Archive for May, 2015

This Week in Washington…

Posted on May 28, 2015. Filed under: Uncategorized |

TOP STORIES

Workers in scaffolding continue the restoration of the Capitol dome.

Workers in scaffolding continue the restoration of the Capitol dome.

  • Most polls show the undeclared former first brother and governor of Florida, Jeb Bush, leading the race for the GOP presidential election by between 2 and 5 points. The field is growing with former Pennsylvania Sen. Rick Santorum and former New York Gov. George Pataki joining this week. Looking Ahead: South Carolina Sen. Lindsey Graham is expected to declare his candidacy on Monday. And Maryland Governor Martin O’Malley is expected to announce his candidacy for the Democratic nomination on Saturday.
  • Speaker John Boehner (R-Ohio) has so far refused to yield to demands from members of both parties that he allow a vote on President Obama’s war powers act aimed at fighting ISIS. Walter Jones (R-N.C.) and James McGovern (D-Mass.) were the latest to join the chorus in a letter to the speaker. Looking Ahead: Boehner is hoping the president will start over with a new resolution.
  • The Veterans Affairs Department, which is the target of a billion cyber attacks per month, is developing a doomsday plan to implement if the attacks were to succeed. Looking Ahead: The agency is holding an internal cybersecurity summit in June.
  • German Chancellor Angela Merkel is the most powerful woman in the world, according to Forbes latest list. Hillary Clinton is number two and Michelle Obama also makes the top 10. Taylor Swift is number 64.
  • A recent GAO audit found that millions of dollars was charged on government issued credit cards at casinos and strip clubs. But banning the use of government cards in casinos overlooks the “many legitimate business-related expenses incurred at gaming facilities,” Geoff Freeman, president and chief executive of the American Gaming Association, wrote in a letter to the Pentagon.

Your Opinion Counts

 Are American “Investors” killing their Golden Geese?

By W D Budinger

American business corporations are a lot like that goose that laid golden eggs.  Like the fabled goose, they create and distribute wealth.  They are our nation’s crown jewels, the envy of other countries, the engines that made America the most prosperous nation in the world.  But in America today they are under attack and their very existence at risk.

In that old fable, greedy villagers killed their goose and destroyed its ability to create future wealth.  Our geese—our companies — hold considerable wealth inside as necessary to fund R&D, growth, and weather a rainy day.  That wealth represents an irresistible temptation for some “investors.”  The result has been a surge in activist investors and hedge funds that attack companies and demand that the wealth be distributed to shareholders.  They harvest the internal wealth and in so doing, cripple or kill the golden goose.

This harvesting is supported by a number of beliefs—myths, actually—that make the dismemberment of companies more publicly acceptable.  These wrong beliefs have taken hold over the last four decades and are generally accepted as truths in both boardrooms and classrooms.  They serve to rationalize harvesting over building.

Here are three of the most pernicious myths:

Myth One – A corporation’s sole legal purpose is to “maximize” profits for its shareholders—even at the expense of employees, customers, the community, or the environment.

The facts:  Not so.  There is no legal requirement.  There is no law in Delaware or any other state requiring a corporation to maximize profits.  Corporations are free to pursue long-term objectives even at the expense of short-term profits.

Myth Two – click here. ____

Bill Budinger, inventor, entrepreneur, founded and served for 33 years as CEO and Chairman of Rodel, Inc., a private company that built plants around the world to manufacture products for the electronics industry.

The Law: Proposed Rulemakings

  • The Department of Defense, General Services Administration, and National Aeronautics and Space Administration are proposing to change the federal acquisition regulations for contractors performing private security functions.
  • The Federal Housing Finance Agency is establishing a method for assessing the national average single-family house price for use in adjusting the conforming loan limits of Fannie Mae and Freddie Mac.

Resources: A quick and easy way to get info fast:

  1. For more on federal government rulemaking, visit the Federal Register
  2. Want to follow the 2016 presidential sweepstakes? All the polling data you’ll need is a click away.
  3. Get the latest from the declared presidential candidates: Democrat Hillary Clintonand Bernie Sanders and Republicans Ted CruzRand PaulMarco Rubio, Mike HuckabeeCarly Fiorina, and Ben Carson

Follow Caren Z. Turner @ https://twitter.com/CarenZTurner

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Are American “Investors” Killing their Golden Geese?

