Sangamo BioSciences Inc. appointed APT Pharmaceuticals Inc. chief Stephen Dilly as a director, increasing the size of the board from six to seven members.
The Richmond-based company, best known for its “zinc finger” DNA-binding proteins, said Dilly will receive standard fees for non-employee directors: an annual cash retainer of $30,000 and $1,000 per board meeting, if the board meets more than 10 times a year.
Dilly also will receive an option to buy 50,000 shares of common stock at an exercise price of $5.42 per share. Sangamo stock closed last week at $5.42 per share.
Dilly is president and CEO of Burlingame-based APT, which is developing inhaled cyclosporine to treat chronic rejection of lung transplants. The treatment is in a Phase III trial.
Dilly previously was chief medical officer and senior vice president of development at Chiron, leaving after the company’s purchase by Novartis. He also held senior management positions at Genentech Inc., including vice president of development sciences, from 1998 to 2003, and worked in drug development with SmithKline Beecham.
Taxpayers may still be able to deduct last-minute donations to Chile earthquake relief from their 2009 taxes, if a bipartisan bill introduced in the House on Tuesday is signed into law.
Two representatives from Michigan — Sander Levin, the Democratic chairman of the House Ways and Means committee, and Dave Camp, a Republican on the committee — introduced the bill, which would allow taxpayers to deduct these charitable donations from their 2009 taxes instead of having to wait until next year.
"Millions of families have given selflessly, even in uncertain economic times, so that those struck by natural disaster may begin rebuilding their lives," Levin said in a statement. "This bill will encourage those who are considering a donation to take action now."
Donations to Chile would have to be made before the April 15 filing deadline to qualify for a 2009 deduction.
As for taxpayers who may have already filed their 2009 returns — that’s not a problem, said Jackie Perlman, a tax analyst with The Tax Institute at H&R Block. If the law passes, taxpayers can still take advantage of the 2009 deduction by filing an amendment through the 1040-X, a form for making changes to a tax return after it’s filed.
Or, they can simply wait to file their deduction until next year instead, she said my credit score.
Perlman also cautions donors to beware of scammers and make sure they’re only donating to qualified, tax-exempt charities. Taxpayers interested in the deduction should note that the bill has merely been introduced — it’s not a law, just yet.
"You’re certainly more than welcome to make a donation to Chile earthquake relief but if you’re assuming the bill is going to pass, that may not be wise," Perlman said. "You always want to wait until it’s a done deal."
Haiti’s top corporate donors
In January, Congress unanimously passed a law that makes donations to Haiti tax deductible in the 2009 tax year, if the donations were made between January 11 and March 1. President Obama signed the bill into law on January 22.
The bill introduced today would also extend the deadline for tax-deductible Haiti donations to April 15.
Chilean officials estimate that some 2 million people have been affected in one way or another by the earthquake, while 708 have been reported dead. January’s earthquake in Haiti left an estimated 212,000 people dead and more than a million homeless.
Toyota Motor chief executive Akio Toyoda apologized Friday for the problems that led to the company’s recall of more than 8 million cars. But he did not announce any solution for brake problems of its popular Prius hybrid.
Toyoda, the grandson of the company’s founder, made his first public appearance in the two weeks that the company has faced a growing crisis over the safety and quality of its vehicles.
The recall affected 8.1 million vehicles worldwide and will cost the company an estimated $2 billion in repair costs and lost sales due to a sticking accelerator. Toyota has not said how much the new problems with the braking system in the Prius will cost it, though.
Toyoda said an investigation of the Prius problems is under way, and a decision on whether there will be another recall will be announced as soon as possible.
The company also announced Friday it is looking at the brake systems of the latest Lexus hybrid vehicles as well as a Japanese model called the Sai — because they use the same system as the one on the 2010 Prius.
But Toyoda denied the company has been trying to hide problems with the brakes from safety officials in the United States and Japan. Still, he admitted Toyota needed to do more to assure customers about the safety of its vehicles.
"I feel we are in stormy weather," he said. "Under this situation, [we] must regain customer trust. Tackle the problem. My role is to carry it out. We lacked customer perspective. It’s very unfortunate."
Not going far enough. But one expert said Toyota and its chief made a mistake by not announcing a recall for the Prius, especially since it now is clear there is a problem that will eventually need to be fixed.
