Thursday, October 23, 2014
Inquirer Daily News

Archive: September, 2008

POSTED: Thursday, September 11, 2008, 9:48 AM

   In today's print PhillyDeals column.

POSTED: Thursday, September 11, 2008, 9:12 AM

   Fannie Mae executives gave Democratic presidential candidate and U.S. Sen. Barack Obama, D-Ill., more than $100,000, more than any other Senator, in the ten years before the home loan buyer had to be taken over by the Federal Government, says the independent nonprofit Center for Responsible Government.
  That's the years when Fannie and Freddie Mac (which gave Obama another $20,000) grew most rapidly and came under sustained attack from conservative critics. GOP nominee Sen. John McCain, R-Ariz., received around $21,000 in the same years from both lenders. Info from the Center's OpenSecrets.org Web site here.

POSTED: Thursday, September 11, 2008, 4:10 PM

  The $63 billion Pennsylvania Public School Employees' Retirement System lost nearly 3 percent on its investments in the year ended June 30, spokeswoman Evelyn Tatkovski said. The smaller State Employees' Retirement System reported similar losses for the first half of 2008 yesterday.
  PSERS says it made money on bonds, commodities and private-equity investments, but lost on stocks and real estate. Private-equity and real estate profits (losses) are hard to independently verify, since the state doesn't identify those investments, they're often illiquid, and actual returns aren't reported until they're sold.
  The system has plenty of money to pay pensions to 100,000 retired teachers for years to come, but it'll have to increase future subsidies from state and school-district taxpayers to meet long-term goals, unless investment returns recover strongly.

POSTED: Thursday, September 11, 2008, 3:43 PM

  The Federal Highway Administration has refused the Pennsylvania Turnpike Commission's latest plan to impose tolls on I-80 and other state roads, Gov. Rendell said today. "The applications did not meet the technical requirements of the law," said Rendell spokesman Chuck Ardo.
   That's a boost for Rendell's competing plan to lease the Turnpike for $12.8 billion to private companies, and use the proceeds to fix roads. Ardo said that plan "is still going to be a tough sell" in the General Assembly. "But clearly, something needs to be done quickly," before bidder Citigroup-Abertis loses interest, he added. "Right now this is the only option on the table."
  This is yet another unfulfilled promise of the Turnpike Commission, which has spent months urging legislators to make policy decisions on a bet they have now lost,” said Jim Courtovich, advisor to Abertis, the Spanish construction company that wants to run the highway, and Citigroup, the New York bank that wants to fund the deal, which would likely drive the politically-connected Turnpike Commission out of business. According to pro-lease lobbyists' informal count, roughly half of legislators are undecided about the deal, with the rest just about evenly spilt, he said.

POSTED: Wednesday, September 10, 2008, 2:55 PM

   As expected, Exelon's Peco electric subsidiary asked for new price-setting powers today from the Pennsylvania Public Utility Commission.
   How much more will Peco charge Philadelphia-area electric customers? This time, they're not asking for a set price. They're asking to be able to base prices on future power costs.
   In practical terms, that would mean a 20 percent increase by 2011 if today's fuel costs and other expenses stay unchanged until then, said spokeswoman Cathy Engel. The real price could be more, or less, depending on what costs do over the next couple of years.
   Also, Peco is offering to pay 6 percent interest to customers who want to prepay their bills. That's better than your bank is probably paying, though your bank probably doesn't end up keeping your deposits. 
   Peco propaganda here.     
 

POSTED: Wednesday, September 10, 2008, 1:58 PM

   Should traders and speculators go to jail, or is the market working as it should in the complex world oil economy?
   The federal Commodities Futures Trading Commission puts out a report tomorrow weighing whether traders manipulated the price of oil. Analysts and Washington policymakers argue whether the big jump from $100 to $150 a barrel and back was a natural result of supply, demand and the volatile value of the U.S. dollar, or whether speculators did it on purpose to make themselves rich and oil- and gasoline-users poor.  Bloomberg story here.

