SENATE BILL THREATENS GRAMM-LEACH-BLILEY

U.S. Senators Maria Cantwell (D-WA) and John McCain (R-AZ) introduced a bill into the Senate on December 16, 2009, that would basically repeal the Gramm-Leach-Bliley Act of 1999 and reinstate the Glass-Steagall Act of 1933. Senate bill 2886, aka the “Banking Integrity Act,” would prohibit commercial banks from engaging in insurance activities and disallow affiliations between commercial banks and investment banks. Banks engaged in these activities or relationships would be forced to divest themselves of the disallowed operations within one year after the passage of the bill.

Austin-Round Rock, Texas, Most Secure Large Metro Area

The central Texas area of Austin-Round Rock is the most secure U.S. community among large metropolitan areas (population of 500,000 or greater) in which to live, ccording to the sixth annual Most Secure U.S. Places to Live rankings from Farmers Insurance Group of Companies.
The Fargo, N.D.-Moorhead, Minn., area is the most secure mid-size U.S. city (population between 150,000 and 500,000), while the Lewiston, Idaho-Clarkston, Wash., area ranks as the most secure small town (population less than 150,000).
The rankings, compiled by database experts at www.bestplaces.net, took into consideration crime statistics, extreme weather, risk of natural disasters, housing depreciation, foreclosures, air quality, terrorist threats, environmental hazards, life expectancy and job loss numbers in 379 U.S. municipalities. The study divided the communities into three groups: large metropolitan areas, mid-size cities and small towns.
"In today's fast-paced world, citizens look for a strong local government to make their communities secure, and especially desirable for individuals and families to live, work and grow," said Robert Woudstra, Farmers CEO.
The Austin-Round Rock area, which was 15th among large metropolitan areas in the 2008 Farmers study, is a center for technology and business and is attracting more and more pharmaceutical and biotechnology companies. Such Fortune 500 companies as Dell Inc., Whole Foods Market and Freescale Semiconductor are headquartered there, with Austin serving as the state capital and home to the University of Texas. A high job growth rate and minimal housing depreciation contributed to its top rating in the study.
The Fargo-Moorhead area, ranked 14th among mid-size cities in 2008 and sixth in 2007, is a hub for healthcare, manufacturing and higher education. The area is home to three universities and several smaller, private colleges. Its No. 1 ranking in the 2009 Farmers study is largely due to a low unemployment rate, few violent crimes, minimal housing depreciation, high air quality and a long life expectancy among residents.
The Lewiston-Clarkston area, with a population of just under 59,000, jumped from sixth place among small towns in the 2008 study to the top spot in 2009. The area's access to the Pacific Ocean through a network of river, rail and highway transportation facilities provides an excellent business climate for what is regarded as the most inland seaport in the Western United States. It scored high in the study due to excellent job growth, low crime and minimal housing depreciation.
Following are the Farmers Insurance Group's Most Secure U.S. Places to Live for 2009:
Large Metro Areas (500,000 or more residents)
1. Austin-Round Rock, Texas2. Des Moines-West Des Moines, Iowa3. Madison, Wis.4. Bethesda-Gaithersburg-Frederick, Md.5. Rochester, N.Y.6. Honolulu, Hawaii7. Syracuse, N.Y.8. El Paso, Texas9. Portland-South Portland-Biddeford, Maine10. Nassau-Suffolk Counties, N.Y.11. Minneapolis-St. Paul-Bloomington, Minn.12. McAllen-Edinburg-Mission, Texas13. Portland-Beaverton, Ore.-Vancouver, Wash.14. New Haven-Milford, Conn.15. Bridgeport-Stamford-Norwalk, Conn.16. Pittsburgh, Pa.17. Seattle-Bellevue-Everett, Wash.18. Colorado Springs, Colo.19. Denver, Colo.20. Scranton-Wilkes-Barre, Pa.
Mid-Size Cities (150,000 - 500,000 residents)1. Fargo, N.D.-Moorhead, Minn.2. Olympia, Wash.3. Sioux Falls, S.D.4. Bellingham, Wash.5. Rochester, Minn.6. Kennewick-Richland-Pasco, Wash.7. Lynchburg, Va.8. St. Cloud, Minn.9. Duluth, Minn.-Superior, Wis.10. Las Cruces, N.M.11. Bremerton-Silverdale, Wash.12. Killeen-Temple, Texas13. Charlottesville, Va.14. Provo-Orem, Utah15. Fayetteville-Springdale-Rogers, Ark.16. Green Bay, Wis.17. Fort Collins-Loveland, Colo.18. Boulder, Colo.19. Yakima, Wash.20. Yuma, Ariz.
Small Towns (Fewer than 150,000 residents)1. Lewiston, Idaho-Clarkston, Wash.2. State College, Pa.3. Bismarck, N.D.4. Logan, Utah5. Ithaca, N.Y.6. Wenatchee, Wash.7. Corvallis, Ore.8. Morgantown, W.Va.9. Eau Claire, Wis.10. Rapid City, S.D.11. Midland, Tex.12. Sioux City, Iowa13. Harrisonburg, Va.14. Billings, Mont.15. Grand Forks, N.D.-Crookston, Minn.16. Grand Junction, Colo.17. Blacksburg-Christiansburg-Radford, Va.18. Wausau, Wis.19. Mount Vernon-Anacortes, Wash.20. La Crosse, Wis.-Winona, Minn.

