Mortgage services face a potential minefield of problems as New Rules Ease the Restructuring of CMBS Loans.
The Treasury, responding to the growing pain in the commercial real-estate industry, released new tax rules that make it easier for distressed property owners to restructure loans that were packaged by Wall Street firms and sold as securities.
Most in the real-estate industry, which lobbied intensely for the move, applauded the action. But some warned it has opened a Pandora's box, especially for servicers of the securities who will likely come under new pressure from borrowers and competing classes of investors.
The move is the first round of "additional guidance" the Treasury is weighing to stave off what many fear will be a commercial real-estate crisis, according to people familiar with the matter.
But some investors holding CMBS bonds are watching nervously because loan modifications, known as "mods," mightn't always be in their best interest. CMBS have junior and senior pieces, and the senior holders may be in a better position, when a borrower defaults, to foreclose and liquidate the property rather than modify the loan. Junior holders, on the other hand, might benefit from a mod because they mightn't get their money back in a forced sale.
"The biggest concern is that the guidance could open the floodgate for everyone to try to get some sort of loan modifications," said Aaron Bryson, a CMBS analyst at Barclays Capital. "There is a tremendous burden on the servicers to uphold their end of the bargain."
The move by the Treasury reflects the deep concern in government and industry circles over the problems looming in the $6.5 trillion market for commercial real estate. Just as the U.S. economy is struggling to regain its footing, defaults are mounting because of credit-market turmoil, along with declining property cash flows and plunging property values.
Previously, because of tax laws, servicers would not modify terms unless someone fell behind on payments. Now, many who can afford to pay will seek relief. As a result, servicers will have a more difficult time of deciding who is solvent and who is not, and what the right thing to do in picking winners and losers between junior and senior holders.
That the Treasury has to change such rules on the fly shows their concern over just how fragile this "recovery" is.
Showing posts with label Bank Policies. Show all posts
Showing posts with label Bank Policies. Show all posts
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What Are Business Loans
Monday, September 7, 2009
Business loans can be defined as money lent for a specified amount of time at a specific interest rate to a specific person or people that operate a business or plan to operate a business. This definition is very broad, but so are the various types of loans available to business people. Deciding on which type of business loan that you and your company will benefit from the most is very important. Often times, a start-up business or someone that has never owned a business will find themselves more or less applying for a “personal” loan. This can be a very risky endeavor, mixing business loans with personal loans, however, often times it is the only available means for first time business owners.
One of the first things personal business owners need to do is establish business credit. Business credit can help you get a business only loan without using your personal credit. Establishing business credit can be done by:
1.) Opening up a business credit card account and paying it in full.
2.) Buying equipment and supplies from companies that will report good standing to the business credit bureaus.
3.) Having a good business plan with potential earnings, letters of intent, and any type of customer contracts already laid out.
All of these types of endeavors can help in receiving a business loan. Often times, financial institutions require in-depth business plans, be prepared to spend days working on just the certification paperwork prior to applying for a business loan. A business only loan can be obtained in the business name without use of personal credit as long as the business can justify the loan amount and the ability to pay it back.
There are several different types of business loans available, ranging from those secured with collateral, non-secure loans, which are based upon the credit worthiness of the applicant, and even government loans for small business ventures, women and minorities. Government loans are those loans secured by the government; in most instances these loans are available when the business or owner can prove that the community will prosper based upon the business at hand. For the most part, government loans are based upon personal credit.
The basis for which you may need or require a business loan may vary. Some of the most common business loans available to business owners are:
* Acquisitions or a loan to acquire an existing business
* Inventory loans
* Account Receivable Loans
* Working Capital Loans which converts a companies assets into working capital
* Equipment Leasing
* Commercial Property loans
* Warehouse financing
* International business loans
* Franchise loans
One of the most important tools when deciding on what type of business loan your company needs is research. Researching the different types of loans available to you and your company can save you money. First, look into the different type of business loans available to you in your state. Many states have government loans available; some even offer grants, which is money available for specific purposes that do not require repayment. Research the different type of Federal loans available. You can do this at the following website: www.sba.gov. Call your local bank and investment companies regarding the business loans they have available for you. Many times, business loans are not that hard to acquire. With research and a good business plan, your dreams may come true.
One of the first things personal business owners need to do is establish business credit. Business credit can help you get a business only loan without using your personal credit. Establishing business credit can be done by:
1.) Opening up a business credit card account and paying it in full.
2.) Buying equipment and supplies from companies that will report good standing to the business credit bureaus.
3.) Having a good business plan with potential earnings, letters of intent, and any type of customer contracts already laid out.
All of these types of endeavors can help in receiving a business loan. Often times, financial institutions require in-depth business plans, be prepared to spend days working on just the certification paperwork prior to applying for a business loan. A business only loan can be obtained in the business name without use of personal credit as long as the business can justify the loan amount and the ability to pay it back.
There are several different types of business loans available, ranging from those secured with collateral, non-secure loans, which are based upon the credit worthiness of the applicant, and even government loans for small business ventures, women and minorities. Government loans are those loans secured by the government; in most instances these loans are available when the business or owner can prove that the community will prosper based upon the business at hand. For the most part, government loans are based upon personal credit.
The basis for which you may need or require a business loan may vary. Some of the most common business loans available to business owners are:
* Acquisitions or a loan to acquire an existing business
* Inventory loans
* Account Receivable Loans
* Working Capital Loans which converts a companies assets into working capital
* Equipment Leasing
* Commercial Property loans
* Warehouse financing
* International business loans
* Franchise loans
One of the most important tools when deciding on what type of business loan your company needs is research. Researching the different types of loans available to you and your company can save you money. First, look into the different type of business loans available to you in your state. Many states have government loans available; some even offer grants, which is money available for specific purposes that do not require repayment. Research the different type of Federal loans available. You can do this at the following website: www.sba.gov. Call your local bank and investment companies regarding the business loans they have available for you. Many times, business loans are not that hard to acquire. With research and a good business plan, your dreams may come true.
Applying for a Loan
The process of applying for a business loan is a stringent one as compared to the standard procedures in obtaining a home mortgage loan or a personal loan. This is probably due to the fact that business loans contain a greater risk element as compared to other loans. Therefore, lenders need to exercise greater caution and emphasis when evaluating business loan applications in order to minimize their risk exposure.
With that, lenders evaluate their applicants based on the information that are provided as well as their judgment of the viability and profitability of the business being financed. Thus, business loan applicants will be required to submit a loan proposal along with their applications with the purpose of creating a positive impression upon the lender. The first element of a loan proposal is an executive summary, providing short descriptions of the type of business and the industry, the purpose and usage of the loan, the proposed repayment conditions as well as the intended loan period. After that, the company information is provided, enriching the reader with the nature of the business, the location of the business, company history, the products or services provided, key differentiation factors of the company or the product, the general growth of the industry, competitive information, growth potential and target customers.
It would help if you could include your company marketing strategy, detailed product information, historical information as well as projected growth plans for the company. Apart from that, if you plan to incorporate product or service extensions in the future, you should provide these descriptions within your loan proposal. If possible, geographical expansion plans will help in the proposal.
The next area that needs to be showcased in the proposal would be the credentials and experience of each member of the management team. Impressive credentials will provide assurance to the lender that the company is managed by individuals who are responsible and capable. This is important as having the wrong people managing the company could be detrimental for the business.
In any loan application, historical records are essential to be used in evaluating the performance of a company. As new companies do not yet have these records, the financial records of the owners will be used as the basis of evaluation. Income tax returns forms are also required by lenders. All of these records provided should be the latest copies less than 90 days old, with the exception of the income tax returns form.
If the loan is applied for an existing company in active operations, company financial statements, including profit and loss accounts, balance sheets and the net worth reconciliation record should be included in the loan proposal. Again, all of this information should also be the latest and less than 90 days old. Additionally, a listing of accounts receivables and other short term and long term debt should be attached.
On the other hand, if the loan application is submitted for a new business, a pro-forma balance sheet and profit and loss account should be provided. Apart from that, a cash flow projection for the upcoming year is drafted to indicate the possibility of recovering the debt. This also means that projected revenue, profits, costs incurred and expenditure should be listed out with definite explanations provided as well as a list of assumptions.
If you possess assets that you wish to use as collateral for your loan, details for this should be provided to the lender as well. It is often common for lenders to request for dual sources of repayment in the event that one source is defaulted. This means that if the business owner defaults on his repayments, the collateral can be sold in order to recover debt.
Finally, other documents normally required for a loan application would be items like the article of incorporation, lease agreements, partnership agreements, license, references, etc. As the list of required documentation, information and attachments differs between lenders, it is best to check with the individual lender on their specific information and documents required to be attached with the loan proposal.
With that, lenders evaluate their applicants based on the information that are provided as well as their judgment of the viability and profitability of the business being financed. Thus, business loan applicants will be required to submit a loan proposal along with their applications with the purpose of creating a positive impression upon the lender. The first element of a loan proposal is an executive summary, providing short descriptions of the type of business and the industry, the purpose and usage of the loan, the proposed repayment conditions as well as the intended loan period. After that, the company information is provided, enriching the reader with the nature of the business, the location of the business, company history, the products or services provided, key differentiation factors of the company or the product, the general growth of the industry, competitive information, growth potential and target customers.
