Wednesday, October 7, 2015

Archive: April, 2010

POSTED: Friday, April 30, 2010, 11:07 AM

Some bank critics want a return to the Glass-Steagall Act, the Depression-era law that forced banks to choose between commercial banking, or investment banking and trading, but not both. The idea is, this helps avoid conflicts of interest.

The ban was dismantled under President Clinton and his Treasury secretary (now Obama adviser) Lawrence Summers at the end of the 1990s - as a favor to newly-formed, ill-fated Citigroup and its peers, critics say.

Summers disagrees. "One should not ascribe excessive significance to the date when Glass-Steagall was repealed," he told a crowd of Wharton School real estate students at the Rittenhouse Hotel on Tuesday night.

Lehman Bros. Holdings Inc. and Bear Stearns Cos. Inc. failed, despite being purely investment banks, Summers noted. Washington Mutual Inc. and Wachovia Corp. also failed, and these were commercial banks with little or no investment trading.

On the other hand Bank of America, a commercial lender, saved ailing investment banking giant Merrill Lynch & Co. Inc. And Goldman Sachs and Morgan Stanley were stabilized by diversifying into commercial banking, Summers noted.

Summers still seems to believe that bank size and complexity can be a solution, not a threat. That's in contrast with rival Obama adviser Paul Volcker, the ex-Federal Reserve chief, and an advocate smaller, simpler financial giants. (From  my print column in today's Inquirer here.)

POSTED: Friday, April 30, 2010, 10:54 AM

Cigna Corp. held its annual meeting at the Art Museum on Wednesday. I asked if I could stop by - they're usually brief - but David Cordani, new chief executive officer of the Philadelphia  health insurer, had given orders to keep the media out this year.

So instead I visited the 15 protesters, from union-funded health care reform groups, who stood halfway down the steps outside, yelling "Cigna! Shame!" on the famous steps. They had gotten hold of a parachute, which they christened "a golden parachute, for Ed Hanway, said Katy Weeks, who works as a "healthcare navigator" helping poor people get medical care at the Philadelphia Unemployment Project. "It represents the excessive compensation package paid to him when he retired."

Hanway stepped down last year with more than $100 million in Cigna stock and deferred compensation, according to the company's annual shareholder proxy statement. Weeks and her fellow protesters say the money would be better spent on paying claims. They also objected to the millions Cigna and other insurers spent lobbying against some of Obama's healthcare finance plans. (From my column in Thursday's print Inquirer here.)

POSTED: Friday, April 30, 2010, 10:46 AM

Wilmington plans to knock down a parking garage to make way for a bus terminal that would move buses and passengers off its downtown Rodney Square and away from the city's library, theater and DuPont,Wilmington Trust, and Bank of America corporate headquarters, says the News Journal here.

"The move would end years of frustration for nearby businesses and for city officials [led by Mayor James M. Baker] who think the vehicles play a major role in turning Wilmington's town square into a dirty bus stop full of panhandlers who make many people afraid to go there," the Journal reports.

POSTED: Friday, April 30, 2010, 4:37 PM

TD Bank, of Cherry Hill and Boston, has laid off financial advisors employed by its predecessors, the former Commerce Bank and BankNorth, after deciding to limit its "wealth management" services to people with at least $700,000 to invest, workers told me.

Bank spokesman Neil Parmenter confirmed the firings. He said 60 people in Pennsylvania and New Jersey lost their jobs. Smaller clients have been offered the choice of transferring to the company's TD Ameritrade discount brokerage. He said advisors were given notice two months ago, effective this week.

(The bank originally said 80 were fired in the two states, but Parmenter just called to correct that number.)