"What we heard this morning was more foot dragging," said Michelle Krebs, senior analyst for auto sales Web site Edmunds.com. "They still are not very forthcoming. I think it’d be in their best interest to do a recall, and get it all behind them."
Other experts agreed that Toyota is suffering greater damage by not getting all the bad news out as quickly as possible.
"For reasons we may never learn, Toyota appears to be pulling their bandage very slowly, and therefore keeping their recall situation…firmly in the public eye," said James Bell, executive market analyst for Kelley Blue Book.
Krebs said that while most Toyota customers appear to be staying loyal to the brand for now, the damage being done to its image could hit future sales. She believes Toyota’s estimates of a loss of 80,000 sales in North America and another 20,000 in Europe due to the recall are probably too low.
"My impression is they are fairly tone deaf about how significant this is in the U.S.," she said. "I don’t think they have a good sense of what it’s going to cost them in terms of reputation and sales."
She added that problems with the Prius are a particularly tough blow to Toyota — even though the number of hybrids affected is insignificant compared to the 8.1 million vehicles recalled due to the gas pedal concerns.
"The Prius is so important to them. It’s the pinnacle of their technological knowledge and engineering prowess. Now that image has been tarnished," she said.
Toyoda has faced harsh criticism over the last two weeks about his lack of public appearances during the crisis. Krebs said it was important for him to finally speak to the public.
The tone of the news conference, which took place late Friday night in Japan, was very out of character with what is normally seen at corporate press conferences in Japan. Reporters did not show the typical deference to a top executive. Some demanded answers about why there is no leadership and why the company was dodging questions.
Toyoda said the company would set up a committee to examine problems that led to the recall and said the company would cooperate with U.S. authorities who are looking into problems with Toyota vehicles.
"Believe me, Toyota’s cars are safe," he said.
No solution yet for brake problem. The company has admitted it had a problem with the software controlling the anti-lock braking system of the 2010 model year Prius. The company said earlier this week that it has changed the software for cars produced since January, and it is looking into what to do with the vehicles already on the road.
Jesse Toprak, analyst with TrueCar.com, said the delay in announcing a recall for the Prius is a sign that fixing vehicles already on the road won’t be as simple as fixing ones coming off the assembly line. But he said Toyota would be better off announcing the recall even if a solution is not finalized.
"Normally it would have been better off to wait for a solution. It doesn’t help your image to say you don’t know how to fix your own cars. But these are not normal times for Toyota," he said.
The 2010 model year Prius went on sale in the middle of last year. There are an estimated 37,000 of the cars on the road in the United States, and more than 200,000 worldwide. It is the best-selling vehicle in Japan and Toyota’s fourth-best selling model in the U.S.
There have been 124 reports of problems with the brakes on the Prius in the United States, according to the National Highway Transportation Safety Administration, which Thursday announced it had launched a formal defect investigation into the car. There have been reports of four accidents involving the Prius brakes, two of which had injuries, although there have been no reported fatalities.
Toyota, which achieved steady market share growth in the United States due to its reputation of strong vehicle quality and safety, has been criticized by U.S. Transportation Secretary Ray LaHood for being slow to respond to the latest problems. LaHood said Toyota did not move on the accelerator recall until pushed to do so by U.S. safety officials.
The Prius brake problem causes a delay of about a second in the brakes engaging, but during a second a car traveling 60 m.p.h. can travel almost 100 feet.
While Toyota (TM) has far greater financial resources than most of its rivals, especially its U.S. rivals General Motors, Ford Motor (F, Fortune 500) and Chrysler Group, the quality issues do pose a financial challenge for the company. Friday credit rating agency Standard & Poor’s placed its debt on credit watch, meaning it faces the risk of a downgrade that could raise its borrowing costs.
"Standard & Poor’s believes that these developments may affect the company’s reputation for quality, weakening its competitive position," it said in the announcement.
CNN’s Kyung Lah contributed to this report.
Toyota’s suspension of U.S. sales of some of its top-selling models — amid intense pressure from the federal government — deals a blow to the automaker’s reputation for quality.
Toyota Motor Corp. announced late Tuesday it would halt sales of certain models — including the Camry and Corolla sedans and the RAV 4 crossover — to fix gas pedals that could stick and cause unintended acceleration. Last week, Toyota issued a recall for the same eight models affecting 2.3 million vehicles.