It would help if you could include your company marketing strategy, detailed product information, historical information as well as projected growth plans for the company. Apart from that, if you plan to incorporate product or service extensions in the future, you should provide these descriptions within your loan proposal. If possible, geographical expansion plans will help in the proposal.
The next area that needs to be showcased in the proposal would be the credentials and experience of each member of the management team. Impressive credentials will provide assurance to the lender that the company is managed by individuals who are responsible and capable. This is important as having the wrong people managing the company could be detrimental for the business.
In any loan application, historical records are essential to be used in evaluating the performance of a company. As new companies do not yet have these records, the financial records of the owners will be used as the basis of evaluation. Income tax returns forms are also required by lenders. All of these records provided should be the latest copies less than 90 days old, with the exception of the income tax returns form.
If the loan is applied for an existing company in active operations, company financial statements, including profit and loss accounts, balance sheets and the net worth reconciliation record should be included in the loan proposal. Again, all of this information should also be the latest and less than 90 days old. Additionally, a listing of accounts receivables and other short term and long term debt should be attached.
On the other hand, if the loan application is submitted for a new business, a pro-forma balance sheet and profit and loss account should be provided. Apart from that, a cash flow projection for the upcoming year is drafted to indicate the possibility of recovering the debt. This also means that projected revenue, profits, costs incurred and expenditure should be listed out with definite explanations provided as well as a list of assumptions.
If you possess assets that you wish to use as collateral for your loan, details for this should be provided to the lender as well. It is often common for lenders to request for dual sources of repayment in the event that one source is defaulted. This means that if the business owner defaults on his repayments, the collateral can be sold in order to recover debt.
Finally, other documents normally required for a loan application would be items like the article of incorporation, lease agreements, partnership agreements, license, references, etc. As the list of required documentation, information and attachments differs between lenders, it is best to check with the individual lender on their specific information and documents required to be attached with the loan proposal.
The Basics of Borrowing Money
Are you thinking about starting a business but have no money to do it with? Well, you're not alone. This article will tell you the basics of borrowing money.
A loan is money that is borrowed, and has to be paid back along with interest. If the money is borrowed from an institution such as a bank, this is called a commercial loan. Money that is borrowed from a friend or a relative is called a personal loan. The borrower, or debtor, is the business or individual that takes out the loan. The lender, or creditor, is the source from which the money was borrowed. The term, or period, is the time that is specified during which the borrower has to use the money borrowed before he has to repay the loan. The maturity of a loan is when a loan term reaches its end. The Principal is the amount that is borrowed from the lender. When you or your business borrows money, the lender wants to know when they will get their money back. Keep this in mind when you are looking for a lending source.
If the business is not able to repay the loan, the lending source has a right to legally come after assets to recoup it's money. The extent to which you are personally liable depends on the business structure your business is operating under.
If you are approved for a loan, that you will have to make scheduled payments (typically on monthly basis) plus interest. A loan can sometimes be set up as a balloon loan. A balloon loan will typically require smaller initial payments and one lump sum of what was borrowed as the final payment at the end of the term.
Borrowing from Institutions
Business loans generally fall into two main categories: short term and long term loans. A short term loan is a loan that is to be payed back within one year. Examples of short term loans include:
Working capital loans
Accounts receivable loans
Lines of credit
Long term loans are loans that are to be payed back typically from one to seven years. Long term loans are typically used for:
an expansion of a business
the purchase of equipment
real estate
Most business loans that are used for starting a business are long term loans.
When you approach an institution for a business loan, it will be looking at you as the business owner as closely as it will be looking at the business itself. One of the ways lending institutions make money is by lending money and they want to be as sure as possible that they get back their money with the interest owed.
The time between applying for a loan and learning that you have been approved (or disapproved) can vary. If you are disapproved, you may be told almost instantly. If you are approved, it may take a few days though it usually takes longer. It may even take several months to learn whether you or your business has being approved for the loan.
Borrowing from Family and Friends
If you don't want to, or can't get a commercial loan, you can consider getting a private loan from family or friends. This is usually real informal. However, you need to be careful because this can lead to ruined relationships.
If you are getting a private loan, it is in the best interest of the lender to have an agreement put in writing. The written agreement should state the principal, the interest charged and the terms of repayment. This puts the lender in better position either write off the loan on his or her tax return or to legally come after you.
You are free to reprint this only if the article text link is included.
A loan is money that is borrowed, and has to be paid back along with interest. If the money is borrowed from an institution such as a bank, this is called a commercial loan. Money that is borrowed from a friend or a relative is called a personal loan. The borrower, or debtor, is the business or individual that takes out the loan. The lender, or creditor, is the source from which the money was borrowed. The term, or period, is the time that is specified during which the borrower has to use the money borrowed before he has to repay the loan. The maturity of a loan is when a loan term reaches its end. The Principal is the amount that is borrowed from the lender. When you or your business borrows money, the lender wants to know when they will get their money back. Keep this in mind when you are looking for a lending source.
If the business is not able to repay the loan, the lending source has a right to legally come after assets to recoup it's money. The extent to which you are personally liable depends on the business structure your business is operating under.
If you are approved for a loan, that you will have to make scheduled payments (typically on monthly basis) plus interest. A loan can sometimes be set up as a balloon loan. A balloon loan will typically require smaller initial payments and one lump sum of what was borrowed as the final payment at the end of the term.
Borrowing from Institutions
Business loans generally fall into two main categories: short term and long term loans. A short term loan is a loan that is to be payed back within one year. Examples of short term loans include:
Working capital loans
Accounts receivable loans
Lines of credit
Long term loans are loans that are to be payed back typically from one to seven years. Long term loans are typically used for:
an expansion of a business
the purchase of equipment
real estate
Most business loans that are used for starting a business are long term loans.
When you approach an institution for a business loan, it will be looking at you as the business owner as closely as it will be looking at the business itself. One of the ways lending institutions make money is by lending money and they want to be as sure as possible that they get back their money with the interest owed.
The time between applying for a loan and learning that you have been approved (or disapproved) can vary. If you are disapproved, you may be told almost instantly. If you are approved, it may take a few days though it usually takes longer. It may even take several months to learn whether you or your business has being approved for the loan.
Borrowing from Family and Friends
If you don't want to, or can't get a commercial loan, you can consider getting a private loan from family or friends. This is usually real informal. However, you need to be careful because this can lead to ruined relationships.
If you are getting a private loan, it is in the best interest of the lender to have an agreement put in writing. The written agreement should state the principal, the interest charged and the terms of repayment. This puts the lender in better position either write off the loan on his or her tax return or to legally come after you.
You are free to reprint this only if the article text link is included.
9 things you must do to maximize your chances of obtaining a small business loan
To get approval for your small business loan application, you must be able to meet the lending criteria set down. Some organisations are more risk averse than others, and will therefore have more stringent criteria.
To vastly increase your chances of a successful funding application, you will need to present the following information: 1. The reason for the loan. The lender will be looking for something that fits within the normal range and expertise of your business. The amount may cover a number of items, so you will need to cover each.
2. The amount required, and the repayment term of the small business loan you want. (e.g. $10,000 term 5 years, payable quarterly).
3. Details of how you will repay the amount borrowed. For example, “From the increase in profits of reduced running costs of the Whizzbang Go4It”
4. Details of security you will be able to offer to the lender. This will act as reassurance for the lender. If you’re not prepared to put up some aspect of security, then why should they?
5. You will need to include your business plan which will serve to answer essential questions relating to management capabilities, information about the market you operate in. What kind of business you are in etc.
6. 3 Years financial statements. You will need to present quality financial information from your accounting software, preferably signed off by your accountant or tax advisor.
7. Latest Set of Management accounts. Again produced from your accounting software.
8. Accounts receivables (debtors) and payables (creditors) ageing reports.
9. Principals financial statements. – Particularly required if some form of security is necessary.
If you are a new company, the emphasis is going to be on your business plan , and the security (also called collateral) you or your business can provide against the loan.
You must take the time to practice presenting your case to the bank or lender to iron out any glitches. Practice on your colleagues and family (you never know, they might be so impressed, they'll invest or lend!). It may help to role play the lender and come up with as many pointy questions as possible. The more time you take the better your chances will be. (But remember, don’t fall into the analysis paralysis trap!)
To vastly increase your chances of a successful funding application, you will need to present the following information: 1. The reason for the loan. The lender will be looking for something that fits within the normal range and expertise of your business. The amount may cover a number of items, so you will need to cover each.
2. The amount required, and the repayment term of the small business loan you want. (e.g. $10,000 term 5 years, payable quarterly).
3. Details of how you will repay the amount borrowed. For example, “From the increase in profits of reduced running costs of the Whizzbang Go4It”
4. Details of security you will be able to offer to the lender. This will act as reassurance for the lender. If you’re not prepared to put up some aspect of security, then why should they?
5. You will need to include your business plan which will serve to answer essential questions relating to management capabilities, information about the market you operate in. What kind of business you are in etc.
6. 3 Years financial statements. You will need to present quality financial information from your accounting software, preferably signed off by your accountant or tax advisor.
7. Latest Set of Management accounts. Again produced from your accounting software.
8. Accounts receivables (debtors) and payables (creditors) ageing reports.
9. Principals financial statements. – Particularly required if some form of security is necessary.
If you are a new company, the emphasis is going to be on your business plan , and the security (also called collateral) you or your business can provide against the loan.
