"I had no idea there would be this kind of reaction. It strikes me as sort of silly." -- John Carpenter, IRS official, about his newfound celebrity after winning $1 million on Who Wants to Be a Millionaire?Edited by Robert McNattReturn to top
Now, the Close-to-the-Bus Mortgage
Some of the nation's largest lenders and a handful of nonprofit groups have come up with a new weapon to fight the land-grabbing, energy-inefficient mess dubbed suburban sprawl. It's the location-efficient mortgage.
The idea is that homeowners who live in neighborhoods close to shops, nightlife, and mass transit have lower transportation costs than suburbanites and thus can take on a larger mortgage than they would otherwise qualify for. A study by the Center for Neighborhood Technology in Chicago and other policy groups found that these folks are less likely to own cars, giving them an average of $7,000 more to spend annually.
So Fannie Mae is backing a new mortgage which reflects that, and induces would-be homeowners to choose pricier urban settings. A family qualifying for a $110,000 home loan can now borrow $145,000. A pilot program began in Seattle on Nov. 9, and Fannie Mae has committed to buy $100 million of LEMs. Countrywide Home Loans and Seattle-based Continental Savings Bank make the loans now, and Citibank says it may start. Expect LEMs to roll out in Chicago, San Francisco, and Los Angeles early next year.By Lorraine Woellert; Edited by Robert McNattReturn to top
A Sudden Change of Heart at Piper
Ever wonder what it takes to make a securities analyst suddenly sour on a high-profile tech company? For U.S. Bancorp Piper Jaffray's Ashok Kumar, cutting his firm out of a planned initial public offering might do the trick.
Earlier this year, Kumar heaped praise on PC maker eMachines, which specializes in low-price PCs. At the same time, Kumar was lobbying CEO Stephen Dukker for underwriting work on eMachines' IPO. On May 10, Dukker got e-mail--he terms it "plea-mail"--from Kumar begging to let his firm handle 10% of the IPO. "I have known you and supported your story longer than all the [other] analysts," he wrote. Dukker says that later Kumar even offered for Piper to do the deal for free, for the name recognition. Kumar denies it.
But eMachines chose other underwriters. In a scathing June 1 report, Kumar called eMachines' business model unsustainable and tagged the company "sucker.com." In September, he hinted that eMachines' accounting practices were suspect. He says he changed his mind not because of the IPO but because of rising competition and two big lawsuits against eMachines, among other reasons.
Dukker is skeptical that Kumar's harsher outlook was due solely to changing circumstances: "He's an example of everything that's wrong with the securities business." One can only wonder what Kumar would say had he won a cut of the now deferred IPO.By Peter Burrows; Edited by Robert McNattReturn to top
Mr. Yen Joins Mr. Dollar at Citi
Citigroup is cornering the market on former currency czars. On Oct. 26, it took on former Treasury Secretary Robert Rubin, the architect of the Clinton Administration's strong-dollar policy, as a superadviser. Now it has hired Eisuke Sakakibara, who stepped down this summer as top international bureaucrat at Japan's powerful Finance Ministry.
Known as Mr. Yen for his ability to bend currency markets to his will, Sakakibara will serve on the international advisory board, newly started in May, of Citigroup's Salomon Smith Barney subsidiary. The board proffers advice on economic, political, and other strategic business issues. His knowledge of Japan could help Citigroup expand its business there. Sakakibara, who worked closely with Citi on the South Korean bailout in 1997, is the board's first Asian member. Others include former U.S. Defense Secretaries Richard Cheney and Donald Rumsfeld and Johnson & Johnson CEO Ralph Larsen.
The colorful and blunt-speaking Sakakibara is also quietly being pushed by his old Japanese bosses to succeed International Monetary Fund Managing Director Michel Camdessus, who plans to leave by February (BW--Nov. 29). If he gets that job, he'd leave Citigroup.By Rich Miller; Edited by Robert McNattReturn to top