the Federal Deposit Insurance Corp. -- during both the Bush and Obama administrations -- have made trillions of dollars available to the biggest banks through bailouts, low-cost loans and loss guarantees designed to stabilize the financial system.

The failure of Lehman Brothers -- the biggest bankruptcy in U.S. history -- and the panicky sales of Bear Stearns to JPMorgan and Merrill Lynch to Bank of America, also have transformed Wall Street. The surviving investment banks have fewer competitors and more market share.

Five of the biggest banks -- Goldman, JPMorgan, Wells Fargo, Citigroup and Bank of America -- posted second-quarter profits totaling $13 billion. That's more than double what they made in the second quarter of 2008 and nearly two-thirds as much as the $20.7 billion they earned in the second quarter of 2007 -- when the economy was strong.

Meanwhile, Bank of America and Wells Fargo today originate 41 percent of all home loans that are backed by Fannie Mae and Freddie Mac, according to Inside Mortgage Finance. The banks made $284 billion in such loans in the first half of this year, up from $124 billion during the same period last year.

"The big banks now are more powerful than before," said Johnson, now a professor at the Massachusetts Institute of Technology's Sloan School of Management. "Their market share has grown and they have a lot of clout in Washington."

Wall Street's recovery is also being aided by a stock-market rally that has driven the S&P 500 index up nearly 54 percent since March 9, when it hit a 12-year low.

Despite the return to profitability, these aren't the high-octane days from before the crisis. To qualify for government backing, the biggest Wall Street firms are no longer allowed to supercharge their returns by borrowing up to 30 times the value of their assets to place bets on stocks, bonds and other investments.

Businesses supported by Wall Street bankers and traders say they've also noticed changes. Namely, their customers aren't spending as much on food, drinks and entertainment as they did during the boom years.

At Fraunces Tavern, a high-end bar just around the corner from the New York Stock Exchange, the Wall Street workers who used to drink $25 glasses of port are scarce these days.

"Now we're doing happy hours," says Damon Testaverde, one of the owners of Fraunces Tavern. "We never did that. There's just less bodies around."

But one thing fundamental to Wall Street hasn't changed: Big banks and their traders are still finding creative -- some say speculative -- ways to profit.

They're still packaging risky mortgages into securities and selling them to investors, who can earn higher returns by purchasing the securities tied to the riskiest mortgages. That was the practice that helped inflate the real estate bubble and eventually spread financial pain around the globe.

In a way, the government has emboldened banks to keep selling risky securities: Since the crisis erupted, federal emergency programs have helped keep the banks from failing. But now, as the financial system recovers, the government plans to phase out these backstops -- leaving banks more vulnerable to big bets that go bad.

One investment gaining popularity is a direct descendant of the mortgage-backed securities that devastated many banks last year. To get some lesser performing assets off their books, banks are taking slices of bonds made up of high-risk mortgage securities and pooling them with slices of bonds comprised of low-risk mortgage securities. With the blessing of debt ratings agencies, banks are then selling this class of bonds as a low-risk investment. The market for these products has hit $30 billion, according to Morgan Stanley.

"It may be unpleasant to hear that the traders are riding high," said Walter Bailey, chief executive of boutique merchant banking firm EpiGroup. "But, hey, it's a pay-for-performance thing, and they're performing like mad."

And that means the return of another Wall Street mainstay: Lavish compensation.

After 10 of the largest banks received a $250 billion lifeline from the government last fall, some lawmakers were outraged that employees were being paid seven-figure salaries even though their companies nearly collapsed. A handful of top executives, including Citigroup CEO Vikram Pandit, have agreed to accept pay of just $1 this year. But the compensation of most high-performing traders hasn't changed.

Goldman spent $6.6 billion in the second quarter on pay and benefits, 34 percent more than two years ago. And Citigroup, now one-third owned by the government after taking $45 billion in federal money, owes a star energy trader $100 million.

The CEO of Goldman, Lloyd Blankfein, said at a banking conference in Germany last week that excessive banker pay works "against the public interest." He said bonuses are important to attract and retain top talent, but "misapplied, they can also encourage excess."

The Obama administration has proposed measures to diminish the risk posed by large banks. They include forcing banks to hold more capital to cover losses and trying to increase the transparency of markets in which banks trade the most complex -- and potentially risky -- financial products.

One major component of the Obama plan -- creating an agency to oversee the marketing of financial products to consumers -- will be difficult to pass in Congress. Industry lobbying against it and other proposed financial rules has been fierce.

Lobbyists for hedge funds, the large investment pools that cater to the rich, have been able to fend off proposals that would require them to register with the SEC and regularly disclose their holdings.

And they, too, are profitable again after a dismal 2008. The 1,000 largest hedge funds in Morningstar's database posted average returns of 11.9 percent through July. In 2008, those same funds lost 22 percent on average.

"Have there been changes around the edges?" says Timothy Brog, portfolio manager of New York-based hedge fund Locksmith Capital. "Absolutely. Have their been systematic changes? Absolutely not."

