Tag Archives: president
Fed Council Warned of Credit Risk, Asset Price Bubble
By Craig Torres & Joshua Zumbrun – May 8, 2013 A Federal Reserve (TREFTOTL) panel of bankers warned policy makers in February that record stimulus was pushing financial institutions to take on more credit risk and creating a “bubble” in the price of U.S. farmland. “The margin pressures that the low-rate environment has put on financial institutions, coupled with dramatically increased compliance and other infrastructure costs, have caused many to seek higher returns by accepting greater interest-rate or credit risk,” the bankers said on Feb. 8, following a Federal Open Market Committee meeting on Jan. 29-30. Enlarge image Data compiled by the regional Fed banks have documented a rapid run-up in farmland prices, particularly across the Midwest’s Corn Belt. Photographer: Daniel Acker/Bloomberg The minutes of the meeting by the Federal Advisory Council trace how the 12 bankers’ views evolved from opposition to the Fed’s announcement of new bond buying in September to support for Fed efforts in February to boost an economic expansion beset by a “drag” from fiscal tightening. Bloomberg News obtained the minutes in a Freedom of Information Act request. The council includes Joseph Hooley, chairman and chief executive officer of State Street Corp. (STT) in Boston ; James Gorman , chairman and CEO of Morgan Stanley in New York ; Kelly King, chairman and CEO of BB&T Corp. in Winston-Salem, North Carolina ; and D. Bryan Jordan, chairman and CEO of First Horizon National Corp. (FHN) in Memphis , according to the Fed’s website. Policy makers are debating how long to press on with unprecedented easing, including plans to keep buying $85 billion in bonds each month. The central bank has held the main interest rate at zero since December 2008 and pumped up its total assets to $3.32 trillion to spur growth and combat 7.5 percent unemployment. Flagging Risks The panel of bankers in February supported continued Fed easing even while flagging its risks. “Believing the economy to be improving but still vulnerable, and recognizing the high quality of the Federal Reserve ’s information-gathering and analytical resources,” the panel “continues to support the FOMC’s current accommodative monetary policy ,” the council said in its quarterly meeting. The yield on the U.S. 10-year Treasury note climbed yesterday two basis points, or 0.02 percentage point, to 1.78 percent in New York, according to Bloomberg Bond Trader prices. The Fed’s advisory council in February saw “exceptional strength” in the balance sheets of both borrowers and financial institutions, leaving room for “considerable potential for credit expansion as headwinds subside,” according to the minutes. The declining interest-rate spreads in some consumer finance categories “suggest that monetary actions are being transmitted more directly to the economy,” the minutes said. ‘Mounting’ Debt Still, several bankers warned Fed officials in February that “uncertainty over health-care costs, tax policy , and the mounting U.S. debt” were among the reasons commercial and industrial loan growth remained “tepid” and credit lines were “chronically undrawn,” according to the minutes. The panel also said in February that farmland valuations posed an asset-price bubble caused by unusually low interest rates, echoing concerns expressed by Kansas City Fed President Esther George. “Agricultural land prices are veering further from what makes sense,” according to minutes of the council’s Feb. 8 gathering. “Members believe the run-up in agriculture land prices is a bubble resulting from persistently low interest rates.” The Fed pledged to hold the benchmark interest rate at zero until the unemployment rate falls to 6.5 percent, as long as inflation expectations don’t exceed 2.5 percent. The U.S. central bank has also engaged in three rounds of bond purchases, known as quantitative easing. Rapid Run-Up Data compiled by the regional Fed banks have documented a rapid run-up in farmland prices, particularly across the Midwest’s Corn Belt. The Kansas City Fed said irrigated cropland in its district rose 30 percent during 2012, while the Chicago Fed reported a 16 percent increase. The panel of bankers is appointed by regional Fed banks and dates to the founding of the central bank in 1913. Bloomberg obtained minutes from the quarterly meetings from May 2011 until February. At a meeting in February 2012, the council said “growth in student-loan debt, to nearly $1 trillion, now exceeds credit-card outstandings and has parallels to the housing crisis.” Student lending shares features of the housing crisis including “significant growth of subsidized lending in pursuit of a social good,” in this case higher education instead of expanded home ownership, the council said. Fed Accommodation The advisory council opposed continued Fed accommodation on Sept. 14, a day after the conclusion of the FOMC’s two-day meeting Sept. 12-13. The Fed after that gathering announced a third round of bond buying with purchases of $40 billion per month of mortgage-backed securities. “Further accommodation is not warranted,” the bankers said, according to the minutes. The advisory council warned of distorted bond prices resulting from the Fed’s purchases, limited impact on the economy, and “uncertain effects” from an eventual unwinding of the balance sheet, including “risks to price and financial stability.” As early as Dec. 2, 2011, the bankers warned that financial institutions were relaxing underwriting standards while facing limited loan opportunities. “The combination of a sluggish economy and muted credit demand, very low interest rates, abundant bank capital and liquidity, reduced fee income and dramatically increased regulatory and compliance costs is causing some aggressive banks to lead a broader relaxation of risk/reward tolerances,” the council said. ‘Looser Underwriting’ “Aggressive pricing and looser underwriting, including extended terms and weaker transaction structures, are likely to persist and even get worse,” the bankers said in December 2011. “These accumulating risks, including interest rate risk mismatches, will ultimately result in higher loan losses.” President Woodrow Wilson , who signed the Federal Reserve Act into law in 1913, pushed for the creation of a politically-appointed oversight board in Washington to monitor the 12 reserve banks. He set up the advisory council to ensure the Fed Board in Washington was informed of banking and business conditions nationwide. Council members typically serve for three years. To contact the reporter on this story: Craig Torres in Washington at ctorres3@bloomberg.net . To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net Continue reading
Carbon Friendly Reports Financial Projections