Posted on May 28, 2015. Filed under: SEC |

 Are American “Investors” killing their Golden Geese?

By W D Budinger

American business corporations are a lot like that goose that laid golden eggs.  Like the fabled goose, they create and distribute wealth.  They are our nation’s crown jewels, the envy of other countries, the engines that made America the most prosperous nation in the world.  But in America today they are under attack and their very existence at risk.

In that old fable, greedy villagers killed their goose and destroyed its ability to create future wealth.  Our geese—our companies — hold considerable wealth inside as necessary to fund R&D, growth, and weather a rainy day.  That wealth represents an irresistible temptation for some “investors.”  The result has been a surge in activist investors and hedge funds that attack companies and demand that the wealth be distributed to shareholders.  They harvest the internal wealth and in so doing, cripple or kill the golden goose.

This harvesting is supported by a number of beliefs—myths, actually—that make the dismemberment of companies more publicly acceptable.  These wrong beliefs have taken hold over the last four decades and are generally accepted as truths in both boardrooms and classrooms.  They serve to rationalize harvesting over building.

Here are three of the most pernicious myths:

Myth One – A corporation’s sole legal purpose is to “maximize” profits for its shareholders—even at the expense of employees, customers, the community, or the environment.

The facts:  Not so.  There is no legal requirement.  There is no law in Delaware or any other state requiring a corporation to maximize profits.  Corporations are free to pursue long-term objectives even at the expense of short-term profits.

Myth Two –When Activist Investors “unlock value” and distribute capital to shareholders, newer and more vibrant enterprises will be created.

The facts:  It may have been true once, but no longer.   According to the data, capital and “value” extracted from target corporations is not used for investment in new enterprises.  In spite of the dramatic rise in capital distributed to shareholders, new capital invested in public enterprises has plummeted.  Shareholders today trade capital among themselves.  Very few shareholders have actually contributed any capital to the enterprise itself.

Myth Three – Shareholders need more power for they are the only constituency that can act as a check on management excesses and inefficiencies.

The facts:  Back when direct shareholders tended to be founders and wealthy families, this may have been a valid argument.  Today, however, over 70% of shareholders are not principals, but rather, agents for others in mutual, pension, or hedge funds.  And as agents they have their own, often short-term, objectives and may have little interest in the long-term vitality of the enterprise.  There is no reliable data suggesting that modern shareholder activism is generally beneficial either to companies or to the nation.

Debunking these myths is important because together they are used to justify shareholder raids on corporate treasuries.  Coupled with executive stock options, they pressure managers and directors – even in firms not directly targeted – to favor short-term harvesting over long-term investing.

Indeed, the growing pressure on public companies to act short-term and distribute rather than reinvest is likely one of the causes for the precipitous decline in the number of public companies – down almost 45% in the last 15 years.  Today far more capital flows out of public corporations than flows in. Corporate profits, once a source of growth, are instead being dispensed to shareholders.  In the last 10 years, the companies in the S&P 500 have distributed 91% of their profits to shareholders as dividends and stock buybacks.  In effect, planting has been replaced by harvesting.  The business press is replete with stories of companies slashing people, research, and investment – and even borrowing – to generate more cash for shareholders.

It is time for Americans to rethink these destructive trends.  Allowing financial manipulators to kill more and more of our golden geese for short-term gain is robbing our nation of its future prosperity.  It is time to let our corporations be great again and return to planting instead of just harvesting.   Our future depends on it.

_______

 

Bill Budinger, inventor, entrepreneur, founded and served for 33 years as CEO and Chairman of Rodel, Inc., a private company that built plants around the world to manufacture products for the electronics industry.

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This Week In Washington…

Posted on May 21, 2015. Filed under: Uncategorized |

TOP STORIES

The late, great B.B. King was no stranger to Washington. Here, he plays at the Capitol during a Memorial Day show in 2011.

The late, great B.B. King was no stranger to Washington. Here, he plays at the Capitol during a Memorial Day show in 2011.