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Profiles of MetroHealth System board members - Cleveland Plain Dealer Blog

Posted: 13 Sep 2009 08:22 AM PDT

The MetroHealth System is overseen by 10 volunteer board members. Each trustee is vetted by a Cuyahoga County commissioner and then approved by the board of county commissioners as well as Probate and Common Pleas courts.

The board hires and fires the public hospital's executives and ultimately oversees finances, approving construction contracts as well as other spending during monthly public board meetings.

No more than five of the 10 trustees may be from the same political party, according to the by-laws. Members have six-year terms with no limit on how many terms they can serve.

Records obtained by The Plain Dealer reveal that positions don't open up often: Four of the MetroHealth trustees have been serving on the board since the 1990s. Two have served since the early 1980s.

Here's a closer look at members of the board, according to their resumes and reappointment recommendation letters:

Polly H. Clemo

Republican, Bay Village

Appointed: 1995 / Term expires: March 15, 2015

Employment: Vice president of institutional advancement at the Benjamin Rose Institute, which provides services to the elderly. She joined the institute in 1994.

Education: Bachelor's degree in history, Albion College, Michigan, 1963.

Background: She has held several communications and marketing positions, ran a consulting firm and was the president and chief executive of the Junior League of Cleveland. In a February letter to Cuyahoga County Commissioner Jimmy Dimora to request reappointment, Clemo wrote, "I feel that I know every part of this wonderful institution!"

Ronald Fountain, vice chairman

Republican, Shaker Heights

Appointed: 1997/ Term expires: March 5, 2013

Employment: Dean, School of Business, Walsh University; partner, Capital Acceleration Partners, a management consulting firm.

Education: Bachelor's degree, Valdosta State University, Georgia, 1965; corporate financial management program, Harvard Business School, 1980; MBA, Weatherhead School of Management at Case Western Reserve University, 1983.

Background: Formerly partner at the Parkland Group, a management consulting firm. Currently serves as the finance committee chairman for the MetroHealth board.

William Gaskill, chairman

Independent, Shaker Heights

Appointed: 1980 / Term expires: March 15, 2012

Employment: Retired in July as firm director of administration at Jones Day law firm, which he joined in 1980.

Education: Bachelor's degree, Ohio Wesleyan University, 1961; master's in government administration, Wharton School, University of Pennsylvania, 1963.

Background: Worked as Cuyahoga County administrator from 1973 to 1979. He also worked as city manager of East Cleveland as well as director of public utilities for Cleveland. Gaskill served as chairman of the MetroHealth board from 1985 to 1990 and has held board positions of vice chairman and chaired the finance committee.

Richard R. Hollington III

Republican, Shaker Heights

Appointed: 2004 / Term expires: March 2, 2010

Employment: President of Capitalworks LLC.

Education: Bachelor's degree in political science Williams College, 1986; MBA, Darden Business School at the University of Virginia, 1991.

Background: Graduated from University School in Hunting Valley, 1982, and serves as an active trustee. Before being appointed to MetroHealth's board, he also served on the hospital's foundation board and was "instrumental in helping MetroHealth receive much-needed philanthropic support," according to a 2004 letter on his behalf written by then-Chairwoman Donna Kelly Rego.

Thomas M. McDonald

Democrat, Bratenahl

Appointed: 2008 / Term expires: March 5, 2014

Employment: President and chief executive of Thomas McDonald Partners LLC, a registered investment adviser and broker dealer.

Education: Bachelor's degree in industrial management, University of Tennessee.

Background: McDonald has also served on the advisory committee for the Securities Industry Association and the National Association of Securities Dealers. He has held several director positions, including at Goodwill Industries in Cleveland from 1984 to 2003 and the Cleveland San Jose Ballet from 1987 to 1995.

Terry Monnolly

Republican, Westlake

Appointed: 2005 / Term expires: March 2, 2011

Employment: President of DiGioia-Suburban Excavating LLC in North Royalton. Monnolly has been involved in various development ventures over time and listed nearly a dozen on his resume.

Education: Bachelor's degree in civil engineering, Cleveland State University, 1970.

Background: In 2008, as chairman of MetroHealth board's facilities and space committee, Monnolly told other board members that his committee would thoroughly review all bids received for construction projects, according to a Plain Dealer story in July of 2008.

Donna Kelly Rego

Democrat, Rocky River

Appointed: 1983 / Term expires: March 11, 2013

Employment: Organization specialist, consultant. She's also a former high school teacher and certified pastoral minister in the Catholic Diocese of Cleveland. She served 21 years as pastoral associate at St. Malachi Church.

Education: bachelor's degree, Dunbarton College, Washington D.C.; master's degree, St. John College, Cleveland; pursued post-graduate studies at University of Notre Dame and St. Mary Seminary.

