Key bankers advised to 'sit tight' over inquiries

A NUMBER of key figures at the centre of the banking scandal have been advised by lawyers to "sit tight" because the State will find it extremely difficult to prove deliberate wrongdoing.

The Irish Independent has learned that some bankers have been advised that the State will face an uphill task in convincing a court there was intent to commit a crime.

Ireland has a weak record on the prosecution of white-collar crimes and complex fraud actions, owing to the high proof thresholds required in the prosecution of such cases.

The key figures have also been advised that prosecution will be made even more difficult if it can be shown that regulatory authorities knew about or supported certain transactions.

There has never been a successful prosecution for insider trading in Ireland and the Markets Abuse Directive, an EU-wide law that regulates insider trading and market manipulation, has never been tested in an Irish court.

Earlier this year the Office of the Director of Corporate Enforcement (ODCE) told the High Court that it could take another two years for prosecutions, if any, to flow from its inquiries into Anglo Irish Bank.

The ODCE has not secured one conviction in its near 10-year history, during which not one white-collar criminal has bee sent to jail.

A garda file on the Anglo Irish Bank/Irish Life & Permanent deposit exchange, the Anglo 10 share-support scheme and the issue of directors' loans has yet to be completed and may not be handed over to the Office of the Director of Public Prosecutions until early next year.

The revelation came as former regulator Patrick Neary refused to comment on claims by former Anglo Irish chief executive David Drumm that he and the Central Bank were aware at all times of key decisions at the bank.

Mr Drumm, who has not been accused of any crime, has filed for bankruptcy in the US over €8m in loans that he cannot repay Anglo. He alleged at the weekend that everything was done with the knowledge of the authorities.

"Every step we took was hand in hand with our own (Financial) Regulator, the Central Bank," Mr Drumm said from his home in Wellesley in eastern Massachusetts. "I acted at all times in the interests of the bank and with the full backing of the regulator."

Former Central Bank governor John Hurley was unavailable for comment yesterday. Mr Neary refused to comment to the Irish Independent when approached outside his home in Dundrum yesterday.

Proof

Both men have been criticised in the report drawn up by Central Bank governor Patrick Honohan, who found their organisations to have been "timid", "excessively deferential" and "accommodating" but no serious investigation has unearthed proof that the bank or regulator were kept fully informed of Anglo's decisions.

Mr Drumm's interview contains an apology of sorts. "At a human level there isn't a day goes by, all day, and sometimes all night, (that) I'm (not) haunted by what we, as a bank, as a management, as the board of the bank, could have done differently to not end up where we ended up," he said.

The banker also reveals that Anglo decided back in 2004 to reduce exposure to Irish property but somehow failed to implement the policy because it was somehow unable to stand back from long-lasting relationships with borrowers.

Mr Drumm, who has an Anglo pension worth more than €5m which cannot be taken away from him, said he was "sick to my stomach" about the suffering in Ireland but still appeared unable to take responsibility for his actions, saying he would only do so when others took responsibility for theirs.

FEWER PEOPLE FACE LOSING THEIR HOMES

In the three months to the end of March, 10,500 properties were repossessed, 11 per cent down on the last quarter of 2009.

About 40,500 home owners went into arrears, down two per cent, said the Financial Services Authority.

That fall helped cut the number of mortgage holders in arrears for three consecutive quarters by about four per cent to 362,000.

Repossessions have been less than expected due to the low 0.5 per cent Bank of England base rate and support from the Government and lenders. The Council of Mortgage Lenders expects fewer than the 53,000 people it had forecast to lose their homes this year.

Mortgage advances in the first quarter were 22 per cent down as bad weather, the end of the stamp duty holiday and General Election uncertainty put off buyers.

Asia Pacific server revenue up 8.8% in Q1: Gartner

Asia Pacific server shipments grew 27.3% to 371,060 units for the first quarter of 2009, compared to the same period last year, as economic recovery in the region continued during the quarter and firmed up business confidence across different segments, including small and medium businesses (SMBs), according to IT research and advisory firm Gartner.