POSTED: Thursday, April 29, 2010, 2:43 PM

Friday update: Safe to say this caught the banks off guard. Spokespeople for all three of the companies named here declined to comment. One sent me to the Securities Industry and Financial Markets Association, which sent me to the American Bankers' Association, which sent me to the Financial Roundtable that represents the biggest banks... See also in my column in the print Inquirer this morning: 

Thursday: "Citigroup, Bank of America and JPMorgan Chase would have to scale down by about 40%" if a bill cosponsored by Sens. Ted Kaufman, D-Del., and Sherrod Brown, D-Ohio, and backed by Bob Casey, D-Pa., among other Democrats, gets added to the Democratic banking-reform bill, according to statements distributed by Kaufman's office. (Found a copy of the FAQ and summary Kaufman put out, posted online here at liberal think tank

The bill would set caps on bank deposit size, debt levels, and non-deposit liabilities to ensure they'll never again be so big that the nation would miss them if they failed again and weren't bailed out next time.

POSTED: Thursday, April 29, 2010, 1:43 PM

Last night's capitulation by Senate Republicans to the Democratic bank-reform bill, after "huge concessions," has confirmed the plan to tighten banking regulations is now "A Bill Too Big to Fail," says Blank Rome's Financial Reform Watch newsletter here.

And here come the amendments. S-3733, sponsored by Sens. Ted Kaufmann, D-Del., and Sherrod Brown, D-Ohio, and backed by conservative-ish Bob Casey, D-Pa, and socialist Bernie Saunders, D-Vt., among others, would put "a strict 10% cap on any bank-holding-company’s share of the United States’ total insured deposits," underlining a current regulatory limit; limit non-deposit liabilities; and also limit leverage and non-deposit liabilities, to keep banks from growing too big.

POSTED: Thursday, April 29, 2010, 8:40 AM

It's not just that Ron Perelman and a posse of hard-headed Philadelphia businessmen were willing to pump an eighth of a billion dollars into the Inquirer, Daily News, and other Philadelphia Newspapers LLC properties.

It's also that Angelo Gordon & Co. and a collection of demanding investors were willing to turn down Perelman and Co.'s offer -- which was worth an impressive 40 cents for every dollars our owners ran up in the inflated 2007 corporate buyout market.

If they'd taken the offer, most of the creditors could have pocketed a sure profit, or at least limited their losses. But the creditors held out, and won, because they believe we're worth more. And that's a huge vote of confidence.

The presumptive owners won't be able to beat the hometown offer if they shut and sell us in pieces. The real estate - the aging Broad Street headquarters, the written-down Upper Merion printing plant - won't fetch near the $129 million the locals offered. They also know they'll get poor results if they starve the news departments, strip operations, or re-load us with unpayable debt.

The creditors hung on and bested the hometown investors because they believe we, the people who put together, distribute and sell the news, features and investigative reporting assembled daily under veteran Inquirer editor Bill Marimow and frugal Daily News boss Mark Frisby can make them more money than if they grabbed the best offer and ran.

POSTED: Wednesday, April 28, 2010, 2:56 PM

As The Inquirer's Paul Nussbaum wrote today, Gov. Rendell is calling a special session of the General Assembly to cook up ways to pay for half a billion dollars in bridge, road, bus, train projects that were supposed to be financed by renting out the Pennsylvania Turnpike to Citigroup and big Spanish road companies (which legislators wouldn't approve) or tolling I-80 (which the federal government won't allow.)

What'll they try next? How about "public private partnership" that bring in private money to fix up local roads, in exchange for letting private companies collect tolls on your local bridge or bypass? What Rendell attempted with the Turnpike, but on a more local level? State transportation boss Allen Biehler appeared to endorse these private-company partnerships in yesterday's Harrisburg Patriot-News. A recent Pocono Record editorial approvingly quoted lawyer Frank Rapoport, of McKenna Long & Aldridge, Devon, lobbying for changes in state law that would make this easier.

Rendell spokesman Gary Tuma tells me his boss hasn't committed to tolls, partnerships, higher fuel taxes, surcharges, or any other particular course of action. He wants the Senators and Reps to figure that out.

About this blog

PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

Reach Joseph N. at,, 215.854.5194 or 302.652.2004.

Reach Joseph N. at or 215 854 5194.

Joseph N. DiStefano
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