Editor's note: News12 ran a story on Monday about environmentalists protesting the Diocese of Rockville Centre's decision to use property it owns as a cemetery. See the story at the end of this piece for more details.
By Michael Watt
When I first saw about a dozen or so people, led by Dick Amper and Adrienne Esposito, on the news protesting outside the Diocese of Rockville Centre about the Church’s plans to use its property in Old Westbury as a cemetery I thought, “these people have finally gone too far.”
Then, being a fair and open-minded fellow, I thought about it some more and realized that the protestors had a point. It would be a sin to allow Long Island’s deceased a rightful resting place.
Look at the facts. Cemetery proponents argue that dead people do not produce those nefarious school children who wreak havoc on local school districts. Of course they don’t. But what about the families of the dead people? They have children, and more often than not those families drive through local neighborhoods to get to the cemetery. Is the Old Westbury school district ready to run the risk of dozens of families deciding Old Westbury might be a nice place to raise a family as they drive through town on the way to the cemetery?
And what about those funeral processions? Sometimes as many as two dozen cars can be seen following a gas-guzzling limousine and a hearse. Most of those cars have only one or two people in them, tops. And the real problems start once those processions get to the cemetery. Noise-level studies have shown that grieving families at grave-sites, especially the “ethnics” from Queens, generate enough of a racket to interfere with the mating habits of the hoot-eared grey spotted owl. And the less said about the Irish and THEIR funerals, the better.
The protestors also have legitimate concerns about over-crowding. Surveys show that the 65 and over crowd is the fastest growing segment of Long Island’s population. Where are they going to go? To the cemetery no doubt, at least eventually. And don’t let that “senior citizens make the best residents” argument fool you. Go to any cemetery on Long Island and there is a good chance you will find individuals under the age of 65. Try as you might, there’s no realistic way to enforce the “nobody under 65 is allowed to die” rule.
Now, a case could be made for the need to honor those American men and women who saved the world for democracy by winning World War II. But was winning World War II really such a great thing? The Germans are wonderful when it comes to preserving open space – you can travel for miles in Germany and see nothing but beautiful vistas interrupted only by the occasional castle. And does anyone do more with less space than the Japanese? Besides, when those same “veterans” were done “winning” the war, the vast majority of them then came to Long Island and plowed over the beautiful potato farms of Levittown for their own selfish needs. Need we remind anyone of all the construction that had to happen to accommodate those people?
If not cemeteries, then what? We could advocate for cremation, but that creates a whole new problem: what to do with all that ash. We could ship it to Brookhaven but that might undercut the town of Babylon’s price points at its landfill. Perhaps we could put the deceased into those satellites that are constantly being shot into space. Wouldn’t that be a creative use of all that available space in those rockets?
The irony in all this is that if the protestors had their way only the people who already have their houses on Long Island would be allowed to live here. It almost doesn’t matter where they get buried because their descendants will have moved to other regions and therefore unable to visit them when they’re gone anyway.
Opponents call Old Westbury cemetery a grave mistake
02/16/09) OLD WESTBURY - Environmentalists are lining up against a plan to build a 97-acre cemetery in Old Westbury, saying it’s dangerous to put grave sites over the drinking supply.
The Catholic Church wants to build a new 42,000-plot cemetery on land located between Hitchcock Lane and Powell's Lane off Jericho Turnpike in Old Westbury.
Adrienne Esposito, of Citizens Campaign for the Environment, says the proposed cemetery is within the state-designated ground water protection area. She says corpses and coffins leak bacteria and lethal toxins like formaldehyde, which ultimately will end up in the water supply.
The diocese claims the environmentalists don't understand the chemistry involved, and have no proof that toxins will leak.
The Village of Old Westbury will hold a public hearing about the proposed cemetery on Feb. 23.
Public Hearing
Monday, February 23
7 p.m.
