Thursday, February 4, 2010

“Treasury offers loans to banks funding community development (Washington Post)” plus 3 more

“Treasury offers loans to banks funding community development (Washington Post)” plus 3 more

Treasury offers loans to banks funding community development (Washington Post)

Posted: 03 Feb 2010 09:00 PM PST

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The special program, which offers more favorable terms than those available to most banks, will benefit a group of institutions long embraced by Democratic politicians for working in areas where mainstream banks make few loans.

Among the potential beneficiaries is ShoreBank, a pioneering force in the redevelopment of Chicago's Southside that now is struggling with rising loan losses. The program also could benefit OneUnited Bank of Massachusetts, which got federal aid in fall 2008 with the help of Rep. Barney Frank (D-Mass.) but now could be allowed to pay a lower interest rate.

Administration officials said it made sense to offer additional support in the areas hit hardest by the economic downturn.

"This program that you're seeing us lay out today is a very powerful way to try to make sure that we're starting to open up some of the credit channels for businesses in parts of the country where it's most needed and where we think there's going to be a very, very high return," Treasury Secretary Timothy F. Geithner said Wednesday.

The government will offer loans to about 60 banks and 150 credit unions that are certified as community development financial institutions. The loans will carry an interest rate of 2 percent, less than the 5 percent paid by other banks. Treasury also will lower eligibility standards, allowing less healthy banks to qualify if they can raise matching funds from private investors.

The money will come from the $700 billion allocated by Congress to rescue the financial industry. Unlike other recent administration proposals, it does not require congressional approval.

Mark Pinsky, chief executive of the Opportunity Finance Network, an umbrella group for community development lenders, said the industry was "thrilled" by the program. He said advocates now are pushing Treasury to offer similar financial support to community development lenders that do not hold bank charters.

ShoreBank is among the largest and oldest community development lenders. It is also among those most in need of help. The company said earlier this week that it lost $51 million in 2009. It also has been hit with enforcement actions by state and federal regulators.

The bank did not get aid from Treasury's original rescue program, but it could qualify for aid under the new program, provided that it can raise some money from private investors.

OneUnited is in a different position. It got $12.1 million from Treasury in December 2008 after Frank included language in the bailout legislation effectively directing Treasury to give it special consideration. The bank has since stopped making required interest payments, but because of its focus on community development, it could now qualify to convert its loan to a lower interest rate.

Staff writer David Cho contributed to this report.

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Criminals exploiting flood of leaked personal data (V3.co.uk via Yahoo! UK & Ireland News)

Posted: 04 Feb 2010 03:30 AM PST

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Incidences of personal data being stolen and sold online have soared by 230 per cent since 2007, according to new figures from fraud database firm Lucid Intelligence. Skip related content

The company, which develops technology allowing users to check whether their data has been compromised and traded online, said in its annual report that, although the number of stolen credit cards being used online dropped slightly last year to 67,750, cyber criminals are shifting their attention to more sophisticated attacks.

"Phished, stolen or negligently sold personal data has become the basis for creating false identities that can be used to set up bank accounts, credit cards and loans," explained Lucid chief executive Colin Holder.

"With such a potentially high value 'end game', criminals are becoming more patient and persistent. We see 'card not necessary' fraud as the major threat as we enter the next decade."

Lucid also uncovered over 4,100 web sites leaking personal information into the public domain which criminals then exploit, and 3,113 new bank accounts being offered by internet criminals for money laundering.

Holder predicted that 2010 will see a greater trend towards 'card not necessary' fraud "unless the credit agencies take positive action".

He added that phishing and 419 scams are likely to continue, and that smaller, and therefore softer, targets in the banking world will increasingly be used for money laundering.

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Football's quandary: How to avoid debt with more loans (CNN)

Posted: 04 Feb 2010 03:11 AM PST

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(CNN) -- It seems somewhat ironic that in these tough economic times, caused in many ways by bad credit, the best way to sum up football's latest transfer window is the word "loan."