VANCOUVER, British Columbia–(BUSINESS WIRE)–May 08, 2013– Carbon Friendly Solutions Inc. (CNSX: CFQ) (the “Company” or “Carbon Friendly”) is pleased to report that it has accomplished the following goals in the previous six months: — Signed a binding Letter of Intent (LOI) to build the first MicroCoal™ plant in Asia, to be located in Indonesia; — Acquired 100% ownership of the MicroCoal technology; — Completed and submitted additional patent applications for exposing solid material, such as coal and biomass, to microwave radiation; — Granted a trademark registration on “MicroCoal” by the US Patent and Trade Mark Office; — Entered into a consortium with a state-owned agency to apply for a funding grant to establish a European test facility; — Appointed Dr. Isaac Yaniv, a renowned scientist and founder of MicroCoal Inc., to Carbon Friendly’s Advisory Board. (He is responsible for more than 20 patents related to materials and mineral processing, including key patents on separation of contaminants from coal.); — Established representatives in key international markets to market and sell MicroCoal in Europe, Asia, North America, and Africa; — Recruited Mr. Robert Randall Johnson, a former Vice President of Operations and Chief Engineer at Massey Energy, as MicroCoal’s Senior Project Manager. (He will oversee deployment of MicroCoal plants in Indonesia and other countries.); and — Successfully completed coal testing for an Indonesian utility, and advanced the project to the Design Stage. The Company intends to work diligently with parties interested in the MicroCoal technology to secure binding agreements that generate revenue. Based on the foregoing, the Company reports that it anticipates the Operating Profit to be in the range of $4 Million to $5 Million for its June 2014 year-end. In the June 2015 year-end, the Company forecasts the Operating Profit to be between $24 Million and $25 Million, reflecting increased adoption of the MicroCoal™ technology in key international markets. The 2013 guidance represents initial capital expenditures for a MicroCoal plant in the USA, and license fees for Europe and Asia. The Company is in advanced discussion with utilities in Canada, USA, Indonesia, and Europe and expects to convert this interest into sales in 2013 and 2014. Slawek Smulewicz, CEO and Director of the Company, states: “The growing interest for the Company’s MicroCoal Technology is an indicator of the global need for a clean coal technology. As more MicroCoal plants are built, the majority of the Company’s revenue will be driven by its MicroCoal subsidiaries, resulting in strong cash flow and enabling the Company to deliver sustainable, long-term value to its shareholders.” About Carbon Friendly Solutions Inc.: Carbon Friendly Solutions Inc., through its subsidiaries, is focused on the development of energy efficiency technology, renewable energy, and reforestation projects that have the potential to generate significant revenue. MicroCoal Inc. has an internationally patented technology that is expected to improve coal-fired utilities’ economic performance by reducing input costs, improving operations and simultaneously reducing their environmental footprint. Global CO2 Reduction generates Carbon Offsets from forestry projects that may be transacted through international voluntary markets. Carbiopel S.A. aggregates biomass supply and produces biomass fuel pellets for the European market, including large European utilities and independent renewable energy providers, in line with EU renewable energy directives. On behalf of the Board of Directors Carbon Friendly Solutions Inc. “Slawek Smulewicz” CEO and Director Forward Looking Statement Certain information set forth in this press release contains “forward-looking statements” and “forward-looking information” under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements, which include management’s assessment of future plans and operations and are based on current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as “estimates”, “expects” “anticipates”, “believes”, “projects”, “plans”, “outlook”, “capacity” and similar exp ressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause the Company’s actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: risks that the actual production or sales for the 2013 or 2014 fiscal years will be less than projected production or sales for these periods; risks that the prices for MicroCoal facilities and Biomass will be less than projected or expected; technical problems; the effects of competition and pricing pressures in the Biomass and MicroCoal markets; the oversupply of, or lack of demand for, coal or biomass; inability of management to secure sales or third party purchase contracts; currency and interest rate fluctuations; various events which could disrupt operations, engineering, and sales, construction, including labour stoppages and severe weather conditions; and management’s ability to anticipate and manage the foregoing factors and risks. The forward-looking statements and information contained in this press release are based on certain assumptions regarding, among other things, future prices for MicroCoal and Biomass; future currency and exchange rates; the Company’s ability to generate sufficient cash flow from operations and access capital markets to meet its future obligations; the regulatory framework representing royalties, taxes and environmental matters where the Company conducts business; coal consumption levels; and the Company’s ability to retain qualified staff and equipment in a cost-efficient manner to meet its demand. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The reader is cautioned not to place undue reliance on forward-looking statements. The Company does not undertake to update any of the forward-looking statements contained in this press release unless required by law. The statements as to the Company’s capacity to achieve revenue are no assurance that it will achieve these levels of revenue or that it will be able to achieve these sales levels. Neither CNSX nor its Regulation Services Provider (as that term is defined in the policies of the CNSX) accepts responsibility for the adequacy or accuracy of the release. We seek safe harbor. Please contact: Slawek Smulewicz CEO and Director, Carbon Friendly Solutions Inc. Telephone: (604) 676 9792 E-mail: info@carbonfriendly.com CONTACT: Carbon Friendly Solutions Inc. Slawek Smulewicz CEO and Director 604-676-9792 info@carbonfriendly.com SOURCE: Carbon Friendly Solutions Inc. Copyright Business Wire 2013 Continue reading
Business roundup 06.05.2013
Business roundup 06.05.2013 Watch KTN Streaming LIVE from Kenya 24/7 on http://www.ktnkenya.tv Follow us on http://www.twitter.com/ktnkenya Like us on http:/… Continue reading