Old Westbury Village Hall
1 Store Hill Road
Old Westbury, NY 11568
Friday, February 20, 2009
Saturday, February 14, 2009
NAHB: New Data Confirms Low Number of School-Aged Children in Multifamily Building
New Data Confirms Low Number of School-Aged Children in Multifamily
Building new multifamily housing tends to increase local demand for public education, but the real question is by how much. Results published in NAHB’s Multifamily Market Outlook in 2004 showed that there were, at that time, considerably fewer children per unit in multifamily housing compared to the number in single family detached units (click here for report).
Those results were based on the HUD/Census Bureau American Housing Survey (AHS). It’s now possible to revisit this issue and see if the single family/multifamily results can be replicated using a new data source—the American Community Survey (ACS), an ongoing annual survey conducted by the Census Bureau that is designed to replace the long form decennial Census questionnaire. Compared to the AHS, the ACS produces data more frequently (every year instead of every other year) and is based on a much larger sample. The weakness of the ACS is that it contains relatively little information on specific characteristics of multifamily and other types of housing units.
Nevertheless, the ACS contains enough information that it can be used to investigate the number of school-aged children in different categories of housing of units. Results from the most recent ACS data available (2007) are consistent with the AHS results reported in 2004. Per unit, households living in multifamily buildings tend to have fewer children than other types of housing structures, and the number of school-age children tends to be particularly low in larger multifamily structures, and in multifamily condominiums.
The Public Education Budget
Education generally accounts for the largest share of local government budgets. Across all local governments in the U.S., the expenditure on public education is about $433 billion—far more than other major categories such as social services, utilities, public safety, and transportation, etc., according to the 2002 Census of Governments (Figure 1). During the fiscal year 2001 to 2002, local governments in the U.S. spent a little over 1.1 trillion in total, and the largest share is on public education. Among the $433 billion on education, $407 billion is spent on elementary and secondary schools. Even the second largest budget item—social services—only account for $120 billion dollars. In contrast, only $28 billion is spent on housing and community development.
Although residential development has an impact on the demand for public education, it is important to remember that school enrollment can also rise as a result of natural population growth or households with different numbers of school-age children moving into and out of existing units. Moreover, there are many other factors that tend to mitigate the impact of new residential construction on local school system. For one, in most parts of the country, when new households move into an area, school districts typically receive additional state and federal government aid.
Also, some parents choose to send their children to private schools. According to the National Center for Education Statistics (NCES), there are about 11% children enrolled in private elementary and secondary schools nationally in 2005, and this percentage is projected to be quite stable in 2006 and 2007 as well. Since local governments rarely subsidize private schools, this tends to further reduce public school expenses, although the extent to which that occurs varies from place to place. There were about 2.2% school-age children receiving home schooling in 2003 according to the NCES statistics.
Finally, if there is excess capacity in the school system or economies of scale exist, cost per pupil goes down as enrollment rises.
Fewer Children in Multifamily
As shown by the 2007 ACS, there are 50.9 school-age children (age 5 to 18) for every 100 households in the U.S., illustrated in Table 1. However, the average number of school-age children varies substantially across structure types.
As illustrated in Figure 2, there are 32.6 school-age children per 100 households in multifamily structures, compared to 58.8 in single family detached homes, 42.9 in single family attached homes, and 50.2 in manufactured housing units. A traditional explanation for the differences is that families with children have a preference toward homes with back yards that the children can play in.
Within the category of multifamily housing, larger apartment buildings tend to have fewer number of school-age children on average than small, garden-style apartments. There are about 43.1 school-age children per 100 households in structures with 2 to 4 units, compared to 33.1 in multifamily structures with 5 to 19 units, and 20.8 in 20+ unit structures.
Renters Compared to Owners
Within a given structure type, renters have more children than owners, but the magnitude of the difference varies by structure type (Figure 3). In multifamily buildings with 2 to 4 units, there are 45.1 school-age children per 100 renter households and only 34.9 per 100 owner households. In multifamily buildings with 5 to 19 units, these numbers become 35.4 per 100 renter households versus 14.3 per 100 owner households. Fewer numbers of school-age children exist in 20+ unit multifamily buildings. A similar pattern is observed in other structure types such as single family detached, single family attached and manufactured housing.