You must take the time to practice presenting your case to the bank or lender to iron out any glitches. Practice on your colleagues and family (you never know, they might be so impressed, they'll invest or lend!). It may help to role play the lender and come up with as many pointy questions as possible. The more time you take the better your chances will be. (But remember, don’t fall into the analysis paralysis trap!)
Applying for a Business Loan
The process of applying for a business loan is a stringent one as compared to the standard procedures in obtaining a home mortgage loan or a personal loan. This is probably due to the fact that business loans contain a greater risk element as compared to other loans. Therefore, lenders need to exercise greater caution and emphasis when evaluating business loan applications in order to minimize their risk exposure.
With that, lenders evaluate their applicants based on the information that are provided as well as their judgment of the viability and profitability of the business being financed. Thus, business loan applicants will be required to submit a loan proposal along with their applications with the purpose of creating a positive impression upon the lender.
The first element of a loan proposal is an executive summary, providing short descriptions of the type of business and the industry, the purpose and usage of the loan, the proposed repayment conditions as well as the intended loan period. After that, the company information is provided, enriching the reader with the nature of the business, the location of the business, company history, the products or services provided, key differentiation factors of the company or the product, the general growth of the industry, competitive information, growth potential and target customers.
It would help if you could include your company marketing strategy, detailed product information, historical information as well as projected growth plans for the company. Apart from that, if you plan to incorporate product or service extensions in the future, you should provide these descriptions within your loan proposal. If possible, geographical expansion plans will help in the proposal.
The next area that needs to be showcased in the proposal would be the credentials and experience of each member of the management team. Impressive credentials will provide assurance to the lender that the company is managed by individuals who are responsible and capable. This is important as having the wrong people managing the company could be detrimental for the business.
In any loan application, historical records are essential to be used in evaluating the performance of a company. As new companies do not yet have these records, the financial records of the owners will be used as the basis of evaluation. Income tax returns forms are also required by lenders. All of these records provided should be the latest copies less than 90 days old, with the exception of the income tax returns form.
If the loan is applied for an existing company in active operations, company financial statements, including profit and loss accounts, balance sheets and the net worth reconciliation record should be included in the loan proposal. Again, all of this information should also be the latest and less than 90 days old. Additionally, a listing of accounts receivables and other short term and long term debt should be attached.
On the other hand, if the loan application is submitted for a new business, a pro-forma balance sheet and profit and loss account should be provided. Apart from that, a cash flow projection for the upcoming year is drafted to indicate the possibility of recovering the debt. This also means that projected revenue, profits, costs incurred and expenditure should be listed out with definite explanations provided as well as a list of assumptions.
If you possess assets that you wish to use as collateral for your loan, details for this should be provided to the lender as well. It is often common for lenders to request for dual sources of repayment in the event that one source is defaulted. This means that if the business owner defaults on his repayments, the collateral can be sold in order to recover debt.
Finally, other documents normally required for a loan application would be items like the article of incorporation, lease agreements, partnership agreements, license, references, etc. As the list of required documentation, information and attachments differs between lenders, it is best to check with the individual lender on their specific information and documents required to be attached with the loan proposal.
With that, lenders evaluate their applicants based on the information that are provided as well as their judgment of the viability and profitability of the business being financed. Thus, business loan applicants will be required to submit a loan proposal along with their applications with the purpose of creating a positive impression upon the lender.
The first element of a loan proposal is an executive summary, providing short descriptions of the type of business and the industry, the purpose and usage of the loan, the proposed repayment conditions as well as the intended loan period. After that, the company information is provided, enriching the reader with the nature of the business, the location of the business, company history, the products or services provided, key differentiation factors of the company or the product, the general growth of the industry, competitive information, growth potential and target customers.
It would help if you could include your company marketing strategy, detailed product information, historical information as well as projected growth plans for the company. Apart from that, if you plan to incorporate product or service extensions in the future, you should provide these descriptions within your loan proposal. If possible, geographical expansion plans will help in the proposal.
The next area that needs to be showcased in the proposal would be the credentials and experience of each member of the management team. Impressive credentials will provide assurance to the lender that the company is managed by individuals who are responsible and capable. This is important as having the wrong people managing the company could be detrimental for the business.
In any loan application, historical records are essential to be used in evaluating the performance of a company. As new companies do not yet have these records, the financial records of the owners will be used as the basis of evaluation. Income tax returns forms are also required by lenders. All of these records provided should be the latest copies less than 90 days old, with the exception of the income tax returns form.
If the loan is applied for an existing company in active operations, company financial statements, including profit and loss accounts, balance sheets and the net worth reconciliation record should be included in the loan proposal. Again, all of this information should also be the latest and less than 90 days old. Additionally, a listing of accounts receivables and other short term and long term debt should be attached.
On the other hand, if the loan application is submitted for a new business, a pro-forma balance sheet and profit and loss account should be provided. Apart from that, a cash flow projection for the upcoming year is drafted to indicate the possibility of recovering the debt. This also means that projected revenue, profits, costs incurred and expenditure should be listed out with definite explanations provided as well as a list of assumptions.
If you possess assets that you wish to use as collateral for your loan, details for this should be provided to the lender as well. It is often common for lenders to request for dual sources of repayment in the event that one source is defaulted. This means that if the business owner defaults on his repayments, the collateral can be sold in order to recover debt.
Finally, other documents normally required for a loan application would be items like the article of incorporation, lease agreements, partnership agreements, license, references, etc. As the list of required documentation, information and attachments differs between lenders, it is best to check with the individual lender on their specific information and documents required to be attached with the loan proposal.
Alternative Venture Finance : Federal Grants and Loans
While most companies seeking venture capital initially think about angel investors and venture capitalists, a large alternative source of financing is federal grants and loans. The two largest federal grant programs are run by the Small Business Administration (SBA), and by Small Business Investment Companies (SBICs).
An SBA loan, regardless of whether it is a direct loan from the SBA, or, as is more common, a bank loan guaranteed by the SBA, is essentially a bank loan. The benefit of it versus a traditional bank loan is the rate. SBA rates are typically much less than traditional business loan rates.
In most cases, in a guaranteed SBA bank loan, the SBA guarantees 90 percent of the loan will be repaid to the bank. As such, banks are at much less risk than in most other loans, and are a bit more flexible with regards to who they offer these loans. However, the SBA usually requires the founders of the company to personally guarantee the loans, which makes them risky should the venture collapse.
Alternatively, Small Business Investment Companies (SBICs) are privately organized corporations that are licensed and regulated by the SBA. Small or emerging businesses which qualify for assistance from the SBIC program can receive equity capital and/or long-term loans from these companies. Essentially, these companies provide their own capital, which is supplemented by federal funds, to the companies they fund.
Interestingly, U.S. taxpayers benefits from the SBIC program as tax revenues generated from successful SBIC investments have more than covered the cost of the program. Likewise the program has created hundreds of thousands of jobs.
In summary, SBA and SBIC financing are viable alternatives to financing from angel investors and venture capitalists and should be considered in the capital raising process. Similarly to angel and VC financing, companies seeking SBA and SBIC financing need a strong management team and value proposition, and a highly professional and compelling business plan in order to raise the capital they need.
An SBA loan, regardless of whether it is a direct loan from the SBA, or, as is more common, a bank loan guaranteed by the SBA, is essentially a bank loan. The benefit of it versus a traditional bank loan is the rate. SBA rates are typically much less than traditional business loan rates.
In most cases, in a guaranteed SBA bank loan, the SBA guarantees 90 percent of the loan will be repaid to the bank. As such, banks are at much less risk than in most other loans, and are a bit more flexible with regards to who they offer these loans. However, the SBA usually requires the founders of the company to personally guarantee the loans, which makes them risky should the venture collapse.
Alternatively, Small Business Investment Companies (SBICs) are privately organized corporations that are licensed and regulated by the SBA. Small or emerging businesses which qualify for assistance from the SBIC program can receive equity capital and/or long-term loans from these companies. Essentially, these companies provide their own capital, which is supplemented by federal funds, to the companies they fund.
Interestingly, U.S. taxpayers benefits from the SBIC program as tax revenues generated from successful SBIC investments have more than covered the cost of the program. Likewise the program has created hundreds of thousands of jobs.
In summary, SBA and SBIC financing are viable alternatives to financing from angel investors and venture capitalists and should be considered in the capital raising process. Similarly to angel and VC financing, companies seeking SBA and SBIC financing need a strong management team and value proposition, and a highly professional and compelling business plan in order to raise the capital they need.
Financing and Refinancing Programs are Plentiful
As cliché as it may sound, the “Money makes the world go round” adage still holds true. Especially nowadays when everything and anything tangible or intangible can be bought with one’s dollars, money is apparently of extreme importance. What if you want to buy a home or start your own business? How do you go about your financing endeavor? Read on for the best avenue that will “show you the money!”
Coupled with management and planning skills, financing is what will aid one in venturing into business if he/she wishes to make it grow and get the desired profit. Many financial institutions are offering various types of financing that may assist in tackling this matter.To better understand the wide array of financing options for your money needs, here is a rundown of the types of financing that you can avail.