Background: Rego served as the MetroHealth board chair from 1991 to 2007, overseeing the hiring of Chief Executive Terry R. White in 1994 as well as Chief Executive John Sideras in 2004. In a brief 2007 letter thanking the county commissioners for reappointment, Rego notes that she will "seek to be effective and faithful in the exercise of my responsibilities."

Raymond Sawyer

Democrat, Cleveland Heights

Appointed: 1998 / Term expires: March 24, 2010

Employment: Retired from Thompson LLP, consultant. He is also former chief of staff to Ohio Gov. Dick Celeste.

Education: Bachelor's degree, Yale University, 1965; Harvard Law School, 1968.

Background: In a 2004 e-mail request for board reappointment to Cuyahoga County Commissioner Peter Lawson Jones, Sawyer states that he was a member of the system's search committee that selected former Chief Executive John Sideras. He also says that volunteering on the board has been "an inspirational calling."

Charles Spain Jr. Republican, Aurora

Appointed: 1990 / Term expires: March 5, 2014

Employment: Attorney, hospital and municipal finance. Also retired as vice president and senior attorney for National City Bank.

Education: Bachelor's degree, Lincoln University, Pennsylvania, 1966; Columbia University Law School, New York, 1972.

Background: In a 2002 letter of recommendation for reappointment, Spain is credited with helping implement a new information system and building the new skilled-nursing center, as well as fund raising. His most significant contribution to the board, according to the letter, was his "active participation in philanthropic initiatives at the system."

Brenda Terrell, secretary

Democrat, Bratenahl

Appointed: 2000 / Term expires: March 2, 2011

Employment: Principal of Terrell & Associates, a consulting firm. She has also served as a consultant and employee of the former Greater Cleveland Growth Association.

Education: Bachelor's degree, University of Tennessee; master's degree, Memphis State University; doctorate in philosophy from the University of Pittsburgh.

Background: During a long academic career, Terrell held graduate faculty positions at Memphis State University, Case Western Reserve University and Kent State University. In a 2005 reappointment letter, then board Chairwoman Donna Kelly Rego said Terrell's "business experience, her organizational insights and her strong relationship with many diverse groups" make her a "real asset."

SOURCES: Interviews as well as resumes and recommendation letters obtained from MetroHealth and Cuyahoga County

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Texas city marks anniversary of Hurricane Ike - Miami Herald

Posted: 13 Sep 2009 08:15 AM PDT

GALVESTON, Texas -- Residents of Galveston on Sunday remembered the destruction Hurricane Ike inflicted on their Texas island city a year ago, but they also celebrated the community's efforts to rebuild, saying the storm has brought people closer together.

During a sunrise memorial service to mark the storm's anniversary, clergy from the island's different faiths talked of the strides their community has made since Ike made landfall just outside Galveston in the early morning hours of Sept. 13, 2008.

"You can see behind me a new day has dawned. A new day has dawned on our community," the Rev. David Green of the First Presbyterian Church said in a sun-filled ballroom at the Hotel Galvez. About 100 people gathered for the service at the historic hotel near the beach.

The service was part of a nearly weeklong series of events to highlight rebuilding and recovery efforts in the year since Ike hit.

Through the windows behind Green one could see Galveston's Seawall Boulevard, which runs along the beach and a year ago had been covered in rocks, sand, splintered wood and other debris that had been deposited there by Ike's powerful storm surge. On Sunday, cars flowed along the boulevard and people sat or walked along the beach.

A year ago, bleary-eyed residents used dawn's first light to survey the destruction to their homes. Many homes were unrecognizable, said the Rev. Helen Appelberg, with St. Augustine of Hippo Episcopal Church.

The hurricane damaged 75 percent of the city's houses and as well as thousands of other homes in cities from the southeast Texas Gulf Coast into Houston, which is 50 miles inland. It also submerged farmland and ranches in saltwater, scoured away beaches and ruined thousands of acres of vegetation.

Galveston suffered more than $3.2 billion in damage. The working-class city's largest employer, the University of Texas Medical Branch, temporarily shut down and had to lay off about 3,000 employees.

Ike was the costliest natural disaster in Texas history. Its powerful surge reached as high as 20 feet and its 110 mph winds caused more than $29 billion in damage. The storm caused flooding and deaths as far away as Pennsylvania and Illinois. Ike was blamed for at least 72 deaths in the U.S., including 37 in Texas.

Appelberg asked residents to hold on to their hope for a better future.

"Let the hope that rests in each of our hearts grow and grow into the flower of new life in every corner of this city," she said.

Galveston has been able to bounce back after Ike. City leaders says 75 percent of businesses are now open and tourists have returned.

But residents say the city still has a long way to go. About 3,000 of the city's 58,000 residents still have not returned. Mobile homes provided by the Federal Emergency Management Agency still dot driveways and front lawns of many neighborhoods.

"The community is still hurting," said Elizabeth Godbehere, 59, who was born on the island. "But we've been making tremendous efforts to support each other as a community."

Neighborhoods around Galveston are expected to hold block parties and cook outs later Sunday to reconnect.