Sunday, October 4, 2015

POSTED: Friday, September 18, 2015, 10:30 AM

"We’re thrilled to announce our investment in Clover Health," the largest his firm has made in 10 years of backing industry-disrupting smartphone- and data-based businesses, like the Uber car service, writes Josh Kopelman, boss partner at West Philadelphia-based FirstRound Capital.

FirstRound committed $4 million -- seven to eight times its usual bet -- into a $100 million joint equity and debt fundraising, alongside New York's Flatiron Capital, in Clover, which has offices in San Francisco (data, engineering) and Jersey City (medical, finance, operations).

Founded by investment banker Vivek Garipalli and software engineer Kris Gale, Clover is a Medicare Advantage government-subsidized insurance plan for elderly people. It was previously known as CarePoint Health Plan. Garipalli is also co-owner of CarePoint Health System, a group of hospitals in northern New Jersey, with re investor Jeff Mandler and veteran hospital executive James Lawler. Clover Health was formerly known as CarePoint Health Plan. (Revised and corrected)

POSTED: Friday, September 18, 2015, 9:53 AM
University of Delaware President Patrick Harker is seen on the main campus in this 2014 handout picture taken in Newark, Delaware. (REUTERS)

Timothy McTaggart, a Washington partner at Philadelphia-based corporate law firm Pepper Hamilton LLP and Delaware's banking commissioner as that state became a credit card and wholesale-lending powerhouse in the 1990s, is a keen observer of the financial-regulatory climate.

With former Wharton dean and Delaware University President Patrick Harker, an engineer and economist, taking over as President of the Philadelphia Federal Reserve this summer, I asked McTaggart what to expect as Harker replaces Charles I. Plosser, a conservative academic who distrusted the Fed's stimulative role and focused instead on inflation-fighting and regulatory targets. Highlights from our two conversations:

(About Patrick Harker: do you expect he join the 'dovish' consensus of cheap-money Fed leaders afraid to raise interest rates because it could spook the stock market? Or will Harker succeed Charles Plosser as a high-rate 'hawk' who wants to help savers and fight inflation?) My sense is he will be an empiricist. Between dove and hawk. His background is not strictly theoretical. He marries up the business world with the academic framework. 

POSTED: Thursday, September 17, 2015, 2:01 PM
Federal Reserve head Janet Yellen (Getty Images)

(With link to Fed statement, and comments) The Federal Reserve Open Market Committee voted no change in U.S. interest rate targets at its monthly meeting in Washington today, pleasing stock investors who had mostly stopped expecting an increase, while disappointing bank lenders who say at least a symbolic 0.25% boost in the federal funds rate is overdue after years of cheap-money policy. Fed statement here.

Betting that cheap money will encourage employers to keep hiring, the committee said it "reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate." The committee also said it was concerned about the impact of higher U.S. rates on foreign economic and financial problems.

Before boosting the rate sometime in the future, FOMC wants to see "some further improvement in the labor market" and more signs inflation is rising toward its 2 percent annual goal; higher rates slow price gains. 

POSTED: Thursday, September 17, 2015, 1:29 PM

Downgrades of public school district and local municipal credit ratings rose back up to Great Recession levels this Spring, a sign that spending on retirement plans and other programs are rising unsustainably faster than tax collections, warns PNC muni-bond analyst Tom Kozlik, after reviewing Moody's Investor Service data.

After a break last winter, "the latest data showed 149 public finance sector downgrades in second-quarter 2015," which is "disturbingly" close to the average 157 a quarter from 2009-13, Kozlik notes, and tripple the pre-recession (2002-08) average of 55 a quarter.

Illinois toped the downgrade list, with 17; there were 14 in Michigan, 11 -Ohio, 10-Pennsylvania and 8 in New Jersey. (Those states, along with New York and New England, have more local governments and school districts than most of the U.S. In many states south of Delaware Bay and west of the Mississippi, there are no township-level governments, and no organized equivalent to the small-town boroughs of the Northeast.)

POSTED: Thursday, September 17, 2015, 11:45 AM
Jon Lubert. ((c/o Jon Lubert))

Philadelphian Jon Lubert, 35, a businesslike Republican who  believes in democracy and the transforming power of the Internet, has set up the new political watch, policy debate and crowd-thinking site, Says he wants people to "join and debate ideas and candidates on a non-partisan basis. They'll agree to vote site-wide, a few weeks before an election, then vote in that election as a bloc, the way the majority of the site agrees." A lobby for thoughtful people to back effective and efficient government, against more specialized interests.