1. Revolving Line of Credit
This is the most usual and most low-cost kind of business loan for small and medium-sized businesses. A revolving line of credit will fund a company’s working capital. This working capital typically consists of the sum of present assets minus the present liabilities.
2. Non-Capital Goods Financing
This is a type of financing that is for short-term deals. These deals are with settlement terms of about a year or may be less for buying goods, i.e., construction materials, products, and other non-capital stuff.
3. Project Finance
Financial companies offers financing for projects that need longer than 5 years repayment terms. Depending on the predicted cash flows and kind of revenue that a project is about to generate, this kind of financing undergoes extensive analysis.
4. Capital Equipment Financing
Extension of funding plans is possible if one chooses this financing. As the transaction requires it to be, the extension can go from 1 to 10 years.
5. Subordinated Mezzanine Debt
This is one of the more expensive types of financing compared to revolving line of credit and term debt. Lenders usually ask for equity like warrants to add on their earnings from interests.
6. Equity Financing
This form of financing is for investors that are brave enough to face major risks that this kind of financing brings. But with that warning of a great risk comes the expectation of high returns on the part of the equity investor.
7. Piggyback Financing
This program caters to homebuyers who avoid the required mortgage insurance when the mortgage is in excess of the 80 percent of the purchase price. Two mortgages with possible varying costs are available for the borrower with this type of financing.
8. Creative Financing
This option is when the buyer of the house is with a third-party lending institution, i.e., a bank or a loan company.
9. Owner Financing
This is when the property owner or seller finances the buyer.
These are some of the most popular financing possibilities one can acquire for his/her business or any money-involving activity. What would further serve you best in your decision making on which to stick to is considering payment terms you can afford and the right timing when applying for the funding plan.
With the many options mentioned, you are more armed with the several financing choices that will help you pull it off with yourbusiness, home buying or any endeavor that requires financial aid.
Coupled with management and planning skills, financing is what will aid one in venturing into business if he/she wishes to make it grow and get the desired profit. Many financial institutions are offering various types of financing that may assist in tackling this matter.To better understand the wide array of financing options for your money needs, here is a rundown of the types of financing that you can avail.
1. Revolving Line of Credit
This is the most usual and most low-cost kind of business loan for small and medium-sized businesses. A revolving line of credit will fund a company’s working capital. This working capital typically consists of the sum of present assets minus the present liabilities.
2. Non-Capital Goods Financing
This is a type of financing that is for short-term deals. These deals are with settlement terms of about a year or may be less for buying goods, i.e., construction materials, products, and other non-capital stuff.
3. Project Finance
Financial companies offers financing for projects that need longer than 5 years repayment terms. Depending on the predicted cash flows and kind of revenue that a project is about to generate, this kind of financing undergoes extensive analysis.
4. Capital Equipment Financing
Extension of funding plans is possible if one chooses this financing. As the transaction requires it to be, the extension can go from 1 to 10 years.
5. Subordinated Mezzanine Debt
This is one of the more expensive types of financing compared to revolving line of credit and term debt. Lenders usually ask for equity like warrants to add on their earnings from interests.
6. Equity Financing
This form of financing is for investors that are brave enough to face major risks that this kind of financing brings. But with that warning of a great risk comes the expectation of high returns on the part of the equity investor.
7. Piggyback Financing
This program caters to homebuyers who avoid the required mortgage insurance when the mortgage is in excess of the 80 percent of the purchase price. Two mortgages with possible varying costs are available for the borrower with this type of financing.
8. Creative Financing
This option is when the buyer of the house is with a third-party lending institution, i.e., a bank or a loan company.
9. Owner Financing
This is when the property owner or seller finances the buyer.
These are some of the most popular financing possibilities one can acquire for his/her business or any money-involving activity. What would further serve you best in your decision making on which to stick to is considering payment terms you can afford and the right timing when applying for the funding plan.
With the many options mentioned, you are more armed with the several financing choices that will help you pull it off with yourbusiness, home buying or any endeavor that requires financial aid.
How to Choose a Bank for your Home Business
You should thoroughly consider your business needs when selecting a financial institution or bank for your small/home business. You may want to consider the following points:
- The types of products and services that are offered.
- The bank's criteria for qualifying for a loan.
- The minimum balances for accounts, interest rates and charges for account services.
- Location and Access to ATMs
- Online Banking Services
One bank may specialize in home loans or auto loans while another may focus on commercial loans for businesses. Some banks may only offer basic deposit accounts while others have lock box services, sweep accounts, and even online banking! It's very important to evaluate your business needs before you select your banker.Here are some of the things that your banker may be able to help you with:
- Help you with the cash management needs of your business.
- Offer investment products of varying maturities or risks.
- Provide advice regarding what it will take to qualify for the loan that best meets your needs.
- Provide special loan programs for small businesses, including SBA loan programs and other government-guaranteed or agency loans.
- Assist you with finding financial information on your industry.
So compare different banks in order to find the one that will serve your business's needs and will also provide support and assistance during the infancy stage of your business. Selecting a bank that you can work with will be especially important as your business grows.
Start shopping around by gathering information to help you make this important selection. Compare interest rates on deposit accounts and basic consumer loans (most business loans are negotiated, so the rates won't be posted at the banking center). Also, look carefully at the charges for services. Tell them about your business and the form of organization so that they can tell you what special products and services or restrictions might apply.
Before selecting a bank, be sure to have a good understanding of your own business needs, and what you need from your bank. If you know what you will need from a bank, it will be much easier to evaluate and compare between various services. Remember, it is a good idea to establish a relationship with a banker, before you need money. The right banker will be someone that understands the needs of emerging and growing businesses. They will be interested in your business dreams and will help you achieve them.
- The types of products and services that are offered.
- The bank's criteria for qualifying for a loan.
- The minimum balances for accounts, interest rates and charges for account services.
- Location and Access to ATMs
- Online Banking Services
One bank may specialize in home loans or auto loans while another may focus on commercial loans for businesses. Some banks may only offer basic deposit accounts while others have lock box services, sweep accounts, and even online banking! It's very important to evaluate your business needs before you select your banker.Here are some of the things that your banker may be able to help you with:
- Help you with the cash management needs of your business.
- Offer investment products of varying maturities or risks.
- Provide advice regarding what it will take to qualify for the loan that best meets your needs.
- Provide special loan programs for small businesses, including SBA loan programs and other government-guaranteed or agency loans.
- Assist you with finding financial information on your industry.
So compare different banks in order to find the one that will serve your business's needs and will also provide support and assistance during the infancy stage of your business. Selecting a bank that you can work with will be especially important as your business grows.
Start shopping around by gathering information to help you make this important selection. Compare interest rates on deposit accounts and basic consumer loans (most business loans are negotiated, so the rates won't be posted at the banking center). Also, look carefully at the charges for services. Tell them about your business and the form of organization so that they can tell you what special products and services or restrictions might apply.
Before selecting a bank, be sure to have a good understanding of your own business needs, and what you need from your bank. If you know what you will need from a bank, it will be much easier to evaluate and compare between various services. Remember, it is a good idea to establish a relationship with a banker, before you need money. The right banker will be someone that understands the needs of emerging and growing businesses. They will be interested in your business dreams and will help you achieve them.
NetSol, Chinese bank sign contract
Wednesday, July 29, 2009
LAHORE: NetSol Technologies Ltd and China Minsheng Bank Corp Ltd have signed a contract for NetSol Technologies Financial Suite of leasing and finance products. The implementation will include NetSol Financial Suite s (NFS) Credit Application Processing (CAP) and Contract Management System (CMS) for retail business operations. The NetSol implementation with MSFL incorporates product licenses as well as customization, implementation, and data migration services. According to a statement issued here, Executive Vice President of Minsheng Financial Leasing, Ms Wong said they made the choice after careful evaluation of globally leading IT services vendors providing software in the finance and leasing space. We selected NetSol based on their impressive product strength and presence in the Chinese market. As we embark on this long-term partnership, MSFL is advancing its objective of becoming the largest finance and leasing company in China, she said, adding that NetSol s Financial Suite of products stand as a critical supporting factor in reaching this goal.
Dollar Rebounds Versus Euro on Reports Speculations
Euro Down as Risk Aversion Returns
World Stocks Plummet After Global Banks Take Action in Bid to Avoid Recession
Saturday, July 4, 2009
Saviour: The Bank of England has acted as a lender of last resort to Northern Rock
Change of heart: Mervyn King
Stocks worldwide have plummeted in the wake of yesterday's unprecedented decision by leading central banks to pump billions into money markets in a bid to avoid a worldwide recession.
The Bank of England has joined the U.S. Federal Reserve, the European Central Bank and their counterparts in Canada and Switzerland to pump at least £55billion into money markets.
However this morning the FTSE 100 fell more than 70 points to 6458.7 and the markets in Japan, Hong Kong and Taiwan all suffered nervous starts to the day's trading.
Investors are worried that the shock decision by the world's banks could mean that the credit crisis is likely to get worse.
It is hoped that the loans - £ 22.7billion of which will go to the UK - will help make lending between banks easier, avoiding any repeat of the Northern Rock crisis.
The Rock ran into trouble because the current economic climate has encouraged banks to hoard their cash, rather than lend it to each other.
Northern Rock could therefore not borrow the money it needed from other banks, and was forced to go to the Bank of England as a "lender of last resort" at punitive rates.