Asia Pacific server revenue increased 8.8% to $1.76bn, compared to $1.62bn for the same period a year ago. Five sub-regions recorded year-on-year revenue growth, with Australia and New Zealand (ANZ), and ASEAN leading the pack with increases of 36.4% and 17.6%, respectively during the quarter. In Greater China and India, despite strong consumption of x86 servers, revenue growth was somewhat flat at 4.3 and 4.2%, respectively.


The research firm said x86 servers was a predominant platform that fostered market growth during the quarter. The product mix in this segment continued to move towards higher end platforms which resulted in faster revenue growth of 37.9% while shipment was up 30%.


Blade servers (including x86 blades and RISC/IA-64 blades) witnessed the fastest compared to other server form factors, rack and tower, with a 47.9% year-over-year shipment growth in 1Q10.


IBM held the highest market share in revenue with 39.1%, a lead of 5.8% over second-place HP. IBM server vendor revenue increased 8.2% to $690.1m, compared to same quarter last year. Dell gained the third spot with a market share of 12.9%, followed by Oracle and Fujitsu with market shares 5.6% and 1.5%, respectively.


In server shipments, HP retained the top spot with a market share of 31.9% in the first quarter of 2009. HP server shipments increased 44.7% to 118,444, compared to same period last year. Dell held the second spot with 23.9% market share, followed by IBM and Lenovo with 20.6% and 3.5% share, respectively..


Erica Gadjuli, principal research analyst at Gartner, said: “Server consolidation and virtualization still played important roles as growth engines in mature markets like Singapore, Taiwan, Hong Kong and Australia, driving faster adoption of new processors on richer configured servers. Demand came generally from a mix of financial and public sectors in those markets.”

Bankcard holders more willing to spend

BEIJING: Chinese bankcard holders' were increasingly willing to spend in April as optimism about the Chinese economy grew, the latest consumer confidence figures showed Sunday.

The Bankcard Consumer Confidence Index (BCCI) stood at 86.80 in April, up 2.67 year-on-year but slightly lower than the record high of 86.89 in March.

The Chinese economy recovered with increased demand, industrial output, employment and imports in April.


Moreover, measures to cool China's overheated property market also boosted consumer confidence, the report said.

Many bankcard holders were willing to spend on discretionary items during the many sales campaigns ahead of the Labor Day holidays from May 1 to 3, the report said.

The BCCI index is compiled by Xinhua News Agency and China UnionPay, a national bankcard association.

They jointly started compiling the index in April 2009 based on bankcard transaction data and analysis of structural changes in urban consumption.

J.P. Morgan Brazil investment trust attracts £46.7m

The J.P. Morgan has raised £46.7m for its Brazil investment trust, the first UK closed-ended company focused on the Latin American country.
Retail investors accounted for £18.6m of the money raised, with the rest coming from institutional accounts. J.P. Morgan targeted £50m for the launch.

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Managers Sebastian Luparia and Luis Carrillo plan to run a concentrated portfolio of 40 to 45 stocks, investing in companies which will benefit from increased domestic spending.

It means the trust will be unlikely to hold Petrobras and Vale, which account for a combined 40% of the Brazilian stock exchange.

The trust will be overweight consumer discretionary, consumer staples and industrials, but be underweight energy and materials. Its benchmark is the MSCI Brazil 10/40 Index, which limits any constituent to a maximum of 10% and the top five to 40%. However, the managers intend to diverge substantially from the index.

“When investors think about Brazil, they think the economy is commodity driven because the exchange is so weighted to this area,” client portfolio manager Claire Simmonds says.

“However, domestic consumption accounts for 60% of Brazil’ GDP and is much more diversified than the index would suggest.”

“We want the fund to reflect how the Brazilian economy looks now, rather than how than reflect the stock exchange. We are prepared to go all the way down the market capitalisation spectrum.”

The trust has a management fee of 1% with performance fee equal to 10% of any outperformance of its NAV, providing NAV growth has been positive.

