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Governor and Comptroller Clash on Pension-Fund Help - (www.nytimes.com) New York’s governor and state comptroller clashed on Friday over how to make up steep losses in the state’s pension fund. The comptroller, Thomas P. DiNapoli, said that the fund, which declined 26.3 percent for the year that ended March 31, suffered “the worst year in anybody’s memory.” He said that local governments other than New York City would have to significantly increase their payments into the pension system for the first time in several years, setting off a war of words with Gov. David A. Paterson. The governor said in a statement that such increases would have “a devastating impact on already overburdened local property taxpayers,” adding that the comptroller needed to do more to ease costs borne by local governments. Mr. DiNapoli shot back at the governor in his own statement, saying, “The governor is wrong to dismiss this proposal,” and adding that it would “clearly mitigate the impact of rising rates on the state, local governments and taxpayers” by deferring some of the payment increases. Tensions have been festering between the two men since Mr. DiNapoli criticized increased spending in the state budget that was passed last month. Mr. DiNapoli has also not embraced a proposal by the governor to move future state workers from traditional pensions to a 401(k)-style plan. Over all, the pension fund’s value is now at $109.9 billion, down from $153.9 billion a year earlier. The 26.3 percent loss — Mr. DiNapoli called it a “startling figure” — reflects the sharp downturn in the stock market but not contributions to and payouts from the pension system last year. The loss will require local governments to increase their contributions, from 7.4 percent of their payrolls projected for next year to an estimated 11 percent by early 2011, the comptroller’s office said. The news does not directly affect New York City, which has its own retirement system. Governments across the state are already facing severe budget strains. Mr. DiNapoli proposed allowing local governments the option of paying less of an increase now and more — including interest — in future years, presumably after the economy and financial markets recover. Mr. DiNapoli defended the fund’s performance, saying it held up well compared with similar pension funds. The Standard & Poor’s 500-stock index declined nearly 40 percent during the fund’s fiscal year. “We’ve weathered the storm better than many of our peers,” he said. The report came as past pension fund investment decisions were being engulfed in scandal. Attorney General Andrew M. Cuomo and the Securities and Exchange Commission have been investigating allegations that aides to Mr. DiNapoli’s predecessor, Alan G. Hevesi, sold access to the fund to investment firms for millions of dollars.
Students Relying on Loans Wonder Whether Forgiveness Will Last - (www.nytimes.com) If you want to become a public defender, Georgetown University can be a great place to get your legal education. So Heather Gatnarek expects to take on well over $100,000 of debt to get her law degree there and hopes to graduate in three years. Here’s the problem, though. She’s relying on a new federal program that forgives part of the student loan debt for graduates who enter public service fields. And she was scared out of her mind when she read a New York Times article on Wednesday on problems in Kentucky, where significant cuts in one of its loan forgiveness programs have put thousands of indebted public school teachers and nurses in a painful financial squeeze. “I would be completely up a creek” without a loan forgiveness program, Ms. Gatnarek said. “I don’t know what I would do. Marry someone rich, I guess. People say that I could just do corporate law for a few years, but I wouldn’t last two days.” The problem in Kentucky and another that emerged in Connecticut on Thursday raise a frightening question for millions of young Americans considering jobs like teaching or nursing: Are the state or federal programs that promise to forgive student loan debt for people in those or other public service professions backed by ironclad guarantees? And if the forgiveness isn’t guaranteed, how on earth can anyone expect 18- or 22-year-olds to take on tens of thousands of dollars in debt? Without such a promise, how can they know that they won’t one day find themselves in a police uniform or in a rural doctor’s office suddenly facing personal bankruptcy? The good news here is that the federal Department of Education says that almost all its loan forgiveness programs are safe. “It doesn’t depend on some future Congress for us to come through on most of these,” said Robert Shireman, deputy undersecretary of education. “The majority of them get appropriations for the life of the programs.” But many states say that financing their loan forgiveness programs depends on state budgets. Given declining tax revenues, that doesn’t inspire much confidence. On Thursday, for instance, Gov. M. Jodi Rell of Connecticut proposed cutting the state’s minority teacher grant program, which awards a stipend that is intended to help students pay off their loans, said Constance Fraser, a Connecticut Department of Higher Education spokeswoman.
California Scrambles Again to Avoid Cash Crunch - (www.cnbc.com) California will soon run out of cash. Again. Governor Schwarzenegger today outlined new measures to cut costs and close a projected $24 billion budget gap, including cutting another $680 million in education, plus $315 million in school transportation funds. State workers may face a 5 percent pay cut on top of the 10 percent cut earlier instituted through twice-monthly furloughs. Most Californians who receive in-home state-supported healthcare services would have to do without, and the state would also eliminate adult day care services for low-income residents who can't afford nursing home care. It may not be enough. State Controller John Chiang reports that California will run out of cash on July 29th. "On that date, the State will be in the red by $317.1 million; two days later, on July 31, our cash deficit increases to a negative $1.02 billion." He says the situation will continue to worsen, bottoming in April of next year, when the state will be $22 billion short "of meeting our payment obligations...that is four times the $5.1 billion cash deficit we faced this past spring." Controller Chiang says California has not had a positive cash balance in nearly two years, and that the Legislature needs to fix the budget problem by July 15th to give him enough time to sell Revenue Anticipation Warrants (RAWs) to raise cash before July 29th.