As noted above, there tends to be fewer children per household in larger apartment buildings. If this is combined with the effect of ownership status, it produces an even larger spread between 45 children per 100 renters in 2 to 4 unit multifamily buildings and fewer than 11 per 100 owners of condos in 20+ unit buildings.
Recent Movers
In multifamily structures, households who stay put tend to have more school-age children than households that have moved in recently (Figures 4 and 5). This is not generally true for other structure types, however. Recent movers into single-family detached homes have, on average, 67.9 school-age children, which is much larger than 57.9 per 100 non-movers in single family detached homes.
In Table 1, the highest number of children per 100 households is 90.8, and this is for households who have recently moved into newly constructed single-family detached rental units. The lowest number is 3.2 for newly constructed 20+ unit condominiums. .
Conclusion
On average, there are fewer school-age children in multifamily structures than in other residential structure types. There are even fewer in particular types of multifamily structures—such as condos, or buildings with more than 20 units. Therefore, when local governments make plans for new residential development, it is important that they take these factors into consideration when estimating the impact on their education budgets.
To get a complete picture of the budgetary impacts, local governments should also take the benefits of new construction—including income and jobs for local residents, as well as increased taxes and other forms of government revenue—into account. Estimates of these local economic benefits for general multifamily housing in a typical metropolitan area were last published in the October 2005 issue of Multifamily Market Outlook. Estimates of the benefits of tax-credit multifamily development were last published in the October 2007 issue.
Building new multifamily housing tends to increase local demand for public education, but the real question is by how much. Results published in NAHB’s Multifamily Market Outlook in 2004 showed that there were, at that time, considerably fewer children per unit in multifamily housing compared to the number in single family detached units (click here for report).
Those results were based on the HUD/Census Bureau American Housing Survey (AHS). It’s now possible to revisit this issue and see if the single family/multifamily results can be replicated using a new data source—the American Community Survey (ACS), an ongoing annual survey conducted by the Census Bureau that is designed to replace the long form decennial Census questionnaire. Compared to the AHS, the ACS produces data more frequently (every year instead of every other year) and is based on a much larger sample. The weakness of the ACS is that it contains relatively little information on specific characteristics of multifamily and other types of housing units.
Nevertheless, the ACS contains enough information that it can be used to investigate the number of school-aged children in different categories of housing of units. Results from the most recent ACS data available (2007) are consistent with the AHS results reported in 2004. Per unit, households living in multifamily buildings tend to have fewer children than other types of housing structures, and the number of school-age children tends to be particularly low in larger multifamily structures, and in multifamily condominiums.
The Public Education Budget
Education generally accounts for the largest share of local government budgets. Across all local governments in the U.S., the expenditure on public education is about $433 billion—far more than other major categories such as social services, utilities, public safety, and transportation, etc., according to the 2002 Census of Governments (Figure 1). During the fiscal year 2001 to 2002, local governments in the U.S. spent a little over 1.1 trillion in total, and the largest share is on public education. Among the $433 billion on education, $407 billion is spent on elementary and secondary schools. Even the second largest budget item—social services—only account for $120 billion dollars. In contrast, only $28 billion is spent on housing and community development.
Although residential development has an impact on the demand for public education, it is important to remember that school enrollment can also rise as a result of natural population growth or households with different numbers of school-age children moving into and out of existing units. Moreover, there are many other factors that tend to mitigate the impact of new residential construction on local school system. For one, in most parts of the country, when new households move into an area, school districts typically receive additional state and federal government aid.
Also, some parents choose to send their children to private schools. According to the National Center for Education Statistics (NCES), there are about 11% children enrolled in private elementary and secondary schools nationally in 2005, and this percentage is projected to be quite stable in 2006 and 2007 as well. Since local governments rarely subsidize private schools, this tends to further reduce public school expenses, although the extent to which that occurs varies from place to place. There were about 2.2% school-age children receiving home schooling in 2003 according to the NCES statistics.
Finally, if there is excess capacity in the school system or economies of scale exist, cost per pupil goes down as enrollment rises.