Toyota is also suspending production at six North American car-assembly plants beginning the week of Feb. 1. It gave no date on when production could restart.
Toyota insisted the problem — sudden, uncontrolled acceleration — was "rare and infrequent" and said dealers should deal with customers "on a case-by-case basis."
Officials under President Barack Obama said they pressed Toyota to protect consumers who own vehicles under recall and to stop building new cars with the problem.
David Strickland, the administrator of the National Highway Traffic Safety Administration, told reporters in Washington that the Transportation Department had been in regular
communication with Toyota about the recall.
"Toyota was complying with the law. They consulted with the agency. We informed them of the obligation, and they complied," Strickland said. He wouldn’t address why Toyota failed to stop selling the vehicles five days earlier when it announced the recall.
Across the country, Toyota dealers —swamped by calls Wednesday from drivers — said they were concerned the move would hamper sales. They hoped parts to fix the problem could be distributed quickly.
John McEleney, who owns a Toyota dealership in Clinton, Iowa, said the sales stoppage affects about 60 percent of the inventory on his lot.
He said he was hopeful Toyota would come up with a fix soon — especially because the longer a vehicle stays on a dealer lot, the more money a dealer pays in interest fees.
"Short-term, it’s going to be difficult," McEleney said. "It will certainly set us back, but I think the impact will be very short-lived."
Still, Tom Seeger, president of Seeger Toyota in Creve Coeur, said the automaker did the right thing by suspending sales of affected models until the problems are corrected.
"I am just unbelievably impressed by the decision Toyota has made out of concern for safety," he said.
Seeger said Toyota dealerships would provide loaner vehicles for owners whose vehicles show symptoms of the problems. No one had brought such a vehicle back to Seeger Toyota by late Wednesday, he said.
Gerry Hogan, sales manager at Jay Wolfe Toyota of West County in Ballwin, said: "We’ve had calls, but it’s not as bad as I thought it would be. We’ve sold thousands of these Toyotas, and I haven’t seen one (with the gas pedal problems) yet."
Meanwhile, rental car companies Avis Budget Group and Clayton-based Enterprise Holdings on Wednesday said they were pulling thousands of Toyota models covered by the recall.
Enterprise Holdings, which controls the Enterprise, National and Alamo brands, said it would pull an unspecified number of Toyota models from its fleet, accounting for about 4 percent of the cars it has in service. The company also will stop selling used Toyotas while the automaker finds a fix for the problem.
The suspect parts are made by a U.S. supplier, but they are also found in its European-made vehicles. Toyota said it hasn’t decided what to do there.
Sean Kane, director of Safety Research and Strategies, a consumer group that conducts research into motor vehicle safety issues, said his firm has identified 2,274 incidents of sudden unintended acceleration in Toyota vehicles leading to at least 275 crashes and 18 deaths since 1999.
The firm cites as sources the National Highway and Traffic Safety Administration, direct reports from drivers and incidents mentioned in lawsuits. Toyota would not confirm the numbers.
The supplier of the gas pedals used in the recalled car and trucks, CTS Corp. of Elkhart, Ind., said it knew of only a few cases of drivers having problems with accelerators. It said it’s working with Toyota to design a new pedal.
Also late Wednesday, Toyota said it will add 1.09 million vehicles in the United States to an earlier recall over the risk of accelerator pedals becoming stuck in the floor mats.
The fresh recall would affect five models — 2008-2010 Highlander, 2009-2010 Corolla, 2009-2010 Venza, 2009-2010 Matrix, and 2009-2010 Pontiac Vibe, which is built on a Toyota platform. Toyota has already recalled 4.2 million vehicles in the U.S. over such problems. About 1.7 million vehicles fall under both recalls.
Two years ago, Toyota beat out General Motors Co. to become the world’s largest automaker. Now it is stopping some sales in its biggest market, the U.S., when it desperately needs to sell cars here after reporting its first-ever annual loss last year.
John Wolkonowicz, a longtime auto analyst with IHS-Global Insight, said Toyota is fortunate in that it has a loyal customer base — primarily baby boomers who have been buying Toyotas for decades. That, he said, will help minimize the sales impact in the short term.