  • “I want those emails out.” That’s what Hillary Clinton said this week in agreeing with a federal judge who wants her emails released quicker than the government had proposed. The State Department planned to release the emails all at once by January, 2016. But this week, a federal judge said the emails from Clinton’s private server when she was secretary of state should be rolled out to the public as they are ready. Looking Ahead: The judge gave the State Department until May 26 to produce a new schedule for the release.
  • Expect a flurry of new entrants into the presidential sweepstakes, especially on the GOP side where Louisiana Governor Bobby Jindal, Sen. Lindsey Graham of South Carolina and long shot former New York Governor George Pataki all are poised to make announcments. One Democrat, Maryland Governor Martin O’Malley, is also expected to make his intentions known. Looking Ahead: Expect announcements during the first week of June.
  • The Senate Banking Committee remains split over legislation to reform the nation’s banking system. Details of a bill by the panel’s chairman Sen. Richard Shelby (R-Ala.) began circulating last week, including proposed changes to the Federal Reserve system and an easing of mortgage rules. The Democrats, led by the panel’s ranking member, Sen. Sherrod Brown (D-Ohio), countered with their own version this week. Looking Ahead: Expect sparks to fly when hearings begin on the legislation shortly.
  • Legislation is advancing in Congress that would end bulk collection of phone records by the NSA and prevent key provisions of the Patriot Act from expiring on June 1. The so-called USA Freedom Act passed the House last week, 338-88. Looking Ahead: Senate Majority Leader Mitch McConnell (R-Ky) says the Senate will vote on the measure before the end of the month.
  • Newt Gingrich, the former Republican House speaker and presidential candidate, will join Dentons’ lobbying group as a senior advisor. The 71-year-old Gingrich is not a lawyer and has never formally acted as a lobbyist. Looking Ahead: Gingrich will become part of the firm’s public policy and regulation practice.

 The Law: Proposed Rulemakings

  • The final text of regulations governing practice and procedure for proceedings before the United States Department of Labor, Office of Administrative Lawhas been published.
  • The deadline to submit comments to the Department of Commerce Internet Policy Task Force on cybersecurity issues to be addressed by a multistakeholder process has been extended from May 18 until May 27.
  • The Surface Transportation Board is commencing a proceeding to define “on-time performance” for purposes of Section 213 of the Passenger Rail Investment and Improvement Act of 2008.

Resources: A quick and easy way to get info fast:

  1. For more on federal government rulemaking, visit the Federal Register
  2. Want to follow the 2016 presidential sweepstakes? All the polling data you’ll need is a click away.
  3. Get the latest from the declared presidential candidates: Democrat Hillary Clinton and Bernie Sanders and Republicans Ted CruzRand PaulMarco Rubio, Mike HuckabeeCarly Fiorina, and Ben Carson

Follow Caren Z. Turner @ https://twitter.com/CarenZTurner

 

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This Week In Washington…

Posted on May 15, 2015. Filed under: Uncategorized |

The Arsenal for Democracy Flyover filled the skies over Washington with WWII military aircraft this week.

The Arsenal for Democracy Flyover filled the skies over Washington with WWII military aircraft this week.

TOP STORIES

  • The Federal Transportation Safety Board is in the early stages of investigating this week’s Amtrak derailment outside Philadelphia. The Philadelphia Inquirer reported that the crash occurred in an area of track that is not protected by Positive Train Control, a technology that would have automatically slowed the train. Under a 2008 rail safety law, railroads have until the end of 2015 to implement this technology across heavily travelled lines but federal funding remains an issue and the deadline is likely to be missed. Ironically less than 48 hours after the deadly crash, a House subcommittee began marking up a GOP spending bill that would cut Amtrak funding by $1.1 billion. Looking Ahead: While both parties and most Americans agree infrastructure is a top priority, funding shortfalls are a perpetual problem.
  • A day after rebuking President Obama on a key Pacific trade deal, Senate Democrats fell in line, reaching an agreement with Republicans that is expected to lead to passage of fast track authority for the Trans-Pacific Partnership, the broad trade and tariff deal the president is seeking with 11 Pacific rim nations.  Looking Ahead: The deal clears the way for passage in the Senate, but the House still poses a challenge.
  • With Jeb Bush, the undeclared heavyweight GOP presidential candidate still on the sidelines, Wisconsin Gov. Scott Walker leads the field of Republican presidential hopefuls, but the pack is gaining on him. Looking Ahead: Bush is expected by everyone to announce shortly.
  • The Washington Post cited an internal memo that claims the Veterans Administration did not follow federal procurement guidelines, resulting in a risk to veterans and $6 billion in wasted expense. The scathing report, written by Jan R. Frye, deputy assistant secretary for acquisitions and logistics, says the VA failed to engage in mandated competitive bidding. Looking Ahead: Frye will testify about waste and fraud before the House Veteran Affairs Committee on Thursday, May 14th.
  • Senator Chris Coons (D-Del) who leads the Manufacturing Jobs for America campaign, is earning a reputation for his bipartisan approach in gathering support for this legislation that aligns university programs with advanced manufacturing requirements. This week Roll Call described the senator as a matchmaker, meeting with majority leader Mitch McConnell (R-Ky.) and searching for common ground to win critical GOP support. Looking Ahead: A bipartisan bill that President Obama would back would be a win for members of both parties.