Spending was significantly down in leagues all across Europe, but there was nonetheless a flood of transactions on the February 1 deadline day as players swapped clubs in true "musical chairs" fashion.

Some found a new home and a chance to kickstart their career, but others such as Russia striker Roman Pavyluchenko were left pondering their future as potential suitors failed to follow up interest much hyped by the tabloid media.

Few pundits, however, had predicted big-money moves, and they were proved right. Top clubs such as Barcelona, Real Madrid, Manchester United, Chelsea, Bayern Munich, Inter and AC Milan remained prudent.

English Premier League clubs spent only $48 million compared to $271 million last year according to figures from auditors Deloitte.

In Italy, where champions Inter were most busy on Monday, player sales accounted for a slightly lower numbers in estimates by the Web site Transfermarkt.

It reported that Spanish clubs spent a measly $8 million compared to $86 million a year ago -- Real then splashed out more than $250 million alone in pre-season -- while German Bundesliga clubs coughed up $22 million and those in France a lightly lower amount.

These figures are only a rough guess, given that many clubs -- such as Manchester City, owned by an Abu Dhabi oil billionaire -- did not disclose transfer fees.

But loan deals dominated the day's trading, highlighting the dire economic times that world football faces.

In England, for example, only four of 28 transfers involving Premier League clubs incurred a fee.

"As coaches, club owners and directors become increasingly skeptical of the near-term impact a January acquisition can have, it is unsurprising to see a lack of high-value activity, with those clubs that are active preferring loan deals," said Dan Jones, a partner in Deloitte's Sports Business Group.

"The absence of new club owners and the tightening of club finances and credit availability have helped to accelerate that trend and dampen down the market."

That is not to say that no money changes hands. Far from it. Loaning clubs generally take on the players' wages, and sometimes also pay a fee.

For a club such as cash-strapped Premier League strugglers Portsmouth, the window was a difficult period.

With a transfer embargo lifted only late last week, Portsmouth made only two acquisitions -- the renewal of the loan of Jamie O'Hara from Tottenham, and a new temporary move for Spartak Moscow striker Quincy Owusu-Abeyie.

But at the same time manager Avram Grant was forced to sell French defender Younes Kaboul back to Tottenham and Bosnian goalkeeper Asmir Begovic to Stoke.

That was only a temporary financial reprieve, however, as the Premier League subsequently decided to withhold $3 million of the reported $12.8 million raised in order to pay off other clubs owed money by Portsmouth -- who then failed to pay player wages on time for the fourth month this season, according to the Daily Express.

The departure of Begovic has also left Portsmouth, who face a winding-up order this month for unpaid taxes and also owe former owner Alexandre Gaydamak $45 million in loans, with something of a conundrum.

The club's other senior goalkeeper, England veteran David James, will qualify for a lucrative new $80,000-a-week contract if he plays another 10 games this season, with the Guardian reporting that both parties will try to negotiate that deal.

"While the UK has just recently exited recession, it appears that football may just be entering it," according to financial services company KPMG's head of forensic sports industry team, Geoff Mesher.

"There had been some expectation that Manchester City's wealthy owners, and the arrival of Carson Yeung at Birmingham City, might have produced some high-value signings and that the funds raised from such deals would initiate further spending as they were recycled through the transfer market, but this has not happened."

Richard Fleming, KPMG's UK head of restructuring, believes that Portsmouth could be just one of several top-level clubs facing administration orders.

English second division club Crystal Palace went into administration this month as owner Simon Jordan failed to find a new buyer.

"With up to 90 percent of turnover in football clubs accounted for by players' wages, the main creditor is often [the tax department] HMRC," Fleming said.

"Clubs which have abused HMRC's flexibility by breaking promises to meet their tax liabilities repeatedly may be in for a short, sharp shock."

Such problems are also facing clubs at the other end of the scale.

Manchester United, regularly near the top of Deloitte's wealthy list, have confirmed plans to raise $813 million through a bond issue to help refinance their debts as the reality of the current economic climate continues to hit the game.

