Finance Reporter for The New York Times
They’re called “qualified private activity bonds,” and they’re intended to encourage public works through a tax break. In reality, though, they often go to subsidize private projects—everything from a winery in North Carolina to a golf resort in Puerto Rico to the Barclays Center in Brooklyn and the offices of Goldman Sachs in New York. Louise Story, investigative reporter for The New York Times explains how this loophole gets used.
A three-part investigation by our partner The New York Times may offer some unsettling news for both taxpayers and local officials who have assumed that providing attractive incentives to businesses would create jobs. Investigative reporter Louise Story explains her findings.
Our panel of social, political and pop-cultural experts to tell us about the stories you may have missed this week.
When Goldman Sachs employee Greg Smith handed in his letter of resignation, he did so in the most public manner possible — by posting it in the pages of The New York Times. In his letter, the former derivatives trader described the firm's working environment as "toxic and destructive" and accused their culture of placing company profits over client interest whenever possible.
After the financial meltdown of 2008 people looked to the Securities and Exchange Commission to use its regulatory powers to get to the bottom of the crisis and possibly craft suitable punishments to prevent the same mistakes in the future. Regulation is supposed to discourage not reward bad decisions. But an analysis conducted by our partner The New York Times shows the agency has repeatedly allowed the biggest firms to avoid punishments.
This week, President Obama delivers the State of the Union, then travels to five states that promise to be key battlegrounds for this year's election: Iowa, Arizona, Nevada, Colorado and Michigan. As the President begins his swing state tour, Republican candidates will be setting up camp in Florida, preparing for two debates in the next primary state.
A business and tech story that has the ring of the inevitable to it. A company that practically alone, created the modern global high-tech consumer culture has declared bankruptcy. Eastman Kodak, this morning a penny stock on the New York Stock exchange. The company that invented consumer photography, more than a century ago has filed for bankruptcy, taken out a credit lifeline, put it's portfolio of storied patents on the block, and started a clock which may tick down to the total end of an American technology story that is among other things emblematic of the digital age we live in.
The Journal of Consumer Research recently published a study called "Overestimating Others' Willingness to Pay" which outlines the "overvaluing bias": the tendency to overvalue what another person would pay by nearly 40 percent. While this phenomenon is not new to social psychologists, it clearly influenced the years of easy credit and has more broadly moved Americans away from cash to credit cards.
Bank of America and Goldman Sachs are scheduled to release their earnings reports for the third quarter today. Yesterday, Citigroup reported a 74 percent rise in their earnings and Wells Fargo reported a 21 percent increase, and last week JP Morgan reported a 4 percent fall in profits. Morgan Stanley and U.S. Bancorp are expected to release their reports on Wednesday.
After weeks of silence about the demonstrations in downtown New York and across the country, some of Wall Street biggest bankers are speaking up about the protests and the criticisms being leveled at them. The reaction comes just days after the protestors marched to the houses of J.P. Morgan's Jamie Dimon and hedge fund manager John Paulson.
A great deal of anger has been directed at the profits of the banking industry since the onset of the recession. One of the focal points of Occupy Wall Street, and of the like-minded protests that have emerged throughout the country, is precisely this discontent with the earnings of banks, particularly during a period of such economic duress for the rest of the country. But the quarterly reports from the banks have been showing that they've taken considerable losses over the past three months.
For years we've been moving away from using paper and coins to pay for goods, and toward a cashless society. Now many people use debit cards as a convenient way to shop. But news from the Bank of America yesterday could change the way people feel about that. The banking giant announced it would impose a new monthly fee of $5 for checking accounts that use debit cards. Other banks are likely to follow suit. Why are we seeing increased banking charges and what can consumers do about it?
Economists are predicting yet another week of drama in the Global financial markets. European leaders continue to disagree on the best way to handle the sovereign debt crisis and bail out Greece and other countries needing financial assistance. Meanwhile in the U.S., President Obama hopes his new jobs act will set the economy on a path to recovery — if Congress passes it. All this uncertainty in the political arena does nothing to help steady the markets, which continue to be extremely erratic. The month of August saw stocks in the Standard & Poor’s 500 index lurching hundreds of points within individual days and making huge swings in the course of a week.
It's Monday morning, which means it's time to take a look at what's on the agenda for the week ahead. President Obama will be preparing his Labor Day speech on the economy this week, and after after Hurricane Irene's chaotic visit to the East Coast, leaving billions of dollars in damage behind, he may have to rethink what he's going to say. Irene hit at a time when the U.S. economy is continuing to slump and millions are jobless. Unemployment figures will be out on Friday, and the Congressional Budget Office is predicting that employment will not return to normal levels until 2017. Meanwhile Greece, may not receive a bailout from the European Union, as Finland hesitates to approve it. All EU members must approve the bailout, for it to go into effect.
Since the beginning of the year, Bank of America has lost more than half of its stock market value. Earlier this month, AIG sued the bank behemoth for alleged mortgage securities fraud, and just this past week the company laid off 3,500 workers. With more in mortgage holdings than any other bank, its future success is essentially tied to the state of the faltering housing market. But yesterday, Warren Buffett announced he's investing $5 billion in Bank of America. What's in store for the beleaguered company?
This week we’ve been asking listeners to suggest big ideas on how to fix the economy, and you've given us a huge response. We’ve talked about raising inflation, boosting housing prices, capping total compensation for CEOs, taxing the rich, and the potential financial impact of legalizing pot. We received over 200 responses, and noticed some interesting trends. One in six of those who responded suggested reforming the tax code. The second most popular idea was to cut military spending.
As we learned last week the decisions of one rating agency can cause a lot of economic volatility. But according to an exclusive piece from our partner The New York Times this morning, the Justice Department is opening an investigation into Standard & Poor's to see if the agency improperly rated dozens of mortgage securities leading up to the financial crisis. The ratings being investigated came long before the downgrade of the U.S., but the probe does raise new questions about the credibility of the nation's largest credit agency and their secretive rating process.
Last April the Federal Reserve said that Gross Domestic Product numbers had inched up a respectable 1.8 percent. It was a bright spot in the midst of a bleak economy. The White House touted the news as encouraging, and stocks went up. Now, after a dizzying few weeks of bad news about the economy, the government has revised its numbers, saying the economy really only expanded by 0.4 percent. What happened, and what does this say about the government's understanding of the economy?
European Securities and Market Authority is considering recommending a temporary ban on negative bets against stocks. The ban would be temporary to ease this period of market volatility. This comes on the heels of escalating financial concerns in Europe. The European markets are down this morning in reaction to a report showing Greek unemployment at 16.6 percent and more bad news for French banks.
In the wake of Standard and Poor's decision to downgrade the U.S. credit rating, and an economy still struggling to keep its head above water, the Federal Reserve decided yesterday to keep the nation's interest rate close to zero through 2013. The rate has been static for the past two years. The response on Wall Street seemed mixed. At first stocks took a bit of a dive, but they recovered. The Dow closed up 429 points yesterday after a late rally.