Fewer Children in Multifamily
As shown by the 2007 ACS, there are 50.9 school-age children (age 5 to 18) for every 100 households in the U.S., illustrated in Table 1. However, the average number of school-age children varies substantially across structure types.
As illustrated in Figure 2, there are 32.6 school-age children per 100 households in multifamily structures, compared to 58.8 in single family detached homes, 42.9 in single family attached homes, and 50.2 in manufactured housing units. A traditional explanation for the differences is that families with children have a preference toward homes with back yards that the children can play in.
Within the category of multifamily housing, larger apartment buildings tend to have fewer number of school-age children on average than small, garden-style apartments. There are about 43.1 school-age children per 100 households in structures with 2 to 4 units, compared to 33.1 in multifamily structures with 5 to 19 units, and 20.8 in 20+ unit structures.
Renters Compared to Owners
Within a given structure type, renters have more children than owners, but the magnitude of the difference varies by structure type (Figure 3). In multifamily buildings with 2 to 4 units, there are 45.1 school-age children per 100 renter households and only 34.9 per 100 owner households. In multifamily buildings with 5 to 19 units, these numbers become 35.4 per 100 renter households versus 14.3 per 100 owner households. Fewer numbers of school-age children exist in 20+ unit multifamily buildings. A similar pattern is observed in other structure types such as single family detached, single family attached and manufactured housing.
As noted above, there tends to be fewer children per household in larger apartment buildings. If this is combined with the effect of ownership status, it produces an even larger spread between 45 children per 100 renters in 2 to 4 unit multifamily buildings and fewer than 11 per 100 owners of condos in 20+ unit buildings.
Recent Movers
In multifamily structures, households who stay put tend to have more school-age children than households that have moved in recently (Figures 4 and 5). This is not generally true for other structure types, however. Recent movers into single-family detached homes have, on average, 67.9 school-age children, which is much larger than 57.9 per 100 non-movers in single family detached homes.
In Table 1, the highest number of children per 100 households is 90.8, and this is for households who have recently moved into newly constructed single-family detached rental units. The lowest number is 3.2 for newly constructed 20+ unit condominiums. .
Conclusion
On average, there are fewer school-age children in multifamily structures than in other residential structure types. There are even fewer in particular types of multifamily structures—such as condos, or buildings with more than 20 units. Therefore, when local governments make plans for new residential development, it is important that they take these factors into consideration when estimating the impact on their education budgets.
To get a complete picture of the budgetary impacts, local governments should also take the benefits of new construction—including income and jobs for local residents, as well as increased taxes and other forms of government revenue—into account. Estimates of these local economic benefits for general multifamily housing in a typical metropolitan area were last published in the October 2005 issue of Multifamily Market Outlook. Estimates of the benefits of tax-credit multifamily development were last published in the October 2007 issue.
Friday, February 13, 2009
Americans may be getting more realistic about their home values
This is from Marketwatch.com
More than half of homeowners recently surveyed by Zillow.com believe their home lost value in 2008, a sign that Americans may be getting more realistic about what their homes are currently worth.
Fifty-seven percent of the 1,573 homeowners who participated in the survey in January said that their home lost value during the year, compared with 38% who said their home value was declining in the second quarter of 2008.
In reality, 76% percent of U.S. homes lost value last year, according to Zillow.
"It's clear that the 'not my house' sentiment that was so prevalent in earlier surveys is waning, and homeowners are opening their eyes to the unfortunate reality of significant losses in home values across most of the country," said Stan Humphries, Zillow's vice president of data and analytics for Zillow, in a news release.
Still, many think that the worst may be over. More than two-thirds believe their home's value will increase or stay the same in the first half of this year, according to the survey.
"There's a curious optimism for homeowners when asked about the future -- most seem to believe we've hit a bottom and the worst has passed. Unfortunately, the data tells another story. With year-over-year home value losses continuing to accelerate, most areas of the country will see housing values get worse before they begin to stabilize," Humphries said.
Get more real estate news in this week's pages, including an audio report on why job losses will accelerate foreclosures this year. Also read the latest ideas floating around Washington on how to save homeowners from foreclosure.