The central banks' decision is designed to stop other lenders getting into the same situation - and to avoid panic among both consumers and the City.
It came amid signs that Gordon Brown is bracing himself for a slowdown that could dent his credentials as the architect of Labour's record of economic stability.
A Bank of England spokesman said: "This co-ordinated set of actions is a response to stresses in the inter-bank markets, which have increased in recent weeks, reflecting sentiment about the global financial sector.
"The actions demonstrate that central banks are working together to try to forestall any prospective sharp tightening in credit conditions."
A source at the Bank added that the latest move is not designed to prop up any individual lender, but is rather aimed at alleviating pressures in the overall market.
This is significant, because the Bank is worried that City observers could interpret the massive loan as a covert way of getting cash to a particular lender which has got itself in trouble.
The co-ordinated move took the City by surprise, fuelling fears that the global credit crunch is threatening the economic health of the world's major powers.
With the housing market in turmoil, it was seen as a pre-emptive strike to prevent a worldwide financial meltdown on the back of the American "sub-prime" mortgage crisis.
Bankers hope it will make mortgages easier to arrange amid signs that credit is drying up on the High Street.
Downing Street welcomed the move as an example of the kind of "global co-operation and preventative action" that Mr Brown has called for in the past.
It came only a week after the Bank of England cut interest rates by a quarter point.
The Federal Reserve also reduced U.S. rates by a quarter point - the latest in a series of aggressive cuts.
Yesterday's announcement marked the first joint international effort to support the markets since the September 11 terror attacks.
Observers said the scale and nature of the cash injection is unprecedented.
It underlines the parlous state of the global banking system, where some lenders have been brought to the brink of collapse because of the problems in America's mortgage market.
Experts estimate the record defaults on so-called sub-prime loans advanced to Americans with poor credit histories could lead to up to £200billion of losses at global banks.
Giants such as Wall Street's Citigroup and Switzerland's UBS have gone cap in hand to Asian and Middle Eastern investors asking for cash to support their businesses after racking up tens of billions in losses.
Britain has been far from immune, with the run on Northern Rock leading the Bank of England to hand over billions of pounds of taxpayers' money to keep it afloat.
The Bank will next week offer £11.35billion to selected commercial lenders with a UK presence.
A similar auction for another £11.35billion will take place in the New Year.
Banks will "bid" for the cash and will have to pay a premium rate.
Major British-based lenders will also be able to apply for help from the other central banks.
The loans will last for three months and the Bank could step in again if the cash injection fails to have the desired effect.
The banks will still have to provide collateral and meet certain conditions in order to get help, and only those judged to be in sound financial condition will be able to participate.
The Bank of England held a similar auction for three-month loans in September.
However, there were no bidders, because banks were worried that the stigma attached to the auction would reduce confidence in them so soon after the run on Northern Rock.
That auction had a punitive minimum rate set at one per cent above the Bank's base rate, whereas the new auctions do not have a minimum rate.
The Bank has been accused of being slow off the mark in dealing with the stress in financial markets, and some experts described its decision to participate in the global loan scheme as another Uturn from its hardline stance.
Governor Mervyn King has been reluctant to rescue big banks which are in trouble because of their foolish investments - but with the world markets under increasing pressure, he has been forced to act.
The British Bankers' Association welcomed the move, calling it a "constructive and imaginative initiative".
It added: "It is also importantly an international solution to an international issue."
Julian Jessop, of analysts Capital Economics, said the move is welcome, but that further interest rate cuts would be needed to have a real effect.
He added: "Central banks have combined to reduce the risk that the credit crunch tips the most vulnerable economies into recession. But even if these measures are successful, the world economy is still facing a marked U.S-led slowdown in 2008.
"It does not resolve the more fundamental weaknesses in the world's major economies.
"Official interest rates will still have to be cut significantly further in the U.S. and the UK, and are likely to fall earlier than generally expected in the eurozone too."
BANKS
Sunday, April 19, 2009
Welcome to the ultimate source of authentic and reliable information about the banks of the world on the net. The links in this directory will guide you to the official sites of the banks you are looking for. Click on the respective alphabet to begin your search for a particular bank or scroll down to the appropriate section beginning with that alphabet. Once you click on the link, it will directly take you to the official homepage of the particular bank. In case of non-availability of of a particular official site, we have screened a number of sites and selected the most informative site on the subject.
We have made sincere efforts to list as many links of the banks world over as we can. The links provided here are most reliable and will help you get all the facts about the banks of the world. However, if you do not find the official site of the bank you are looking for, then use the feedback link at the bottom of this page to apprise us of the same. We will leave no stones unturned to add the missing link of the bank in our directory as soon as possible.
We have made sincere efforts to list as many links of the banks world over as we can. The links provided here are most reliable and will help you get all the facts about the banks of the world. However, if you do not find the official site of the bank you are looking for, then use the feedback link at the bottom of this page to apprise us of the same. We will leave no stones unturned to add the missing link of the bank in our directory as soon as possible.
| Further are the details of different products that we offer: | |||||||||||||||||||||||||||||||||||||||||||||||||
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| Why Clients Should Choose Us? | |||||||||||||||||||||||||||||||||||||||||||||||||
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London Protesters Threaten Bankers, Evoke Executions
Tuesday, April 14, 2009
Mark Barrett, a professional tour guide, spent last Saturday painting Barack Obama’s election catchphrase “yes we can” on a banner that protesters will carry as they try to occupy London’s financial district April 1.
Barrett is helping organize a protest outside the Bank of England, one of several called to express anger against banks and bankers and mark the arrival in London of leaders of the Group of 20 nations -- including Obama, now president.
“We want a very English revolution,” he says from a café near his home in north London. “The first English revolution in 1649 was about winning sovereignty for parliament over the king.” Now, protesters are campaigning for sovereignty for everyone.
All police leave has been canceled to increase security and financial workers have been told to wear casual clothes amid warnings that protests could turn violent.
“There are a lot of hacked-off people,” said Mike Bowron, commander of the City of London Police. “There’s potential for disruption and certain individual groups see violence as their raison d’etre.”
The global economic slump has raised unemployment to more than 2 million in the U.K., with more people joining jobless rolls last month than at any time since 1971. The economy shrank 1.6 percent in the fourth quarter, the most since 1980, and there is growing anger at the more than 40 billion pounds ($58 billion) the government has injected into ailing banks while insuring 585 billion pounds more in risky assets.
Beheading Charles I
Class War, an anarchist newspaper, has produced a special edition to promote the protest with an image of former Royal Bank of Scotland Group Plc CEO Fred Goodwin, whose house was vandalized this week, on a guillotine under the headline “Ready to Riot.” Another shows people dancing around a fire with the slogan “How to keep warm in the credit crunch -- Burn a Banker!” Public anger erupted at Goodwin’s 703,000 pounds annual pension after RBS was bailed out by the government.
The English Revolution culminated with the beheading of Charles I in 1649, ending the so-called divine right of kings in England. Today’s protesters say they draw inspiration from 17th century radicalism.
Four marches will converge on the Bank of England at midday on April 1 for a protest the organizers call “Financial Fools Day.” At the same time, there are plans for a blockade of the European Climate Exchange, in Bishopsgate, to protest against the market in carbon emissions.
Clog Up the Roads
“There’s an avowed intention on their behalf on the 1st of April to stop the City either by just clogging up the roads and preventing people getting into work or, if they’re allowed to, getting into some of those institutions,” said Commander Bob Broadhurst of the Metropolitan Police, who is in charge of the policing operation.
“What we’re seeing is unprecedented planning amongst protest groups,” he told reporters on March 21. “There are some clever, innovative people with lots of ideas.”
Police, who are detailed to provide security for the world leaders attending the April 2 G20 summit at the Excel Conference Centre in east London, will also have to deal with a labor union-organized protest march to Hyde Park tomorrow, demonstrations at the conference center itself and an anti-war march on the U.S. Embassy.
Around 10,500 officers will be available during the week and policing costs will be around 7.2 million pounds, Broadhurst said.
Tighter Security
City of London authorities are advising businesses to beef up security and protect building entrances and loading bays to thwart protesters who may attempt to break into buildings. The City district has around 300,000 workers, mostly in financial services, and contains JP Morgan Chase & Co.’s and Merrill Lynch & Co.’s European headquarters as well as large buildings of RBS and Deutsche Bank AG.
The organizers of the demonstrations in the financial district, who are expecting “several thousand” people to turn up, say they want them to be non-violent protests.
“We are organizing a peaceful creative demonstration with music, a carnival, parades and theater,” Barrett said. “I’ll be amazed if some individuals don’t act in ways considered to be violent, but it’s not something organizers are encouraging.”
Stewards will tell protesters to sit down if violence breaks out to show that it is only a minority involved, Barrett said. “We see the state and the finance system as being the violent part of this in the way that economic policy affects people around the world, dislocates them from the land and damages the environment,” he said.
Climate Exchange
The group planning to protest at the Climate Exchange say they will arrive outside its building at 62 Bishopsgate on April 1, pitch tents, string up bunting and set up a “climate camp,” which they expect to block the road. They hope to stay for 24 hours and there will be workshops, games and a farmers market, spokeswoman Mel Evans said.