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Get your kids to fund their nest eggs

Naturally, affording retirement isn't an issue that weighs heavily on the minds of young people just starting off in the workforce. So it's no surprise that only 28% of workers under age 25 contribute to employer-sponsored retirement plans, as reported by tax information service CCH.
But as a parent, you don't want your child to end up behind. And with fewer workers being offered corporate pension plans, individual savings are increasingly important in determining quality of life in retirement. As for convincing your kid of this ...



Show the cost of waiting
You know that time is a powerful factor in building wealth. But does your child? Demonstrate with numbers: A 25-year-old saving $250 a month before taxes -- the equivalent of $188 after taxes in the 25% bracket -- will have $656,000 by age 65, assuming a 7% average annual return; if he instead waits until 35 to start saving, he needs to stash more than $500 a month to get to the same amount.
Use the calculators on our website, at cnnmoney.com/tools, to run more scenarios. Share your own experiences too. If you've been a disciplined saver, explain what it means for your retirement; if not, say what the consequences might be, says Atlanta financial planner Mary Claire Allvine.
Explain the incentives
Many young adults don't realize how much money they're leaving on the table if their company offers a savings match and they're not contributing. Show your kid: If he's making $50,000, a match of 50¢ on the dollar up to 6% of salary is worth about $1,500 a year.
If your kid argues that he won't be at the job long enough to vest, explain the other benefits of employer retirement plans, such as pretax contributions and deferred growth. And if you can afford to, create your own match by contributing to an IRA on your child's behalf contingent on his saving, says Hadley, Mass., financial planner Allen Davis.
Play financial adviser
Offer your wisdom in choosing investments, which can be intimidating to a beginner. Not confident in your own knowledge? Suggest a target-date mutual fund, which adjusts the mix of stocks and bonds to grow more conservative as retirement nears. Or have your kid pick stock and bond index funds in an 80/20 mix, an allocation that won't need to be changed for a decade or so.

The greatest real estate turnaround ever

Charlotte Street was an apocalyptic nightmare version of urban life.

Weed-choked, junk-filled lots flanked the three-block stretch. Burned out tenement buildings punctuated the sky, and abandoned cars littered the landscape.

The street, like much of the rest of New York City's South Bronx, had fallen to epic lows by the late 1970s. The area had disgorged nearly two-thirds of its population as living conditions declined and arson fires raged. Some landlords, unable to find tenants, torched their properties for insurance money. Other blazes were set by junkies, while still more were set by residents of public housing trying to get moved into nicer apartments.

See photos of the devastation
"Charlotte Street was burning," says Genevieve Brooks, a former resident. "Every day, I'd see the fires and smell the smoke. I slept with my shoes by my bed at night because you never knew if your building was next."

Just three miles away, at Yankee Stadium, is where Howard Cosell uttered his famous line: "There it is, ladies and gentlemen, the Bronx is burning."

No longer.


0:00 /3:26From bombed out slum to suburbia
In the three decades since Cosell introduced the world to the plight of the Bronx during the 1977 World Series, Charlotte Street has morphed into a haven of single-family ranch houses accented by backyards flourishing with fruit trees and flowers. Boats sit in driveways and above-ground swimming pools are common. It's a slice of suburbia in one the country's most urban -- and poor -- counties.

What happened to the Charlotte Street that President Carter called "the worst slum in America?" Or the Charlotte Street that President Reagan visited during a 1980 campaign swing? The one he compared -- unfavorably -- with London after the Blitz.

One of the greatest real estate turnarounds ever.

"Charlotte Street is thought of as quite a success story, particularly considering its context: It rose, phoenix-like, out of the ashes," says Nicolas Retsinas, director of Harvard's Joint Center for Urban Studies.

Baby steps
One of the primary catalysts was Brooks, who had moved to Charlotte Street from South Carolina in the 1960s, when the neighborhood was racially mixed and thriving. But as the 1970s dawned, she watched the deterioration take hold.

When she asked her landlord about maintaining her building, he dismissed her. "He told me I should move to Queens, or Park Avenue," she remembers. "I could have left. But I was single at the time, no children, so I didn't have as much to lose."