It has taken awhile for Americans to accept that their homes are decreasing in value. But according to the Zillow survey, many still see the glass half full for 2009 -- at least when it comes to the value of their own home.
-- Amy Hoak , Real Estate writer
More than half of homeowners recently surveyed by Zillow.com believe their home lost value in 2008, a sign that Americans may be getting more realistic about what their homes are currently worth.
Fifty-seven percent of the 1,573 homeowners who participated in the survey in January said that their home lost value during the year, compared with 38% who said their home value was declining in the second quarter of 2008.
In reality, 76% percent of U.S. homes lost value last year, according to Zillow.
"It's clear that the 'not my house' sentiment that was so prevalent in earlier surveys is waning, and homeowners are opening their eyes to the unfortunate reality of significant losses in home values across most of the country," said Stan Humphries, Zillow's vice president of data and analytics for Zillow, in a news release.
Still, many think that the worst may be over. More than two-thirds believe their home's value will increase or stay the same in the first half of this year, according to the survey.
"There's a curious optimism for homeowners when asked about the future -- most seem to believe we've hit a bottom and the worst has passed. Unfortunately, the data tells another story. With year-over-year home value losses continuing to accelerate, most areas of the country will see housing values get worse before they begin to stabilize," Humphries said.
Get more real estate news in this week's pages, including an audio report on why job losses will accelerate foreclosures this year. Also read the latest ideas floating around Washington on how to save homeowners from foreclosure.
It has taken awhile for Americans to accept that their homes are decreasing in value. But according to the Zillow survey, many still see the glass half full for 2009 -- at least when it comes to the value of their own home.
-- Amy Hoak , Real Estate writer
Tuesday, February 3, 2009
Citigroup to deploy $36.5 billion to boost lending
This comes from today's LIBN "Flash Report."
http://libn.com/blog/2009/02/03/citigroup-to-deploy-365-billion-to-boost-lending/
Citigroup, under pressure to increase its lending, says it will spend $36.5 billion to issue mortgages, make credit card loans and buy distressed assets in the tight credit markets in the coming months.
The decision arrives after the bank received $45 billion in capital from the federal government in two installments late last year, and taxpayers’ questions mounted about the use of that money.
In a report reviewed by The Associated Press that Citigroup Inc. plans to release Tuesday morning, the bank detailed how it is boosting lending efforts by using funds from the Troubled Assets Relief Program, or TARP.
It’s not that the $45 billion in TARP is being doled out by Citigroup directly to borrowers. Rather, having the extra capital allows the bank to borrow more money from various funding sources, and then lend that money out to others. A bank makes money by borrowing cheaply for the short-term and lending at higher rates for the long-term; if a bank has no capital, other institutions and investors won’t lend to it.
So while Citigroup says it will deploy $36.5 billion in the coming months as a result of TARP, that figure could grow substantially should the funding markets improve.
“Our responsibility is to put these funds to work quickly, prudently and transparently to increase available lending and liquidity,” said CEO Vikram Pandit in a statement included in the report.
“TARP capital will not be used for compensation and bonuses, dividend payments, lobbying or government relations activities, or any activities related to market, advertising and corporate sponsorship,” Pandit said.
After considering $51.2 billion worth of proposals from its various arms, the bank said it approved $36.5 billion. That includes $25.7 billion in U.S. residential mortgage activities; $5.8 billion in credit card lending; $2.5 billion in personal and business loans; $1.5 billion in corporate loan activity; and $1 billion in student loans.
The $36.5 billion deployment is in addition to the $75 billion in new loans that Citigroup made in the fourth quarter. It also does not include the $10 billion Citigroup used in November to buy pools of mortgages secured by Fannie Mae.
Of the $25.7 billion Citigroup set aside for U.S. residential mortgage activities, $10 billion will go toward buying securities backed by mortgages that conform to Fannie Mae and Freddie Mac standards. Another $7.5 billion will be used to buy prime home mortgages in the secondary markets. The final $8.2 billion will be mortgages issued directly to aspiring homeowners — including mortgages with values that exceed the limits set for government-sponsored loans.