“We want a space to discuss these issues and to take action to see some changes being made for the benefit of people across the world, not just a couple of bankers,” Evans said.
Sara Stahl, the exchange’s marketing manager, said it was company policy not to comment on the protests.
Spoof FT
A group of protesters have produced a spoof edition of the Financial Times newspaper, which was handed out at railway stations today. It imagines the headlines in 2020 and how the events of the G20 summit will be viewed in the future.
Chris Knight, a professor of anthropology at the University of East London, was suspended from his job yesterday after he told the British Broadcasting Corp. that “we’re going to be hanging a lot of people from lampposts” on April 1 “and I can only say let’s hope they are just effigies.”
Knight was suspended “pending investigation,” the university said. Knight didn’t immediately respond to an e-mail message.
The Bank of England, founded in 1694, has been the target of demonstrators before, according to the Bank’s Web site. In 1780 the bank, known as the Old Lady of Threadneedle Street, was provided with a military guard after it was threatened by a mob during anti-government riots. This was only discontinued in 1973.
There is also a history of protest at the Excel Centre, where the G20 leaders will meet, and campaigners believe it was chosen in place of the palaces and historic buildings of central London because it is easier to protect.
“It’s privately owned land and it’s very, very easy to close off so it’s easy to impose the sort of security which you can’t in central London,” said Kaye Stearman, of the Campaign Against the Arms Trade, which opposes the arms fairs held at the center. “It’s very difficult to protest.”
Some campaigners are traveling from mainland Europe for the demonstrations and, after London, plan to head for Strasbourg, France, and the North Atlantic Treaty Organization conference. “It’s the beginning of the season,” Barrett said.
Barrett is helping organize a protest outside the Bank of England, one of several called to express anger against banks and bankers and mark the arrival in London of leaders of the Group of 20 nations -- including Obama, now president.
“We want a very English revolution,” he says from a café near his home in north London. “The first English revolution in 1649 was about winning sovereignty for parliament over the king.” Now, protesters are campaigning for sovereignty for everyone.
All police leave has been canceled to increase security and financial workers have been told to wear casual clothes amid warnings that protests could turn violent.
“There are a lot of hacked-off people,” said Mike Bowron, commander of the City of London Police. “There’s potential for disruption and certain individual groups see violence as their raison d’etre.”
The global economic slump has raised unemployment to more than 2 million in the U.K., with more people joining jobless rolls last month than at any time since 1971. The economy shrank 1.6 percent in the fourth quarter, the most since 1980, and there is growing anger at the more than 40 billion pounds ($58 billion) the government has injected into ailing banks while insuring 585 billion pounds more in risky assets.
Beheading Charles I
Class War, an anarchist newspaper, has produced a special edition to promote the protest with an image of former Royal Bank of Scotland Group Plc CEO Fred Goodwin, whose house was vandalized this week, on a guillotine under the headline “Ready to Riot.” Another shows people dancing around a fire with the slogan “How to keep warm in the credit crunch -- Burn a Banker!” Public anger erupted at Goodwin’s 703,000 pounds annual pension after RBS was bailed out by the government.
The English Revolution culminated with the beheading of Charles I in 1649, ending the so-called divine right of kings in England. Today’s protesters say they draw inspiration from 17th century radicalism.
Four marches will converge on the Bank of England at midday on April 1 for a protest the organizers call “Financial Fools Day.” At the same time, there are plans for a blockade of the European Climate Exchange, in Bishopsgate, to protest against the market in carbon emissions.
Clog Up the Roads
“There’s an avowed intention on their behalf on the 1st of April to stop the City either by just clogging up the roads and preventing people getting into work or, if they’re allowed to, getting into some of those institutions,” said Commander Bob Broadhurst of the Metropolitan Police, who is in charge of the policing operation.
“What we’re seeing is unprecedented planning amongst protest groups,” he told reporters on March 21. “There are some clever, innovative people with lots of ideas.”
Police, who are detailed to provide security for the world leaders attending the April 2 G20 summit at the Excel Conference Centre in east London, will also have to deal with a labor union-organized protest march to Hyde Park tomorrow, demonstrations at the conference center itself and an anti-war march on the U.S. Embassy.
Around 10,500 officers will be available during the week and policing costs will be around 7.2 million pounds, Broadhurst said.
Tighter Security
City of London authorities are advising businesses to beef up security and protect building entrances and loading bays to thwart protesters who may attempt to break into buildings. The City district has around 300,000 workers, mostly in financial services, and contains JP Morgan Chase & Co.’s and Merrill Lynch & Co.’s European headquarters as well as large buildings of RBS and Deutsche Bank AG.
The organizers of the demonstrations in the financial district, who are expecting “several thousand” people to turn up, say they want them to be non-violent protests.
“We are organizing a peaceful creative demonstration with music, a carnival, parades and theater,” Barrett said. “I’ll be amazed if some individuals don’t act in ways considered to be violent, but it’s not something organizers are encouraging.”
Stewards will tell protesters to sit down if violence breaks out to show that it is only a minority involved, Barrett said. “We see the state and the finance system as being the violent part of this in the way that economic policy affects people around the world, dislocates them from the land and damages the environment,” he said.
Climate Exchange
The group planning to protest at the Climate Exchange say they will arrive outside its building at 62 Bishopsgate on April 1, pitch tents, string up bunting and set up a “climate camp,” which they expect to block the road. They hope to stay for 24 hours and there will be workshops, games and a farmers market, spokeswoman Mel Evans said.
“We want a space to discuss these issues and to take action to see some changes being made for the benefit of people across the world, not just a couple of bankers,” Evans said.
Sara Stahl, the exchange’s marketing manager, said it was company policy not to comment on the protests.
Spoof FT
A group of protesters have produced a spoof edition of the Financial Times newspaper, which was handed out at railway stations today. It imagines the headlines in 2020 and how the events of the G20 summit will be viewed in the future.
Chris Knight, a professor of anthropology at the University of East London, was suspended from his job yesterday after he told the British Broadcasting Corp. that “we’re going to be hanging a lot of people from lampposts” on April 1 “and I can only say let’s hope they are just effigies.”
Knight was suspended “pending investigation,” the university said. Knight didn’t immediately respond to an e-mail message.
The Bank of England, founded in 1694, has been the target of demonstrators before, according to the Bank’s Web site. In 1780 the bank, known as the Old Lady of Threadneedle Street, was provided with a military guard after it was threatened by a mob during anti-government riots. This was only discontinued in 1973.
There is also a history of protest at the Excel Centre, where the G20 leaders will meet, and campaigners believe it was chosen in place of the palaces and historic buildings of central London because it is easier to protect.
“It’s privately owned land and it’s very, very easy to close off so it’s easy to impose the sort of security which you can’t in central London,” said Kaye Stearman, of the Campaign Against the Arms Trade, which opposes the arms fairs held at the center. “It’s very difficult to protest.”
Some campaigners are traveling from mainland Europe for the demonstrations and, after London, plan to head for Strasbourg, France, and the North Atlantic Treaty Organization conference. “It’s the beginning of the season,” Barrett said.
Inside Obama's bank CEOs meeting
Sunday, April 12, 2009
The bankers struggled to make themselves clear to the president of the United States.
Arrayed around a long mahogany table in the White House state dining room last week, the CEOs of the most powerful financial institutions in the world offered several explanations for paying high salaries to their employees ? and, by extension, to themselves.
?These are complicated companies,? one CEO said. Offered another: ?We?re competing for talent on an international market.?
But President Barack Obama wasn?t in a mood to hear them out. He stopped the conversation and offered a blunt reminder of the public?s reaction to such explanations. ?Be careful how you make those statements, gentlemen. The public isn?t buying that.?
?My administration,? the president added, ?is the only thing between you and the pitchforks.?
The fresh details of the meeting ? some never before revealed ? come from an account provided to POLITICO by one of the participants. A second source inside the meeting confirmed the details, and two other sources familiar with the meeting offered additional information.
The accounts demonstrate that despite the public comments on both sides that the meeting was cordial, the tone in the room was in fact one of mutual wariness. The titans of finance ? men used to being the most powerful man in almost any room ? sized up a new president who made clear in ways big and small that he expected them to change their ways.
There were signs from the outset that this was a business event, not a social gathering. At each place around the table sat a single glass of water. No ice. For those who finished their glass, no refills were offered. There was no group photograph taken of the CEOs with the president, which typically happens at ceremonial White House gatherings but not at serious strategy sessions.
?The only way they could have sent a more Spartan message is if they had served bread along with the water,? says a person who attended the meeting. ?The signal from Obama?s body language and demeanor was, ?I?m the president, and you?re not.??
According to the accounts of sources inside the room, President Obama told the CEOs exactly what he expects from them, and pushed back forcefully when they attempted to defend Wall Street?s legendarily high-paying ways.
Arrayed around a long mahogany table in the White House state dining room last week, the CEOs of the most powerful financial institutions in the world offered several explanations for paying high salaries to their employees ? and, by extension, to themselves.
?These are complicated companies,? one CEO said. Offered another: ?We?re competing for talent on an international market.?
But President Barack Obama wasn?t in a mood to hear them out. He stopped the conversation and offered a blunt reminder of the public?s reaction to such explanations. ?Be careful how you make those statements, gentlemen. The public isn?t buying that.?
?My administration,? the president added, ?is the only thing between you and the pitchforks.?