"But it will further impede their ability to get the younger buyers that they so dearly want to get into the Toyota fold," Wolkonowicz said.
The sales halt calls into question the aggressive growth strategy pursued under former company president Katsuaki Watanabe, a cost-cutting expert, who led the Japanese automaker to the No. 1 spot in global vehicle sales in 2008, analysts say.
The automaker’s problems in the U.S. may be an extension of the spate of quality problems that plagued Toyota several years ago in Japan, its home market, during the aggressive growth strategy pursued under Watanabe.
In 2006, the Japanese government launched a criminal investigation into accidents suspected of being linked to vehicle problems, though no one was charged. Watanabe later acknowledged overzealous growth was behind the quality problems.
Watanabe was replaced last year by Akio Toyoda, the grandson of Toyota’s founder.
The problems hit Toyota extra hard because it has touted quality for years to gain advantage over competitors, said Brenda Wrigley, chair of the public relations department at Syracuse University’s S.I. Newhouse School of Public Communications.
"Quality was their differentiator, and now it’s their Achilles heel," she said.
The Associated Press, Detroit Free Press and Robert Kelly of the Post-Dispatch contributed to this report.
Health care stocks rallied Tuesday in anticipation of a Republican victory in the Massachusetts Senate race. Well, now it’s official. Scott Brown has defeated Martha Coakley.
So what’s next for health care stocks? Is the Obama reform plan dead? And if so, can health care shares continue to gain ground?
Most health care stocks took a breather Wednesday. But they didn’t fall as much as the broader market did. So this looks more your classic case of buying on speculation and selling on the actual news.
Managed care companies such as Humana (HUM, Fortune 500), UnitedHealth (UNH, Fortune 500) and WellPoint (WLP, Fortune 500) would appear to have the most to gain if Brown’s victory means little change to the nation’s health care system.
These stocks performed poorly in the early part of last year — even as the broader market started to recover — due to fears about the impact a so-called public option or other plans to overhaul how Americans get health insurance would have on profits at the big HMOs.
Major pharmaceutical firms like Pfizer (PFE, Fortune 500) and Merck (MRK, Fortune 500), as well as medical device manufacturers like Medtronic (MDT, Fortune 500), also stand to benefit if gridlock reigns supreme in the nation’s capital. Investors were worried last year that reform might have led to lower drug prices and a hefty tax on medical equipment makers.
But health care stocks have been on a tear for the past few months as it became increasingly clear that Congress would probably not pass a bill that led to a drastic overhaul of the nation’s health care system. So for health care bulls, Brown’s victory is just icing on the cake.
"The Massachusetts election results confirm our view that health care reform will either be watered down or not passed at all. Generally, that’s favorable for the sector," said David Song, a health care stock analyst with Rockefeller & Co., a wealth management firm in New York.
The Health Care Select SPDR (XLV), an exchange-traded fund that owns most of the big drug, biotech, medical device and health insurance stocks, is up nearly 20% since the start of November. The S&P 500, by way of comparison, is up about 10%.
In fact, this Health Care ETF was up 4% in just the past week, a period when the overall market was flat.
Winners and losers
Charles Fernandez, president of Fairholme Capital Management, a Miami-based investment firm that runs the Fairholme fund, said that he thinks that health insurers and drug companies still have room to run. The fund owns shares of insurers Humana and WellPoint, as well as pharmaceutical firms Pfizer and Forest Laboratories (FRX).
Fernandez said that even if health care reform isn’t completely dead, that shouldn’t be a significant concern to investors.
It’s possible that the House of Representatives could try and pass the Senate version of the heath care reform bill before Brown is sworn in, he said. But that $871 billion bill, passed on Christmas Eve, does not include the controversial public option.
So he argues that health insurers wouldn’t be hurt if this became law. What’s more, the Senate bill calls for an expansion of Medicaid, which should mean more people would have access to medication us fast cash.
"The big pharma firms would be winners because more people will be insured. As more are insured, more prescriptions would be issued," Fernandez said.
Song said biotechs are another group that stand to gain if there is little or no reform from Washington. There have been some calls to include rules allowing more competition for so-called biologic drugs from generic makers. That, in theory, would lead to lower prices.
The Senate bill includes a provision giving biotechs a 12-year period of exclusivity before generics are made available. The Obama administration had been pushing for a shorter window of protection for biotechs.