The Law: Proposed Rule makings

  • The Federal Communications Commission announced the procedures, upfront payment amounts, and minimum opening bids for the auction of certain FM broadcast permits, July 23.
  • The President’s Export Council  announced that it will meet on North American supply chain competitiveness; innovation; Open Skies agreements; regulatory cooperation; infrastructure; and promoting sustainable building practices and products in developing countries.
  • The Department of Energy is extending to June 3 the deadline for submitting comments on the request for information on the Methodology for Assessing the Cost-effectiveness of Building Energy Codes, which was originally published in the Federal Register on Thursday (80 FR 19974).

 

Resources: A quick and easy way to get info fast:

  1. For more on federal government rulemaking, visit the Federal Register
  2. Want to follow the 2016 presidential sweepstakes? All the polling data you’ll need is a click away.
  3. Get the latest from the declared presidential candidates: Democrat Hillary Clinton and Bernie Sanders and Republicans Ted CruzRand PaulMarco Rubio, Mike HuckabeeCarly Fiorina, and Ben Carson

Follow Caren Z. Turner @ https://twitter.com/CarenZTurner

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This Week In Washington…

Posted on May 7, 2015. Filed under: Uncategorized |

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TOP STORIES

  • The list of declared contenders in the GOP presidential sweepstake grew by three this week, with former Mike Huckabee, the former governor of Arkansas and previous presidential aspirant, Hewlett-Packard CEO Carly Fiorina, and retired neurosurgeon Ben Carson joining the race. Republican Sens. Ted Cruz, Rand Paul and Marco Rubio have already declared. Looking Ahead: Expected to join the Republican race in the coming days, former Florida Gov. Jeb Bush and Wisconsin Gov. Scott Walker.
  • Republicans on Capitol Hill are continuing their push for legislation that give President Obama fast-track authority to ink a trade agreement with Japan and 10 other Pacific Rim economies. Known as the Trans-Pacific Partnership, it would cover about 40 percent of the global economy, but some Democrats are skeptical. Looking Ahead: This odd coalition of Obama and congressional Republicans could bring things to a head by demanding a vote.
  • It’s not a red issue, or a blue issue, it’s a purple issue. Reforming the criminal justice system is on the agenda of everyone from Hillary Clinton, to Rand Paul, to Koch Industries and the Tea Party-aligned group FreedomWorks. Looking Ahead: With riots in Baltimore putting pressure on lawmakers and candidate, expect the issue to resonate into the fall.
  • A Treasury inspector general investigation found only 39 percent of Internal Revenue Service employees who violate tax laws are terminated, as required by law. In some cases, repeat offenders are still on the job. Looking Ahead: The IRS agreed to amend its policy going forward.

The Law: Proposed Rulemakings

  • The Securities and Exchange Commission is proposing amendments to the Dodd-Frank Wall Street Reform and Consumer Protection Act that would requite registrants to disclose in a clear manner the relationship between executive compensation actually paid and the stock price.
  • The Commodity Futures Trading Commission is proposing to amend the trade option exemption in its regulations for trade option counterparties that are not swap dealers or major swap participants.
  • The Federal Communications Commission rejected a petition from the National Association of Broadcasters and Public Knowledge to revise its proposal on a presumption that cable operators are subject to effective competition.

 

Resources: A quick and easy way to get info fast:

  1. For more on federal government rulemaking, visit the Federal Register
  2. Want to follow the 2016 presidential sweepstakes? All the polling data you’ll need is a click away.
  3. Get the latest from the declared presidential candidates: Democrat Hillary Clinton and Bernie Sanders and Republicans Ted CruzRand PaulMarco Rubio, Mike HuckabeeCarly Fiorina, and Ben Carson

Follow Caren Z. Turner @ https://twitter.com/CarenZTurner

Read Full Post | Make a Comment ( None so far )

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