The fresh details of the meeting ? some never before revealed ? come from an account provided to POLITICO by one of the participants. A second source inside the meeting confirmed the details, and two other sources familiar with the meeting offered additional information.
The accounts demonstrate that despite the public comments on both sides that the meeting was cordial, the tone in the room was in fact one of mutual wariness. The titans of finance ? men used to being the most powerful man in almost any room ? sized up a new president who made clear in ways big and small that he expected them to change their ways.
There were signs from the outset that this was a business event, not a social gathering. At each place around the table sat a single glass of water. No ice. For those who finished their glass, no refills were offered. There was no group photograph taken of the CEOs with the president, which typically happens at ceremonial White House gatherings but not at serious strategy sessions.
?The only way they could have sent a more Spartan message is if they had served bread along with the water,? says a person who attended the meeting. ?The signal from Obama?s body language and demeanor was, ?I?m the president, and you?re not.??
According to the accounts of sources inside the room, President Obama told the CEOs exactly what he expects from them, and pushed back forcefully when they attempted to defend Wall Street?s legendarily high-paying ways.
Bank Creditors Still Sitting Pretty
Saturday, April 11, 2009
NEW YORK (AP) -- American taxpayers and stock owners have taken it on the chin in this financial crisis. The same can't be said of bondholders who lent money to the most troubled banks.
The Obama administration is now ordering General Motors Corp.'s creditors to make sacrifices to save the ailing automaker. Yet bondholders of financial companies such as Citigroup Inc. and Bank of America Corp. so far have been mostly left off the hook, even though the government has given the banks billions of dollars in bailout money.
Many those bondholders, in fact, are still profiting from their investments so long as they haven't had to sell, while the rest of us deal with vanishing wealth.
"The sum total of the policy responses to this crisis has been to defend the bondholders of distressed financial institutions at the public expense," said John Hussman, who runs an investment firm in Ellicott City, Md.
Hussman is among critics who say bank bondholders shouldn't be shielded from all that has gone wrong in the past two years. "When one lends money to a financial institution, one also assumes the risk and responsibility of bearing the losses," Hussman observed.
The White House has been sending out the same message as it turns up the heat on GM's creditors. In addition to forcing CEO Rick Wagoner to resign, Obama administration officials told GM bondholders over the last week they must make concessions or else the automaker will be headed for a bankruptcy reorganization that likely would diminish the value of their holdings.
Creditors of GM, which has received $13.4 billion in federal loans, had been balking at restructuring their debt, betting the government wouldn't dare force the giant automaker into bankruptcy. But White House economic adviser Austan Goolsbee called their bluff: "They're going to have to make some sacrifices," he said in an interview on CNBC.
Too bad bank creditors aren't under the same pressure. They're still living in a financial world of the past, where corporate bond investors -- whether they be individuals, pension plans or hedge funds -- loan companies money and get regular interest payments. If they keep the investment until it matures, they reclaim their principal.
For example, investors who took part in a $1 billion 30-year bond offering by Citigroup in 2002 are still being paid a 6.625 percent yearly return on each $1,000 invested and are scheduled to be paid back in full when the bonds mature in 2032. If they sold now, they would get about half that value since bonds of that vintage are currently trading at around 56 cents on the dollar.
Federal officials have been reluctant to force any changes to the terms of bank debt. That's because they fear setting off another global financial panic -- much like what happened after the collapse of investment bank Lehman Brothers last September -- by suddenly altering bondholder agreements.
Bank creditors also are harder to push around. If they're forced to take haircuts on their investments they could threaten to close off future lending to banks, cutting off a vital supply of oxygen to financial service providers who depend heavily on debt to fund their operations.
Consider that about 20 percent of the $12.5 trillion in liabilities on bank balance sheets at the end of 2008 came from corporate bonds and other debt vehicles, according to data from the Federal Deposit Insurance Corp.
At a company like Citigroup, about $500 billion of its nearly $1.8 trillion in liabilities comes from debt to the company's bondholders. Citigroup has received $45 billion in rescue funds from the federal government.
That doesn't mean bank creditors couldn't take action on their own, say, offering to restructure the debt of the most distressed companies in order to help them stay alive.
If those investors are willing to convert some of their debt into equity, the effect could be huge. That could encourage banks to lend more by reducing the claims debtholders have on their capital.
It's the same thing Washington wants from GM's bondholders. Too bad we can't count on the same from bank creditors.
Rachel Beck is the national business columnist for The Associated Press. Write to her at rbeck(at)ap.org
The Obama administration is now ordering General Motors Corp.'s creditors to make sacrifices to save the ailing automaker. Yet bondholders of financial companies such as Citigroup Inc. and Bank of America Corp. so far have been mostly left off the hook, even though the government has given the banks billions of dollars in bailout money.
Many those bondholders, in fact, are still profiting from their investments so long as they haven't had to sell, while the rest of us deal with vanishing wealth.
"The sum total of the policy responses to this crisis has been to defend the bondholders of distressed financial institutions at the public expense," said John Hussman, who runs an investment firm in Ellicott City, Md.
Hussman is among critics who say bank bondholders shouldn't be shielded from all that has gone wrong in the past two years. "When one lends money to a financial institution, one also assumes the risk and responsibility of bearing the losses," Hussman observed.
The White House has been sending out the same message as it turns up the heat on GM's creditors. In addition to forcing CEO Rick Wagoner to resign, Obama administration officials told GM bondholders over the last week they must make concessions or else the automaker will be headed for a bankruptcy reorganization that likely would diminish the value of their holdings.
Creditors of GM, which has received $13.4 billion in federal loans, had been balking at restructuring their debt, betting the government wouldn't dare force the giant automaker into bankruptcy. But White House economic adviser Austan Goolsbee called their bluff: "They're going to have to make some sacrifices," he said in an interview on CNBC.
Too bad bank creditors aren't under the same pressure. They're still living in a financial world of the past, where corporate bond investors -- whether they be individuals, pension plans or hedge funds -- loan companies money and get regular interest payments. If they keep the investment until it matures, they reclaim their principal.
For example, investors who took part in a $1 billion 30-year bond offering by Citigroup in 2002 are still being paid a 6.625 percent yearly return on each $1,000 invested and are scheduled to be paid back in full when the bonds mature in 2032. If they sold now, they would get about half that value since bonds of that vintage are currently trading at around 56 cents on the dollar.
Federal officials have been reluctant to force any changes to the terms of bank debt. That's because they fear setting off another global financial panic -- much like what happened after the collapse of investment bank Lehman Brothers last September -- by suddenly altering bondholder agreements.
Bank creditors also are harder to push around. If they're forced to take haircuts on their investments they could threaten to close off future lending to banks, cutting off a vital supply of oxygen to financial service providers who depend heavily on debt to fund their operations.
Consider that about 20 percent of the $12.5 trillion in liabilities on bank balance sheets at the end of 2008 came from corporate bonds and other debt vehicles, according to data from the Federal Deposit Insurance Corp.
At a company like Citigroup, about $500 billion of its nearly $1.8 trillion in liabilities comes from debt to the company's bondholders. Citigroup has received $45 billion in rescue funds from the federal government.
That doesn't mean bank creditors couldn't take action on their own, say, offering to restructure the debt of the most distressed companies in order to help them stay alive.
If those investors are willing to convert some of their debt into equity, the effect could be huge. That could encourage banks to lend more by reducing the claims debtholders have on their capital.
It's the same thing Washington wants from GM's bondholders. Too bad we can't count on the same from bank creditors.
Rachel Beck is the national business columnist for The Associated Press. Write to her at rbeck(at)ap.org
Obama administration seeks to avoid restrictions, including limits onpay
Friday, April 10, 2009
The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.
Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.
The administration believes it can sidestep the rules because, in many cases, it has decided not to provide federal aid directly to financial companies, the sources said. Instead, the government has set up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials.
Although some experts are questioning the legality of this strategy, the officials said it gives them latitude to determine whether firms should be subject to the congressional restrictions, which would require recipients to turn over ownership stakes to the government, as well as curb executive pay.
The administration has decided that the conditions should not apply in at least three of the five initiatives funded by the rescue package.
This strategy has so far attracted little scrutiny on Capitol Hill, and even some senior congressional aides dealing with the financial crisis said they were unaware of the administration's efforts. Just two weeks ago, Congress erupted in outrage over bonuses being paid at American International Group, with some lawmakers faulting the administration for failing to do more to safeguard taxpayers' interests.
Rep. Edolphus Towns (D-N.Y.), chairman of the House Oversight and Government Reform Committee, said the congressional conditions should apply to any firm benefiting from bailout funds. He said he planned to review the administration's decisions and might seek to undo them. "We have to make certain that if they are using government money in any sort of way, there should be restrictions," he said.
A Treasury spokesman defended the approach. "These programs are designed to both comply with the law and ensure taxpayers' funds are used most effectively to bring about economic recovery," spokesman Andrew Williams said.
Middleman
In one program, designed to restart small-business lending, President Obama's officials are planning to set up a middleman called a special-purpose vehicle ? a term made notorious during the Enron scandal ? or another type of entity to evade the congressional mandates, sources familiar with the matter said.