Still, not all health care investors have reason to cheer Brown’s victory. Both Song and Fernandez said that a broader health care reform bill would have been a big boost to companies that operate hospitals.
That’s because hospitals would have fewer bad debt expenses if health insurance was available to a wider swath of the population. Now, hospitals are either faced with the status quo, or at best, an increase in lower-paying Medicaid patients.
With that in mind, shares of Tenet Healthcare (THC, Fortune 500), the nation’s second largest operator, fell 3.5% Tuesday and were down another 3.5% Wednesday afternoon. Other hospital operators were hit even harder Wednesday: Community Health Systems (CYH, Fortune 500) fell 5% while Universal Health Services (UHS, Fortune 500) fell nearly 7%.
Forget politics. Focus on profits.
To be sure, Brown’s victory does not mean that health care issues will no longer be discussed on Capitol Hill. But Wall Street’s attention may turn more to growth prospects over the next few years as opposed to day-to-day moves based on political headlines. That means opportunity for long-term investors.
"The noise isn’t gone. Assuming reform is dead, it’s not dead forever. We still have an uninsured population that’s not going away," said Sabrina Carollo, a research analyst with Ariel Investments in Chicago.
"But there are companies which would have limited exposure to negative aspects of potential reform. Now the focus should be on the availability of healthcare increasing globally due to favorable demographics, " she added.
In addition to an aging population that will require more medical care, Carollo points out that emerging markets such as China are becoming wealthier. That should lead to lucrative new markets opening up for health care companies.
Carollo said she is looking more for diversified health care companies that can take advantage of these trends. Health care giant Johnson & Johnson (JNJ, Fortune 500) is one such company her firm owns. Another is Baxter (BAX, Fortune 500), a firm that is involved in both the biotech and medical supplies businesses.
Will those stocks really be the best bets over the long-term? That remains to be seen. But it’s refreshing that investors should soon be able to finally have a health care debate about fundamentals instead of politics.
There’s always a coffee war brewing somewhere. The latest one has small, neighbourhood espresso shops kicking grinds in the face of Starbucks, the grande operator of the indie coffee business.
Apparently, independent designer coffee shops – 25 new ones opened in Toronto this year – are stealing coffee drinkers from Starbucks faster than you can say "fratta-latte," so the Seattle-based corporation is fighting back. And it’s using the independents’ playbook as its guide.
Earlier this year, Starbucks opened up a shop in the Capitol Hill neighbourhood of Seattle. However, the new Starbucks wasn’t called Starbucks. The sign outside read: "15th Avenue Coffee and Tea" and in much smaller letters below were the words: "Inspired by Starbucks."
Now it appears more "Inspired by Starbucks" shops may pop up in neighbourhoods across the United States – not Canada, for the time being, though, according to Starbucks – as the coffee giant hopes to perk up enthusiasm among what could well be described as the anti-Starbucks crowd.
According to independent shop owner Stuart Ross, Starbucks has no one to blame but itself for the competition.
Without the corporate coffee giant, the owner of Bull Dog Coffee at Granby and Church streets says a majority of coffee drinkers would likely never have been turned on to espresso-based drinks in the first place.
"They (Starbucks) are the ones who told us, `Now is the time to drink Americanos, macchiatos,’" Ross says.
"What they’re good at is marketing, which paved the road for places like mine."
Starbucks Coffee Canada calls the company’s new cafés "a celebration of each community’s personality and culture," and "learning labs for us to incubate ideas and evaluate various concepts."
Starbucks says the new locations have been received with community enthusiasm, but a number of Seattle’s independent café owners weren’t so sanguine.
A week before the opening of 15th Avenue Coffee and Tea, the Seattle Times reported that owners of at least two independent shops, Seattle Coffee Works and Victrola Coffee Roasters, spotted Starbucks’ employees on research trips lingering in their stores.
"They spent the last 12 months in our store up on 15th (Ave.) with these obnoxious folders that said, `Observation’ written on them," said one independent owner.
Federal Reserve Chairman Ben S. Bernanke and his colleagues may indicate the U.S. recovery is gaining strength while repeating a pledge to keep the benchmark interest rate almost at zero for an “extended period.”