United have since announced pre-tax profits of $78.4 million for the year to 30 June 2009, compared with a loss of $34.8 million a year ago, but without the sale of Cristiano Ronaldo, the Red Devils would have reported a loss of $51.7 million despite a trophy-laden season.

The Glazer family saddled United with huge debts with their 2005 takeover, and the Americans also have outstanding personal sums owed on the deal which have since increased by $64 million, according to Britain's The Times newspaper.

A year ago, football's finances seemed to be healthier than ever, bucking the trend of global economic hardship.

The total European market had ballooned to a staggering $20.76 billion by the end of the 2007-8 season, and clubs -- especially in England -- splashed out big in the January 2009 transfer market, with the Premier League responsible for a record-breaking $252 million in player purchases.

Even given those rosy-looking figures of 2007-08, the most recent available, Europe's top clubs then still owed more than $6 billion according to a study by football finance expert Jose Maria Gay de Liébena, an accounting professor at the University of Barcelona.

"Clubs are getting deeper and deeper into the mire of enormous debt, and along with overvalued assets and costs that far outstrip income levels, this is the biggest of football's ills," Gay de Liébena said in his report.

With European ruling body UEFA planning to bring in new rules governing debt and ownership from 2012 which mean clubs cannot spend more than they earn, the pressure is on to find a safe financial footing.

Chelsea's billionaire owner Roman Abramovich responded by converting the $540 million he has given the English club in interest-free loans into equity.

And it's not just in England where clubs, also including the American-owned Liverpool, are battling to stay afloat in a sea of debt -- said to be around $4.3 billion for the whole of the Premier League, according to the Wall Street Journal.

German giants Bayern Munich plan big wage cuts, according to Britain's Guardian newspaper, and may be forced to sell star asset Franck Ribery, long a target of Real, United and Chelsea, before the start of next season.

"We are going to try to reduce the wages," the Bundesliga club's director of sport Christian Nerlinger said. "The wages have gone through the roof and, therefore, we have got to get our message through to the players that a new contract does not necessarily mean a pay rise."

Belgian club Mouscron went into liquidation after being expelled from the Jupiler League on December 28 for failing to meet financial obligations, with debts of $1.15 million, ending 87 years of existence.

Manchester City, owned by Sheikh Mansour bin Zayed Al Nahyan, revealed their losses had tripped to almost $150 million during his first season in charge.

Sheikh Mansour has invested a staggering $630 million since buying the heavily indebted club in August 2008, the figures released by the club revealed.

Lower league club Notts County were saved from oblivion in July by the Munto Finance group, who promised to take the world's oldest side into the Premier League with a massive cash injection and the expensive acquisition of former England manager Sven-Goran Eriksson as director of football.

But that has fallen by the wayside with Munto selling to chairman Peter Trembling for a nominal fee, and the club again faces an uncertain future with a second winding-up order from the tax man, though Eriksson apparently remains committed to his post.

Scottish clubs were last year forced to accept a far less lucrative replacement deal from Sky and ESPN following the collapse of Irish broadcaster Setanta, highlighting how precarious the existence of some leagues is.

"The economy of football is not an exception to the rule of economics," Gay de Liébena said. "If one major sponsorship or television deal collapses, the clubs will sink."

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Criminals exploiting flood of leaked personal data (vnunet.com)

Posted: 04 Feb 2010 03:14 AM PST

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"Phished, stolen or negligently sold personal data has become the basis for creating false identities that can be used to set up bank accounts, credit cards and loans," explained Lucid chief executive Colin Holder.

"With such a potentially high value 'end game', criminals are becoming more patient and persistent. We see 'card not necessary' fraud as the major threat as we enter the next decade."

Lucid also uncovered over 4,100 web sites leaking personal information into the public domain which criminals then exploit, and 3,113 new bank accounts being offered by internet criminals for money laundering.

Holder predicted that 2010 will see a greater trend towards 'card not necessary' fraud "unless the credit agencies take positive action".

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Posted by Rakhma at 4:07 PM

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