Instead, she knocked on neighbors' doors and asked if they noticed the change. When they said "yes," she formed a tenants association. Then she helped form a block association to lobby the city to pick up trash and abandoned cars, and to crack down on crime.

"We went down to the cellars and bagged tons of garbage, brought it upstairs and got Sanitation to pick it up," she remembered. "The kids were excited about sweeping the streets. I would give them money for snacks. They would ask, 'Miss Brooks can we sweep the street today?'"

Bigger strides
By 1974, tired of the small scale efforts, a host of neighborhood volunteers formed a group they called the Mid-Bronx Desperadoes to lobby for improvements throughout the community.

"There was a tremendous amount of community action," says former Bronx Borough President Fernando Ferrer. "That was the secret ingredient. The community refused to give up. They needed allies. They needed people who took the decline of the South Bronx as personally as they did."

One of those people was urban planner Ed Logue, who was hired in 1978 to run a city agency called the South Bronx Development Office. The city was trying to erase the shame of its worst slums, and to do that Logue knew he would need the assistance of local organizations. The Desperadoes, headed by Brooks, were ready to step into the breach.

Brook's and Logue's vision was to go to the rotted core -- Charlotte Street -- and work outward. But most everyone advised them to rebuild starting from the healthy fringes. They wanted single-family homes; critics wanted density and multi-family dwellings, saying it would promote a lively, safe neighborhood and attract merchants.

"The conventional wisdom was that no one would invest their life savings in such a devastated area," says Julie Sandorf, who worked with the MBD and is now president of the Charles H. Revson Foundation, a New York City-based charity.

Brooks, though, knew most of the families in the area were African Americans from the South, Caribbean blacks and Puerto Ricans, and she was convinced that the long home-owning traditions of these groups would help make a community of single-family homes work.

So she and Logue focused on convincing the Local Initiatives Support Corp., a newly launched nonprofit that had a $10 million grant from the Ford Foundation to assist burgeoning neighborhood revivals.

"There was so much devastation in the Charlotte Street area, it needed a big infusion of dollars," Brooks remembers. "We were in the financial disaster stage."

Convincing skeptics
LISC was indeed interested in assisting in the South Bronx, but the foundation had its doubts about the plan. "People at LISC were skeptical about the notion of doing single-family homes in the South Bronx," says CEO Michael Rubinger. "It was thought to be a crazy idea."

But Logue and Brooks dazzled then-director Anita Miller with a vision of white picket fences. She agreed take a gamble and put up the $125,000 the groups needed to purchase two model homes.

Those first three-bedroom, two-bath ranch homes were manufactured in Pennsylvania and trucked over the George Washington Bridge one night in 1983. Sandorf and her husband were on site waiting for the trucks. The first people they saw was a rough looking street gang -- whom Logue had hired to secure the grounds.

Still, Sandorf says, her husband was a little spooked. "He kept asking, 'Where are all the lights?' I had to tell him all those buildings are abandoned. There are no lights."

The homes were priced at about $50,000, and they sold like hot cakes. "We got more than 600 applications from potential buyers in the first three weeks," says Sandorf.

Within three years, 92 homes would be built on the street and the area re-christened Charlotte Gardens. About 90% of the buyers were from the Bronx, according to Sandorf; many were low-income.

Homeownership was made possible by discounting the houses: Each property sold for between $50,000 and $59,000 even thought it cost an average of $110,000 to build. The difference was funded through federal dollars, but the City of New York and various foundations also helped subsidize buyers.

"The houses in Charlotte Gardens were very deeply subsidized," says former borough president Ferrer. "But it wasn't just city money: That provided a stimulus for financial institutions who were reluctant to lend. We told the banks they had to get involved, they had to get up here and lend. Some admitted they had to eat crow: They never expected the complex to succeed."

Shining example
But succeed it did. Original buyers invested and stayed; fewer than a dozen homes out of the 92 have ever been sold. Plus, while the rest of the country is being wracked by foreclosures, Charlotte Gardens has lost just one home to the plague.