Citigroup will be making more loans than it would have without TARP, but said in the report it will not “take excessive risk with the capital the American public and other investors have entrusted to the company.”
The bank will continue to read proposals for increased lending from its various divisions, and plans to issue quarterly reports on TARP use.
While TARP will be used to back lending efforts, Citigroup’s expenses will come out of its cash flow, the bank said.
The government has used TARP money, in many cases, to buy preferred stock in banks.
Where TARP capital sits on banks’ books, however, is just a technicality to many of Wall Street’s critics, who have harshly excoriated banks for their spending decisions.
New York state Comptroller Thomas DiNapoli reported last week that Wall Street spent $18.4 billion on bonuses for 2008; President Barack Obama called the payouts “shameful.”
Citigroup has been criticized for its corporate jets — most recently, the fact that Citigroup’s former CEO Sanford “Sandy” Weill, as a consultant to the company, had a contract that allowed him to use the jet for personal trips. (Weill and Citigroup last year agreed to terminate his consulting contract in April, and Weill on Sunday night said in a statement he would immediately stop using the corporate jet.)
Citigroup’s announcement about TARP use comes as the government tries to figure out how to help the nation’s ailing banks so they can lend more. Treasury Secretary Timothy Geithner is expected to announce new plans for rescuing the financial sector in a speech next week.
Banks are not lending massively because of three factors: Demand for loans is down due to the weak economy; there are fewer creditworthy borrowers in the weak economy; and the loans the banks already hold are expected to bring big losses in the coming quarters.
This is why banks’ cash balances have jumped by $800 billion to $1.1 trillion since August, pointed out Miller Tabak & Co. analyst Tony Crescenzi in a note last week. Crescenzi said the idea of a “bad bank,” or “aggregator bank” — which would take the bad assets off banks’ balance sheets — could encourage banks to boost lending.
Another option is having the Federal Deposit Insurance Corp. guarantee more securities issued by financial institutions.
The Federal Reserve in its quarterly survey of bank lending practices released Monday found that nearly 60 percent of banks said they tightened lending standards on credit card and other consumer loans, about the same portion as in the previous survey released in early November. About 80 percent of domestic banks said they tightened lending standards on commercial real-estate loans, slightly less than the roughly 85 percent that reported doing so in the previous survey.
In January, Citigroup reported a fourth-quarter loss of $8.29 billion — its fifth straight quarterly deficit — and announced that it would be splitting into two parts. One portion, Citicorp, will focus on traditional banking around the world, while the other, Citi Holdings, will manage the company’s riskier assets and tougher-to-run ventures.
The company has also made some significant changes at the board level.
Robert Rubin, a former U.S. Treasury Secretary, in January said he would be retiring from Citigroup’s board. Less than two weeks later, Win Bischoff, chairman since December 2007, announced his retirement, too. Longtime board member Richard Parsons, the former CEO of Time Warner Inc., became the new Citigroup chairman.
http://libn.com/blog/2009/02/03/citigroup-to-deploy-365-billion-to-boost-lending/
Citigroup, under pressure to increase its lending, says it will spend $36.5 billion to issue mortgages, make credit card loans and buy distressed assets in the tight credit markets in the coming months.
The decision arrives after the bank received $45 billion in capital from the federal government in two installments late last year, and taxpayers’ questions mounted about the use of that money.
In a report reviewed by The Associated Press that Citigroup Inc. plans to release Tuesday morning, the bank detailed how it is boosting lending efforts by using funds from the Troubled Assets Relief Program, or TARP.
It’s not that the $45 billion in TARP is being doled out by Citigroup directly to borrowers. Rather, having the extra capital allows the bank to borrow more money from various funding sources, and then lend that money out to others. A bank makes money by borrowing cheaply for the short-term and lending at higher rates for the long-term; if a bank has no capital, other institutions and investors won’t lend to it.
So while Citigroup says it will deploy $36.5 billion in the coming months as a result of TARP, that figure could grow substantially should the funding markets improve.
“Our responsibility is to put these funds to work quickly, prudently and transparently to increase available lending and liquidity,” said CEO Vikram Pandit in a statement included in the report.