Lubert, founder of the $350 million-asset alt.investment firm JL Squared Group and a member of one of Philadelphia's best-known investor families (his father, Ira Lubert, runs the Independence Capital group of funds, based like JL in the Cira tower), is "becoming very frustrated with the direction of the country," he told me in his firm's offices facing the Art Museum across the Schuylkill. And "it's very hard to have any influence." 

Don't rich guys like him already rule American politics with their money? He tested that: As Bloomberg noted here, Jon was one of the 250 "well-connected Republicans" who met with Presidential hopefuls Mitt Romney and Sens. Lindsey Graham and Marco Rubio over rifles at a Spring fundraiser in Utah. Jon and his wife also donated to Carley Fiorina, Ben Carson and Chris Christie

POSTED: Thursday, September 17, 2015, 9:58 AM
Philadelphia Fed President Charles Plosser steps down March 1. (Photo from NDN)

Charles I. Plosser, the conservative economist who headed the Federal Reserve Bank of Philadelphia before quitting when his term on the rate-setting Board of Governors ended last winter, gave this interview to Fox Business Network's Maria Bartiromo today. Thanks to Fox for these excerpts. I added the topic headings: 

WILL THERE BE A RATE HIKE? “Well, I don't know... but I'm sure there's a very lively debate. They're debating all the issues that all the news programs and financial markets are talking about. And it's going to be a tough decision. It's going to be probably a pretty close call I think.”

WHEN SHOULD THE FED HAVE RAISED RATES? “Maybe a year ago. But yes, I sort of made that argument for quite some time and felt like it was time to move. We still had crisis-style monetary policy in the midst of an economy that was going between or around 2.5 percent. And unemployment rate was getting close to the natural rate or what might be full employment. And it seemed to me it’s rather strange to be having a record amount of accommodation in an economy that was pretty close to the Fed’s goals and targets.”

POSTED: Tuesday, September 15, 2015, 1:33 PM
Federal Reserve Board Chairwoman Janet Yellen arrives to testify before a House Financial Services committee hearing on "Monetary Policy and the State of the Economy" on Capitol Hill in Washington July 15, 2015. REUTERS/Yuri Gripas

(Wednesday update with links to Summers, Blankfein comments, new sources) We've been waiting since before the 2008 credit crisis  -- borrowers in fear, savers and lenders in hope -- for the day the Federal Reserve finally raises interest rate targets above the near-historic lows. Goldman Sachs boss Lloyd Blankfein,  ex-Treasury Sec. Larry Summers and others on Wall St. worry even a symbolic 0.25 percent increase in the federal fund rate will scare investors.

"The growth scare is likely enough to delay the Fed’s rate hike" until at least December, predicts Jason Pride, Director of Investment Strategy at Glenmede Trust, which manages $29 billion in investments. The "consensus" is that the Fed won't raise rates this week, says Tom Wilson, managing director and investment committee senior at $18.5 billion asset Brinker Capital in Berwyn. The larger mystery is how much the Fed emphasizes recent improved hiring, low inflation and China's slow economy in projecting a future rate hike.

But "rates have to go up," says Ernie Cecilia, chief investment officer at Bryn Mawr Trust Co. Cheap money forces too many investors into bad deals like mispriced junk bonds and overpriced stocks and real estate speculation. Low rates starve careful savers, including retirees, he told me.

POSTED: Tuesday, September 15, 2015, 12:48 PM

Duran Group, a Wertheim, Germany-based glassmaker with 600 workers at three plants in central Europe, has purchased 350-employee Wheaton, the century-old Millville laboratory glass and plastic container supplier, for an undisclosed price. Besides its flagship Millville plant, Wheaton also operates a smaller plant near Manchester, England.

Seller was Incline Partners, a Pittsburgh investment firm (formerly part of PNC when Dave Hillman ran their private investments) that had owned the business since 2010. Duran is owned by $11 billion-asset One Equity Capital Partners, a New York buyout firm run by a group of former JPMorgan investment bankers.

Duran's backing "will allow us to accelerate a number of growth programs already in progress" and "opens up many possibilities for improvements and growth," said Wayne Brinster, a former Becton Dickinson Corp. executive who has served as Wheaton's president and chief executive since 2012. With its skilled labor and sand supply, South Jersey is a historic center for industrial glassmakers, though employment has dropped. 

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.

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