The Federal Open Market Committee gathers as growth in the final quarter of 2009 accelerates to more than 4 percent, the fastest pace in almost four years, according to analysts’ forecasts. The FOMC will probably discuss how to eventually withdraw unprecedented programs to revive credit, including purchases of $1.43 trillion in housing debt, economists said.
Fed officials in a statement today may try to head off any investor expectations the improving economy will prompt them to raise interest rates early next year. While acknowledging that job losses are easing after last month’s drop in the unemployment rate, the FOMC may reaffirm that tight credit and weak income growth are among the risks to the recovery.
“The last thing they want is for people to expect that tightening is closer,” said Laurence Meyer, vice chairman of Macroeconomic Advisers LLC in Washington and a former Fed governor. “They are going to increase their confidence about the sustainability of the expansion, but not become materially more optimistic about growth next year.”
The FOMC is scheduled to issue its statement at around 2:15 p.m. after the end of its two-day meeting.
“Assuming they don’t drop ‘extended period,’ market reaction will probably be limited,” said James O’Sullivan, chief economist at MF Global Ltd. in New York.
Changed Forecasts
Macroeconomic Advisers raised its forecast for fourth- quarter growth last week to a 4.2 percent annual pace from 3.1 percent, while Credit Suisse and JPMorgan Chase & Co. increased its estimate by 1 percentage point to 4.5 percent. Retail sales in November climbed twice as much as economists expected, while exports rose to the highest level in 11 months, government figures showed.
“The Fed has to fight two battles: supporting economic growth and showing the market it is concerned about potential inflation later on,” said Sung Won Sohn, former chief economist at Wells Fargo & Co. and now an economics professor at California State University-Channel Islands in Camarillo, California. “Balancing inflation and economic growth and the communications related to that will be their most difficult challenge.”
Fed funds futures on the Chicago Board of Trade indicated yesterday a 53 percent chance that the FOMC will raise its main lending rate by at least a quarter-percentage point by its June meeting, compared with 35 percent odds a month ago.
Fulfill Mandate
Any expectation by investors that monetary policy tightening will occur sooner would complicate efforts by policy makers to reduce the 10 percent unemployment rate, said former Atlanta Fed research director Robert Eisenbeis, now chief monetary economist at Cumberland Advisors Inc saving account payday loan. in Vineland, New Jersey.
“They have a huge problem, and the risk is real,” he said. “It will take extraordinary growth for three years to significantly eat into the unemployed who have lost their jobs.”
U.S. payrolls have fallen by 7.2 million since the start of the recession in December 2007, and a growing population means more jobs must be created to restore full employment. The FOMC projects the unemployment rate will be between 9.3 percent and 9.7 percent in the fourth quarter of 2010, according to forecasts released after its November meeting.
Policy makers will probably also continue to debate the usefulness of selling assets as part of the so-called exit strategy from the unprecedented expansion of credit, Fed watchers said. Central bank officials have tested the use of reverse repurchase agreements to drain some of the cash the Fed has pumped into the economy.
Main Lending Rate
The Fed has kept the benchmark lending rate at a range from zero to 0.25 percent during the past 12 months and has adopted asset purchases as its main policy tool. Since March, the FOMC has said “exceptionally low” rates are likely warranted for “an extended period.”
Bernanke and New York Fed President William Dudley, who serves as vice chairman of the FOMC, signaled in speeches last week that they favored keeping the language.
The U.S. economy faces “formidable headwinds,” including a weak labor market and tight credit, that will probably generate a “moderate” pace of expansion, Bernanke said.
Growth will probably decline next year from the 3 percent to 3.5 percent pace likely in the last six months of this year, “mostly because some of the current sources of strength are temporary,” Dudley said.
‘Pretty Fragile’
“The economy is still pretty fragile,” said Dean Croushore, a former Philadelphia Fed economist who is now chair of the economics department at the University of Richmond in Virginia. “Because inflation has remained low and growth is positive, but not overly strong, the Fed has time to think about how to reduce the excess amount of liquidity in the market.”
The central bank will probably continue to describe inflation as “subdued” and inflation expectations as “stable,” economists said. The Fed’s preferred price measure, which excludes food and fuel, climbed 1.4 percent in October from a year earlier.
NEW YORK–Google appears to be preparing to market its own smartphone, a move that would intensify the company’s rivalry with Apple Inc., whose iPhone dominates the high-end smartphone market.