POSTED: Wednesday, September 10, 2008, 1:17 PM

  It's 25 years since Pittsburgh National Bank bought Philadelphia's Provident to form PNC. The Provident's money-management services arm has morphed into a national player, especially since its 1999 takeover of First Data Investor Services Group, and now competes with Citigroup, State Street, JPMorgan and other giants for global investment accounting and transaction accounts.
  As PNC Global Investment Servicing, the group handles $1 trillion in mutual fund and hedge fund accounts for clients. It employs 5,000 accountants, techs, sales and support people, half of them in Southwest Philadelphia, Wilmington, King of Prussia and Chadds Ford.
  The mutual fund business is consolidating -- it's a mature business, compared to "the go-go growth of the 1990s" -- yet "new hedge funds are raining from the skies," says Ridley native Steve Wynne, the group's chief executive. Unlike its sister unit, investment manager BlackRock Inc., PNC wasn't able to complete its planned spin-off of the group when the IPO market was hot.
  So it's grown by acquisition.  PNC has acquired smaller, specialised firms like Web broker-sales analytics maker Coates Analysitcs Group LP of Chadds Ford and portfolio-accounting specialist Albridge Solutions Inc. of Lawrenceville, NJ (both last Fall) to boost sales and meet demand.
   Wynne's staff labels in the bowels of finance, far from Wall Street glamour -- and from Wall Street's subprime-mortgage nightmares. Last Spring Wynne went back to his alma mater, Widener University in Chester, to give the commencement address: "Conduct yourself ethically...be known as the go-to guy in (your) sector...be self-motivated, period."
   Widener might not have the Wharton School's cachet, but it also trained fellow financial CEOs Edward Hanway of Cigna Inc. in Philadelphia, Jim Hirschman of Legg Mason's $500 billion bond shop Western Asset Management in Denver, and Bill D'Alonzo of $15 billion-asset Friess Associates in Greenville, Del. "It's a great place to be from," said Wynne, whose office is 10 minutes down I-95 from Widener and his old Ridley home,  in Wilmington's Bellevue Corporate Center. 
     
 

POSTED: Wednesday, September 10, 2008, 12:35 PM

  Montgomery County has more residents than Alaska. Does that mean ex-Montco commissioners chairman Tom Ellis is as qualified as fellow Republican Alaska Gov. Sarah Palin to run for vice president?
  Ellis laughed at the idea, in his law office at Ballard Spahr high above Center City, as he prepared to run to Tuesday's McCain-Palin rally in Lancaster. "Though, you know, our budget may be bigger than Alaska's," he joked. (Montco collects more property tax than Alaska, but Alaska has a big edge in oil revenues.)
  Ellis is running in November for Pennsylvania Treasurer, against Democratic venture capitalist Rob McCord. Ellis says his experience as a municipal finance lawyer is more relevant to the job than McCord's record of investing state dollars during the Internet bubble and collapse. "Rob tried to sell me some of his funds when I was first county commissioner," he recalled.
  He questions the propriety of state candidates like McCord taking campaign contributions from money managers and other state contractors. "That smells funny," he said. "It doesn't give the citizens confidence." (McCord has promised to excuse himself when his donors come under state review.)
   Like McCord, Ellis says he'd use the job partly as a pulpit to promote better financial practices. While McCord targets consumers, Ellis stressed the needs of state and local agencies -- combining small pension funds, warning boards away from Wall Street salesmen pushing interest-rate swaps they don't understand.
  Ellis defended the City of Philadelphia's 1998 pension bond issue and the high fees collected by his firm and others. "That was a complicated transaction," he said. The pension fund have to borrow again, Mayor Nutter has said. Why didn't the bond solve that problem? Because the city has more retirees than workers -- and the fund hasn't beaten the market: "When you get the money, you need to invest it correctly," he said. 
  Ellis says he's uneasy about Pennsylvania's growing reliance on private equity, hedge fund and real estate investments that aren't subject to public scrutiny. "We shouldn't be giving private institutions taxpayer money without knowing where it's going," he said. "The fees these firms charge are extraordinarily high, but there's no transparency. You don't know where the money is invested, and you don't know if you're giong to make a profit for years and years. That should change."
  
 

About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

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