“TARP capital will not be used for compensation and bonuses, dividend payments, lobbying or government relations activities, or any activities related to market, advertising and corporate sponsorship,” Pandit said.
After considering $51.2 billion worth of proposals from its various arms, the bank said it approved $36.5 billion. That includes $25.7 billion in U.S. residential mortgage activities; $5.8 billion in credit card lending; $2.5 billion in personal and business loans; $1.5 billion in corporate loan activity; and $1 billion in student loans.
The $36.5 billion deployment is in addition to the $75 billion in new loans that Citigroup made in the fourth quarter. It also does not include the $10 billion Citigroup used in November to buy pools of mortgages secured by Fannie Mae.
Of the $25.7 billion Citigroup set aside for U.S. residential mortgage activities, $10 billion will go toward buying securities backed by mortgages that conform to Fannie Mae and Freddie Mac standards. Another $7.5 billion will be used to buy prime home mortgages in the secondary markets. The final $8.2 billion will be mortgages issued directly to aspiring homeowners — including mortgages with values that exceed the limits set for government-sponsored loans.
Citigroup will be making more loans than it would have without TARP, but said in the report it will not “take excessive risk with the capital the American public and other investors have entrusted to the company.”
The bank will continue to read proposals for increased lending from its various divisions, and plans to issue quarterly reports on TARP use.
While TARP will be used to back lending efforts, Citigroup’s expenses will come out of its cash flow, the bank said.
The government has used TARP money, in many cases, to buy preferred stock in banks.
Where TARP capital sits on banks’ books, however, is just a technicality to many of Wall Street’s critics, who have harshly excoriated banks for their spending decisions.
New York state Comptroller Thomas DiNapoli reported last week that Wall Street spent $18.4 billion on bonuses for 2008; President Barack Obama called the payouts “shameful.”
Citigroup has been criticized for its corporate jets — most recently, the fact that Citigroup’s former CEO Sanford “Sandy” Weill, as a consultant to the company, had a contract that allowed him to use the jet for personal trips. (Weill and Citigroup last year agreed to terminate his consulting contract in April, and Weill on Sunday night said in a statement he would immediately stop using the corporate jet.)
Citigroup’s announcement about TARP use comes as the government tries to figure out how to help the nation’s ailing banks so they can lend more. Treasury Secretary Timothy Geithner is expected to announce new plans for rescuing the financial sector in a speech next week.
Banks are not lending massively because of three factors: Demand for loans is down due to the weak economy; there are fewer creditworthy borrowers in the weak economy; and the loans the banks already hold are expected to bring big losses in the coming quarters.
This is why banks’ cash balances have jumped by $800 billion to $1.1 trillion since August, pointed out Miller Tabak & Co. analyst Tony Crescenzi in a note last week. Crescenzi said the idea of a “bad bank,” or “aggregator bank” — which would take the bad assets off banks’ balance sheets — could encourage banks to boost lending.
Another option is having the Federal Deposit Insurance Corp. guarantee more securities issued by financial institutions.
The Federal Reserve in its quarterly survey of bank lending practices released Monday found that nearly 60 percent of banks said they tightened lending standards on credit card and other consumer loans, about the same portion as in the previous survey released in early November. About 80 percent of domestic banks said they tightened lending standards on commercial real-estate loans, slightly less than the roughly 85 percent that reported doing so in the previous survey.
In January, Citigroup reported a fourth-quarter loss of $8.29 billion — its fifth straight quarterly deficit — and announced that it would be splitting into two parts. One portion, Citicorp, will focus on traditional banking around the world, while the other, Citi Holdings, will manage the company’s riskier assets and tougher-to-run ventures.
The company has also made some significant changes at the board level.
Robert Rubin, a former U.S. Treasury Secretary, in January said he would be retiring from Citigroup’s board. Less than two weeks later, Win Bischoff, chairman since December 2007, announced his retirement, too. Longtime board member Richard Parsons, the former CEO of Time Warner Inc., became the new Citigroup chairman.
Subscribe to:
Posts (Atom)