Judge Rules for Lloyd's In Dispute Over Stanford's Insurance

A federal judge in Houston found accused swindler Allen Stanford and his attorneys in contempt of a court order Wednesday over their attempts to collect insurance policy proceeds to pay defense costs.
No sanctions were imposed, according to the judge's order.
U.S. District Judge David Godbey in Dallas, who oversees the civil fraud case, granted the motion filed by insurer Lloyd's of London, which issued Stanford's directors and officers policy.
The defendants and Lloyd's are battling over the payment of defense fees in federal courts in both Dallas and Houston.
Kent Schaffer, Stanford's lawyer, could not immediately be reached for comment.
In November, the insurer said it was denying payment of defense costs after Aug. 27, the day Stanford's former chief financial officer, James Davis, pleaded guilty to fraud.
Lloyd's, which has so far advanced a total of $4.2 million in legal fees to Stanford defendants, declined to provide additional coverage because claims resulting from money laundering are excluded under the policy, according to court records.
U.S. District Judge David Hittner, who presides over the criminal case, is expected to take up the defense fee issue at a hearing Thursday.
Stanford, 59, is accused of leading a Ponzi scheme centered on certificates of deposit issued by his Stanford International Bank Ltd, his offshore bank in Antigua.
The former billionaire has been in jail since his arrest on criminal charges in June. He has denied any wrongdoing.
The civil case is SEC v Stanford International Bank et al, U.S. District Court, Northern District of Texas, No. 3:09-cv-00298-N. The criminal case is USA v. Stanford et al, U.S. District Court, Southern District of Texas, No. 4:09-cr-00342.
(Reporting by Anna Driver; Editing by Richard Chang)

HOYER: REPEAL MAYBE A MISTAKE

Neither the House reform bill, nor legislation being debated in the Senate, would reinstate Glass-Steagall.
But House Democratic Leader Steny Hoyer told reporters Tuesday at his weekly news conference that such a move was ''certainly under discussion ... As someone who voted to repeal Glass-Steagall, maybe that was a mistake.''
The 1933 Glass-Steagall laws were adopted at the same time the Federal Deposit Insurance Corp was set up. Both reforms came in the Great Depression, when thousands of banks collapsed, wiping out the savings of millions of Americans.
Glass-Steagall was largely repealed in 1999 under the Gramm-Leach-Bliley Act during the Clinton administration amid lobbying pressure from bankers, including those keen to merge the financial firms that later came to comprise Citigroup.
Today, supporters of stronger regulation of Wall Street and the banks say it is no coincidence that America has suffered a series of financial crises since deregulators gained the upper hand politically in Washington in the 1980s.
"The repeal of Glass-Steagall has exposed the U.S. economy to a level of risk that is simply unacceptable,'' Hinchey said
"Congress ignored history in 1999 when it repealed the Glass-Steagall Act and the American people have been forced to pay the price while bailing out these mega-banks, which should have never existed in the first place,'' he said.
Opponents dispute this and say restoring Glass-Steagall might not have prevented last year's crisis or others.
Citigroup, JPMorgan Chase and Morgan Stanley declined to comment. No immediate comment was available from Goldman Sachs and Wells Fargo.
(Additional reporting by Juan Lagorio and Jonathan Spicer in New York; Editing by Dan Grebler)