On Friday, Google distributed a new phone running its own Android operating software to many of its employees. On the messaging service Twitter, some Google employees described the device as a "Google phone," renewing speculation that the company is getting ready to release a mobile phone with its own brand.
Google employees who asked not to be identified confirmed recently that the company was indeed developing new hardware and software for Android phones and coming up with new ways to get those phones into the hands of consumers, but they would not give more details. One Google employee said the new phone was designed by Google No teletrak payday loan.
The Wall Street Journal reported on its website that Google would sell the phone directly to consumers rather than through carriers. The move, if confirmed, would signal a more aggressive effort by Google to become a force in mobile devices.
On Saturday Google acknowledged on a corporate blog that it was indeed distributing a new class of Android phones to employees to experiment with new features.
Mario Queiroz, a vice-president of product management, said, "This means they get to test out a new technology and help improve it."
Federal Reserve Chairman Ben S. Bernanke said removing the central bank from bank supervision and tampering with its political independence would “seriously impair” economic stability in the U.S.
“A number of the legislative proposals being circulated would significantly reduce the capacity of the Federal Reserve to perform its core functions,” the Fed Chairman said in a commentary released yesterday on the Web site of the Washington Post. The measures “would seriously impair the prospects for economic and financial stability in the U.S..”
Bernanke has presided over the most expansive use of Fed powers since the Great Depression. While the 55-year-old Fed chairman has said he averted a financial meltdown, lawmakers have voiced concern about taxpayer-sponsored bailouts and proposed the most sweeping dismantlement of Fed authority since the creation of the institution in 1913.
Bernanke’s commentary is his first comprehensive answer to proposals in the House and Senate that would limit the Fed’s supervisory powers and exert more political oversight in the setting of interest rates. The issues are likely to be discussed when he faces the Senate Banking Committee on Dec. 3 for a hearing on his nomination to a second term as chairman.
“Congress has a lot of public support for an attack on the Fed,” Allan Meltzer, a Fed historian and professor at Carnegie Mellon University in Pittsburgh, said in an interview Nov. 23. “They bailed out everybody in sight.”
Lax Supervision
Senate Banking Committee Christopher Dodd, a Democrat from Connecticut, has criticized the central bank for lax supervision and introduced legislation this month that would strip bank oversight from the Fed and create a single bank regulator. Dodd would also limit the central bank’s ability to loan to individual companies.
“There is a strong case for a continued role for the Federal Reserve in bank supervision,” Bernanke said. “Because of our role in making monetary policy, the Fed brings unparalleled economic and financial expertise to its oversight of banks.”
The Fed chairman pointed to capital adequacy tests the Fed performed in May which helped restore confidence in the banking system. The Standard and Poor’s 500 Financials Index has increased 34 percent since May 1, outperforming the S&P 500 by about 10 percentage points.
Dodd and Representative Barney Frank, chairman of the House Financial Services Committee, want to take away the Fed’s rule- writing power on consumer financial products and give it to a new Consumer Financial Protection Agency.
‘Excessive Risk-taking’
“The Federal Reserve, like other regulators around the world, did not do all that it could have to constrain excessive risk-taking in the financial sector in the period leading up to the crisis,” Bernanke said. The Fed has reviewed its performance and “moved aggressively to fix the problems,” he added.
As the subprime mortgage crisis began to trigger losses in bank portfolios, Bernanke used emergency authority last year to purchase securities from Bear Stearns Cos. and facilitate its merger with JPMorgan Chase & Co.
The Fed chairman said that the government’s actions, while in some instances “distasteful and unfair,” were necessary to prevent “a global economic catastrophe that could have rivaled the Great Depression in length and severity.”
Bernanke pushed the Fed’s backstop lending beyond banks, setting up programs to support the commercial paper and asset- backed securities markets easy payday loan. The Fed Board approved the bank holding company applications of Goldman Sachs Group Inc. and Morgan Stanley, giving them access to the Fed’s loan window.
Propped Up Markets
The former Princeton University economist and Great Depression scholar has more than doubled the Fed’s assets to $2.21 trillion and become the lender of last resort to government bond dealers, banks, Wall Street firms and U.S. corporations. The central bank has also propped up markets for mortgage-backed and asset-backed securities that support credit to consumers, small businesses and commercial real estate.