Auto Suppliers Brace for Blow of GM Bankruptcy - (www.washingtonpost.com) Auto parts suppliers, pummeled by the global slump in vehicle sales, will soon face a new menace to their survival: General Motors' bankruptcy. GM is likely to file for Chapter 11 bankruptcy protection on Monday. And suppliers could suffer if the automaker, following Chrysler's example, slashes more production by shuttering plants until it emerges from court. GM shares more than half of its 1,500 North American suppliers with Chrysler and Ford, according to CSM Worldwide. "You'll have a tough time finding a supplier that isn't touched by GM," CSM auto analyst Mike Wall said. The industry is already suffering. Plagued by manufacturing cutbacks and falling profits, Ford's largest supplier, Visteon, filed for Chapter 11 protection in U.S. Bankruptcy Court in Delaware on Thursday, while Metaldyne, another Michigan company, filed in New York. "Visteon and Metaldyne are just the beginning," said Ann Wilson, senior vice president of government affairs for the Motor and Equipment Manufacturers Association. "We're talking 50 to 60 suppliers that will probably file in the next few months. Some will go straight to liquidation. Small companies will just close. But a number will enter the bankruptcy process, and it's important it's done with the same thought and care that's been afforded to GM and Chrysler." Last year about 40 suppliers sought bankruptcy protection, according to the manufacturers association. At least 20 filed in the first four months of this year. The association plans to meet lawmakers next month in hopes that they will pass an incentive program, like cash-for-clunkers, to reverse weak U.S. new-car sales. Following Chrysler's bankruptcy, small auto parts makers have appealed to lawmakers for federal aid. Chrysler's bankruptcy judge approved a motion that will pay some of its biggest venders, who make key modules such as dashboards, for shipped parts. Yet small companies, contracted to make the screws for those dashboards, say the money isn't trickling down. GM is wrestling with its spun-off supplier Delphi, which filed for Chapter 11 in 2005 and still has not emerged. GM has poured millions of dollars into Delphi, and under a deal this week with its union, GM may take ownership of five Delphi plants.
Antiques dealers lament sales slowdown - (news.yahoo.com/s/ap) Walking what used to be a busy trail of antiques shops in this western Connecticut hamlet now is a lonely, quiet trek. Throughout New England and the U.S., antiques dealers are having a difficult time drawing customers, canceling major shows from Boston to Minnesota as would-be buyers scale back on purchases during the worst economic downturn since the Great Depression. "It's awful," said Ann Beckman, co-owner of Grass Roots Reruns, one of more than two dozen shops operating in a row of historic Woodbury homes and rustic barns. "A lot of people have just dropped out. You have to be able to weather the storm." A multimillion-dollar industry dominated by mom-and-pop shops and part-time enthusiasts, antiques dealers across the country are feeling the pinch. Organizers canceled the 50th anniversary Ellis Antiques Show in Boston and the Chicago Botanical Garden Antiques & Garden Fair and Preview and haven't decided when they'll be rescheduled. The Minneapolis Institute of Arts also canceled its 2009 show, one year after marking the event's 25th anniversary. "It was purely economical," said Kim Cameron, who was to be co-chair of the show. "It was not a fun decision to make and not fun to do on my watch," she said. Connecticut's Farmington Antiques Weekend will still take place this June 13 and 14 despite losing its major sponsor, Country Home magazine, after the publication folded this year. Organizers expect about 200 vendors and up to 5,000 shoppers during a two-day period, according to Jon Jenkins, whose family annually organizes that show and 17 others. He's using a blog, Web site and e-mail to keep his customer base coming. "It definitely takes customers with money in their pockets to make this business work," Jenkins said. "But deep down inside, people like the stuff. Antiques are the physical objects that connect our collective past. They evoke memories. ...Nobody ever sits and looks at the vase they ordered from Crate and Barrel with a great story about how they bought it on the Internet." Overall, sales have slowed, said Lita Solis-Cohen of the Maine Antique Digest. Small venues are faring the worst, she said, and high-end antiques are being held in reserve or are only being sold in private. "The auction houses discouraged people from putting very, very good things in the market because they were afraid they would fail," Solis-Cohen said.
OTHER STORIES:
'Vulture' shoppers circle Chrysler dealers - (www.latimes.com)
What should Obama do with shares in auto companies? - (www.latimes.com)
Dollar Slips to $1.41 per Euro on Economy, Higher-Yield Demand - (www.bloomberg.com)
Crude Oil Caps Biggest Monthly Gain Since 1999 on Dollar Drop - (www.bloomberg.com)
Chrysler Sale to Fiat Delayed Until Monday by Court - (www.cnbc.com)
Iacocca Loses Pension With Chrysler Bankruptcy - (www.cnbc.com)
Kudlow: US Now Owns GM, But Won't Get Paid Back - (www.cnbc.com)
Bank Of America's Lead Director Sloan Steps Down - (www.cnbc.com)
Rise in risk appetite, U.S. deficit fear slam dollar - (www.cnbc.com)
Geithner wields little leverage in China talks - (finance.yahoo.com)
Zoellick Warns Stimulus ‘Sugar High’ Won’t Stem Unemployment - (www.bloomberg.com)
Options Investors Turn Bearish On Oil - (www.cnbc.com)
Avastin's Failure to Extend Cancer Survival Is Detailed - (www.cnbc.com)
First-Time Homebuyers May Be Eligible for US Loans - (www.cnbc.com)
FDIC orders changes at five California banks - (www.latimes.com) The agency and state regulators require tighter lending policies, stronger...
Charity fundraisers targeted in state lawsuits - (www.latimes.com) Intended recipients -- police, firefighters and veterans -- allegedly got little...
Obama to appoint cyber-security advisor - (www.latimes.com) The president says America's digital infrastructure will be treated as a...
'Jumbo' mortgages more affordable but still tough to get - (www.latimes.com) Rates for loans that exceed $729,750 have fallen, but many lenders are imposing stringent credit score,...
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