Congress Weighs Restoring Wall Between Banking, Insurance

Financial giants such as Goldman Sachs Group could be broken up under two bills introduced in the U.S. Congress Wednesday, one with the backing of former Republican presidential nominee John McCain.
Both would reinstate the 1930s-era Glass-Steagall laws that barred large banks from affiliating with securities firms and engaging in the insurance business. Those limits were largely repealed in 1999, a high-water mark for deregulation.
"It is time to put a stop to the taxpayer financed excesses of Wall Street ... This country would be better served if we limit the activities of these financial institutions,'' McCain said in a statement with Democratic Senator Maria Cantwell.
Passage of the Cantwell-McCain bill would force firms at the center of last year's financial crisis -- such as Goldman, Morgan Stanley, Citigroup, JPMorgan Chase and Wells Fargo -- to spin off investment and insurance operations, said Demos, a progressive think tank in New York.
A similar measure was offered Wednesday by six House Democrats, including Representatives Maurice Hinchey, Peter DeFazio, Jay Inslee and John Tierney.
The bills come as Congress debates a sweeping overhaul of financial regulation more than a year after a severe banking and capital markets crisis rocked economies worldwide.
"Restoring Glass-Steagall may have populist appeal, but it is hard to see how one finds 60 votes for it'' to win passage in the Senate, said financial services policy analyst Jaret Seiberg, at investment firm Concept Capital.
"This will be painted as a jobs killer, especially for New York. Plus, conservatives in both parties will balk at having the government forcibly break up private companies,'' he said.
The House approved a regulatory reform bill last Friday that would empower a new systemic risk regulator to order the break-up of risky financial firms in extreme circumstances.

Third Quarter 2009

In an effort to streamline the financial reporting process and provide the Board with more timely and meaningful financial information, the finance team consolidated and redesigned most of the financial reports being forwarded to the Board. Specifically, in the past, the Board received three separate quarterly reports, often at different intervals:
Investment Portfolios Status Report — investment activities and results for the DIF and the National Liquidation Fund;
Financial Analysis Report (FAR) — financial statements for the DIF and FRF; and
Budget Variance Report — year-to-date budgeted vs. actual results, broken out both by major categories of expenditures as well as by divisions and offices. While these reports provided a good deal of useful information, there was no attempt to integrate this information and provide it at a more summary level. By doing so, we believe that the Board will have a better sense of what our overall financial results imply about our performance as a financial steward. As a result, we believe that the attached consolidated financial report will be much more useful to the Board in that regard and we welcome your comments on what we view as a work-in-progress.
Printable version - Third Quarter 2009 CFO Report to the Board - PDF 165k (PDF Help)

Bank Brokerage Index Advances 5 Percent in 3rd Quarter

The Index is an average based on quarterly brokerage revenues at 20 operating banks (see table above) with established retail investments programs. It sets 2007 1st quarter as a baseline (100). The index rose from 98 in the second quarter of 2009 to 103 in the third quarter of 2009. Aggregate brokerage revenue of the 20 banks covered increased 9 percent—from $156.56 million to $173.17 million. Fourteen of the 20 banks in the Index improved their brokerage performance in the 3rd quarter.
Big gains were notched by Compass Bank (up 46 percent), First National Bank of Omaha (up 26 percent), KeyBank (up 23 percent), and Branch Banking & Trust (up 18 percent).
“Aggregate securities revenue increased 13 percent in the quarter, following a gain of 13 in the previous quarter,” said Heywood Sloane, Managing Director of the Bank Insurance and Securities Association. “Annuity revenues increased 9 percent.”
Brokerage revenues are comprised of two groups: annuities (“fees and commissions from sales of annuities”) and securities (“fees and commissions from securities brokerage activities”) as reported to the FDIC. (December 3, 2009)