A financial regulatory reform bill proposed by Frank, a Democrat from Massachusetts, would limit Fed emergency lending to broadly available credit programs.
The Frank bill preserves the Obama administration’s proposal to make the Fed the lead regulator of risk across the financial system.
The central bank’s independence is also under fire from both chambers of Congress. Frank’s committee advanced a proposal this month to remove a three-decade ban on congressional audits of Fed interest-rate decisions. The proposal was offered by Representative Ron Paul, a Republican from Texas, and based on a bill with more than 300 co-sponsors.
Less Independent
Bernanke said studies show that central banks independent of political influence tend to keep inflation and interest rates lower than their less independent counterparts.
“The general repeal of that exemption would serve only to increase the perceived influence of Congress on monetary policy decisions, which would undermine the confidence the public and the markets have in the Fed to act in the long-term economic interest of the nation,” Bernanke said.
Under the proposal by Dodd, commercial banks would lose their power to appoint directors of the 12 regional Fed banks. Instead, directors would be chosen by the Fed’s Senate-confirmed governors, and each board chairman would be appointed by the president of the United States and subject to Senate approval.
The proposal would increase political oversight of the Fed bank presidents, who are among the most vocal proponents on the Federal Open Market Committee for keeping inflation low.
‘Financial Stability’
“Now more than ever, America needs a strong, nonpolitical and independent central bank with the tools to promote financial stability and to help steer our economy to recovery without inflation,” Bernanke said.
Policy makers cut the benchmark lending rate to a range of zero to 0.25 percent almost a year ago and this month reiterated a pledge to keep the policy rate low for “an extended period.”
While the economy expanded at a 2.8 percent annual pace in the third quarter, unemployment jumped to 10.2 percent in October. The Fed’s challenge is to support growth without unleashing expectations of higher inflation prompted by aggressive monetary stimulus.
“The ultimate goal of all our efforts is to restore and sustain economic prosperity,” Bernanke said. “Our ability to take such actions without engendering sharp increases in inflation depends heavily on our credibility and independence from short-term political pressures.”
Continuing a Thanksgiving tradition, every year I ask our staff what they’re thankful for, excluding family, friends and good health — none of which we ever should take for granted, but too often do.
Here’s what they said this year, with a few items from me thrown in for good measure.
• Mentors. Each year I try to learn from people. It could be co-workers, business relationships, friends or family. Having a mentor has helped me be a better salesperson and has helped me in personal and business relationships.
• Mistakes. You can learn from other people’s mistakes and your own. Making mistakes in life is natural and makes people even stronger if they learn from them.
• People who admit their mistakes. This is mine, and I’ll give you an example. In last week’s column, I misspelled the name of Rebecca Kenyon, a local woman who tried out for and made a pro football team here. No excuses. Stupid mistake.
• Is it too corny to say I am thankful for my job? I think of all those people at the Tribune who will be facing some tough times this holiday season. I really am thankful to be a part of a well-respected publication — my home away from home.
• I am thankful that it looks like a buyer may have been found for the Tribune after all, hopefully saving at least some of those jobs.
• For all the trials and tribulations that have come my way. It has caused me to learn that we all have two choices: We either pull ourselves up by the bootstraps and make it through and become much stronger people, or we sit and wallow in self-pity and ask “Why me?” When we choose to push through whatever may happen in our lives, it gives us a better perspective of what life is really all about and how we need to focus on the present moment.
• Giving back and having compassion for people less fortunate. Whether it be monetary or hands-on support. Working with and seeing businesses and people who help the less fortunate has made me more aware that I need to give back more. Giving back to our community is something we all should be doing — not only during the holidays, but during the entire year.
• For the medical industry — particularly the nursing profession. … Health care workers are in the trenches every day taking care of people we love, and they truly are the unsung heroes of our community.
• The things I am grateful for this year are things in previous years I have taken for granted, probably along with many others. Seeing that this economy is so bad and a lot of people are losing their homes and jobs, I am extremely grateful for my job, for having a roof over my head and food on the table every night for my family and me.
• And all of us here at the Business Journal are thankful for you, our readers. We appreciate your continued support and feedback. We all have lots of things to be thankful for, and may we remember to think about them a lot more often in the year ahead.
Don Henninger can be reached at dhenninger@bizjournals.com.
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