"The selling of Charlotte Gardens is the extreme opposite story of what happened in the recent real estate debacle," Sandorf says. "It is a shining example of how to do it right. House buyers were carefully selected and vetted. They were subjected to strict credit checks and homeownership counseling."

Property values, too, have soared. Homes that originally went for $50,000 now sell for ten times that -- when one is available. Currently, there is only one for-sale sign on all of Charlotte Street. The owners, who are original, have retired and are moving to Florida. They listed the property for $459,000 -- which is still inexpensive by New York standards. Just across the river, in Manhattan, buyers pay that for a studio apartment.

"Sales are so rare that finding comparables to make an accurate appraisal is very hard," says Tina Gordon, the Century 21 real estate agent for the property.

Genevieve Brooks and her husband retired several years ago and returned to South Carolina, where they have family. But they still come back often to visit friends in Charlotte Gardens.

"We didn't know what we were doing when we started, but we did know we had to do this ourselves," she says.

Portfolio makeover: Is our big debt doing us in?

(Money Magazine) -- Marc and Sharon LeRoux always dreamed of opening a business together. They took the plunge in 2006, tapping home equity to buy a franchise selling pre-made meals to busy families. Alas, the business failed, and last year the couple closed it down.

Fortunately, neither had quit their day jobs - Sharon is an engineer at Hewlett-Packard, Marc owns a specialty game store. But they still have $154,000 on a home-equity line of credit from the venture dragging them down. "Our income is very good, but we're living paycheck to paycheck," say Sharon. "And I'm sure we're underfunding our retirement and our kids' college." (They are parents of Marie, 15, Nicole, 12, and Marc, 5.)

What the planner says
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Income:
$118,000
Assets:
$128,000 in retirement accounts
$5,800 in college savings
Goals:
Pay off HELOC debt
Save enough to retire at 65
Pay for one year of college for each child CDs & Money Market
MMA 0.94%
$10K MMA 1.03%
6 month CD 0.97%
1 yr CD 1.42%
5 yr CD 2.66%
Find personalized rates:


Rates provided by Bankrate.com. That debt is indeed an obstacle, says Salem, Ore. financial planner Ron Kelemen. It eats up $1,000 a month. In spite of that, they've been keeping up with retirement, managing to stash away $12,000 a year. At that pace, says Kelemen, they'll have about $1.25 million by age 65, assuming a 7% average annual return (which they may be able to get if they build more growth into their portfolio).

What they should do
The good news: That amount, along with Social Security, should be enough for their modest income goals. The bad news: They've been unable to start an emergency fund - savings that are essential in such uncertain times. As for college, they're aiming to have saved a year of state-school tuition for each kid . While they can probably get there, wiping out the HELOC would allow them to cover even more.

Accelerate payoff. More than half the HELOC is at an 8.4% rate; the rest, 4.2%. They should ask their lender about allocating payments to the higher-rate debt.

Boost cash reserves. With a car loan and Marc's day-care needs coming to an end soon, the LeRouxs will have $1,100 freed up every month. Kelemen suggests using $160 a month toward college - to hit their goal of one year per kid - and the rest to build a six-month emergency fund .

Invest for growth. At their ages, the LeRouxs shouldn't be so deep - 43% - in bonds. Part of the problem: More than a third of Sharon's 401(k) is in a stable-value fund. She might trade some of that for international stock funds like Dodge & Cox International (DODFX). Also, Marc's IRA is in a target-date fund meant for those who will retire in 2020. (It gets more bond-heavy as it nears that year.) He should switch to T. Rowe Price 2030 (TRRCX), a Money 70 fund now 86% in equities.

Downsize, later. The LeRouxs are considering trading down their five-bedroom house to tackle the debt. They think they could sell it for $360,000 today. That would cover their $168,000 mortgage and the HELOC; but with commissions and closing costs, it won't leave them with a down payment. A better plan: Wait to put the house up for sale until the market improves and they're likely to come out ahead. Once the HELOC is gone, that $1,000 a month can go toward their emergency and college funds.