In another program, which seeks to restart consumer lending, a special entity was created largely for the separate purpose of getting around legal limits on the Federal Reserve, which is helping fund this initiative. The Fed does not ordinarily provide support for the markets that finance credit cards, auto loans and student loans but could channel the funds through a middleman.
At first, when the initiative was being developed last year, the Bush administration decided to apply executive-pay limits to firms participating in this program. But Obama officials reversed that decision days before it was unveiled on March 3 and lifted the curbs, according to sources who spoke on condition of anonymity because the discussions were private.
Obama's team is also planning to exempt financial firms that participate in a program designed to find private investors to buy the distressed assets on the books of banks. But Treasury officials are still examining the legal basis for doing so. Congress has exempted the Treasury from applying the restrictions in a fourth program, which aids lenders who modify mortgages for struggling homeowners.
Lavish pay practices
Congress drafted the restrictions amid its highly contentious consideration of the $700 billion rescue legislation last fall. At the time, lawmakers were aiming to reform the lavish pay practices on Wall Street. Congress also wanted the government to gain the right to buy stock in companies so that taxpayers would benefit if the firms recovered.
The requirements were honored in an initial program injecting public money directly into banks. That effort was developed by the Bush administration and continued by Obama's team. The initiative is on track to account for the bulk of the money spent from the rescue package. All the major banks already submit to executive-compensation provisions and have surrendered ownership stakes as part of this program.
Yet as the Treasury has readied other programs, it has increasingly turned to creating the special entities. Legal experts said the Treasury's plan to bypass the restrictions may be unlawful.
"They are basically trying to launder the money to avoid complying with the plain language of the law," said David Zaring, a former Justice Department attorney who defended the government from lawsuits involving related legal issues. "They are trying to create a loophole to ignore Congress, and I think the courts will think that it's ridiculous."
The federal watchdog agency overseeing the bailout is looking into the matter, trying to determine whether the Treasury's actions are legal.
Of the two major restrictions imposed by Congress in the bailout legislation, the limit on executive pay has been the most politically explosive issue.
Obama himself has called for these limits. "We've got to make certain that taxpayer funds are not subsidizing excessive compensation packages on Wall Street," he said earlier this year.
Private meetings
But officials at the Treasury and the Fed said they worry harsh pay limits will undermine critical bailout programs by discouraging financial firms from participating. Although many of these companies could survive without government help, they might lack money to ramp up lending, which officials consider critical to turning the economy around.
In private meetings with officials in both the Bush and Obama administrations, firms' leaders have pushed back against pay limits.
Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.
The administration believes it can sidestep the rules because, in many cases, it has decided not to provide federal aid directly to financial companies, the sources said. Instead, the government has set up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials.
Although some experts are questioning the legality of this strategy, the officials said it gives them latitude to determine whether firms should be subject to the congressional restrictions, which would require recipients to turn over ownership stakes to the government, as well as curb executive pay.
The administration has decided that the conditions should not apply in at least three of the five initiatives funded by the rescue package.
This strategy has so far attracted little scrutiny on Capitol Hill, and even some senior congressional aides dealing with the financial crisis said they were unaware of the administration's efforts. Just two weeks ago, Congress erupted in outrage over bonuses being paid at American International Group, with some lawmakers faulting the administration for failing to do more to safeguard taxpayers' interests.
Rep. Edolphus Towns (D-N.Y.), chairman of the House Oversight and Government Reform Committee, said the congressional conditions should apply to any firm benefiting from bailout funds. He said he planned to review the administration's decisions and might seek to undo them. "We have to make certain that if they are using government money in any sort of way, there should be restrictions," he said.
A Treasury spokesman defended the approach. "These programs are designed to both comply with the law and ensure taxpayers' funds are used most effectively to bring about economic recovery," spokesman Andrew Williams said.
Middleman
In one program, designed to restart small-business lending, President Obama's officials are planning to set up a middleman called a special-purpose vehicle ? a term made notorious during the Enron scandal ? or another type of entity to evade the congressional mandates, sources familiar with the matter said.
In another program, which seeks to restart consumer lending, a special entity was created largely for the separate purpose of getting around legal limits on the Federal Reserve, which is helping fund this initiative. The Fed does not ordinarily provide support for the markets that finance credit cards, auto loans and student loans but could channel the funds through a middleman.
At first, when the initiative was being developed last year, the Bush administration decided to apply executive-pay limits to firms participating in this program. But Obama officials reversed that decision days before it was unveiled on March 3 and lifted the curbs, according to sources who spoke on condition of anonymity because the discussions were private.
Obama's team is also planning to exempt financial firms that participate in a program designed to find private investors to buy the distressed assets on the books of banks. But Treasury officials are still examining the legal basis for doing so. Congress has exempted the Treasury from applying the restrictions in a fourth program, which aids lenders who modify mortgages for struggling homeowners.
Lavish pay practices
Congress drafted the restrictions amid its highly contentious consideration of the $700 billion rescue legislation last fall. At the time, lawmakers were aiming to reform the lavish pay practices on Wall Street. Congress also wanted the government to gain the right to buy stock in companies so that taxpayers would benefit if the firms recovered.
The requirements were honored in an initial program injecting public money directly into banks. That effort was developed by the Bush administration and continued by Obama's team. The initiative is on track to account for the bulk of the money spent from the rescue package. All the major banks already submit to executive-compensation provisions and have surrendered ownership stakes as part of this program.
Yet as the Treasury has readied other programs, it has increasingly turned to creating the special entities. Legal experts said the Treasury's plan to bypass the restrictions may be unlawful.
"They are basically trying to launder the money to avoid complying with the plain language of the law," said David Zaring, a former Justice Department attorney who defended the government from lawsuits involving related legal issues. "They are trying to create a loophole to ignore Congress, and I think the courts will think that it's ridiculous."
The federal watchdog agency overseeing the bailout is looking into the matter, trying to determine whether the Treasury's actions are legal.
Of the two major restrictions imposed by Congress in the bailout legislation, the limit on executive pay has been the most politically explosive issue.
Obama himself has called for these limits. "We've got to make certain that taxpayer funds are not subsidizing excessive compensation packages on Wall Street," he said earlier this year.
Private meetings
But officials at the Treasury and the Fed said they worry harsh pay limits will undermine critical bailout programs by discouraging financial firms from participating. Although many of these companies could survive without government help, they might lack money to ramp up lending, which officials consider critical to turning the economy around.
In private meetings with officials in both the Bush and Obama administrations, firms' leaders have pushed back against pay limits.
World Bank Sees Slump in Russia Worsening
MOSCOW — The World Bank released a grim report on Russia on Monday, projecting a 4.5 percent contraction in the economy in 2009 and warning that the financial crisis would push 5.8 million Russians into poverty unless the government shifted more spending to poor families.
The report was a sharp revision of the World Bank’s November forecast, which predicted an increase of 3 percent in gross domestic product in 2009. World Bank analysts also took a more pessimistic view than the Russian government, whose experts are predicting a 2.2 percent contraction.
The report praised the government’s $85 billion anticrisis program, which stabilized Russia’s banks and prevented financial panic. But it said too little had gone to households — a hazard in a society where 37 million people, a quarter of the population, lives near the poverty line.
“It is a somewhat disturbing development that we would like to draw attention to,” said Zeljko Bogetic, the World Bank’s chief economist on Russia. “The challenge is now to act quickly.”
During the hours after the report was released, the ruble slipped to about 34.2 per dollar, its lowest rate in 10 days, and both of Russia’s main stock indexes dropped more than 3 percent. Deputy Prime Minister Igor Shuvalov told reporters that he believed that the World Bank report was too pessimistic and said the government had asked experts to review the forecast.
Among the bank’s discouraging conclusions was that Russia cannot expect the kind of vibrant, “V-shaped” recovery that it saw after its 1998 currency crisis.
Though Russia weathered the “rapid tsunami” that followed the collapse of Lehman Brothers last September, Mr. Bogetic said, lower household spending and a pileup of collapsing corporate loans could develop into a “silent tsunami,” suppressing global markets until at least the middle of 2010.
“As the crisis continues to spread to the real economy around the world,” the report said, “initial expectations that Russia and other countries would recover fast are no longer likely.”
The World Bank report addresses a particular worry of Russian authorities: that unemployment will translate into civil unrest. Already, nearly 6.4 million Russians are unemployed and 1.1 million are on forced leave or working part-time schedules.
By the end of 2009, unemployment will probably reach 12 percent, the World Bank predicts. The poverty rate will climb to 15.5 percent, erasing some of the gains made in the last decade, when poverty fell to 10 percent from about 20 percent, the report said.
The report recommends a package of payments, including increases of 70 percent in unemployment subsidies and 220 percent in child welfare payments, which Mr. Bogetic said “could alleviate some of this social pain.”
“These instruments are better than all the others in reaching the poor,” he said. “You need to jack them up sufficiently.”
The report gives high marks to Russia for “responding fairly massively” to the onset of the financial crisis, spending a projected 6.7 percent of its G.D.P. on anticrisis measures when the internationally recommended rate is 2 percent. As a result, Russia avoided a wave of bankruptcies and bank closings, an achievement that “somewhat surprised” most foreign analysts, Mr. Bogetic said.
The World Bank revised its forecast for the price of crude oil to $45 a barrel, increasing slightly to $53 in 2010. The average price of a barrel of oil in 2008 was $97.
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