1. The document summarizes decisions made by the FASB and IASB regarding changes to lease accounting standards. Key decisions include adopting a two-lease approach for lessees and lessors.
2. For equipment leases, it will now be presumed that leases will be accounted for using the interest and amortization method, resulting in front-loaded expenses for lessees. Fewer equipment leases will qualify for straight-line rent recognition.
3. For real estate leases, it will still be presumed that leases will be accounted for using the single lease expense method, allowing for straight-line rent recognition. This is viewed as good news for real estate lessees
The document discusses how to navigate banking relationships during troubled economic times. It provides an overview of the shifts in the banking industry due to the financial crisis, including increased consolidation and losses from mortgage-backed securities and credit default swaps. It then offers advice on evaluating your bank's health, communicating proactively with your banker, understanding your loan terms and knowing when to seek other options.
Mercer Capital's Atlantic Coast Bank Watch | August 2013Mercer Capital
The August 2013 issue of Bank Watch is available now at www.mercercapital.com, and features articles by Jeff Davis, Madeleine Davis, and the announcement of an upcoming webinar on the recently finalized capital rules.
Middle market M&A volumes declined in Q1 2011 after deals were pulled forward in 2010 due to tax uncertainty. Despite lower volumes, multiples remained high at 7.5x. Middle market lending activity increased in Q1 2011 but was fueled by debt refinancings rather than new LBO deals. The US economic recovery remains uncertain as GDP growth slowed in Q1 2011. Liquidity in the middle market financing space has increased significantly from various sources including banks restarting leveraged lending teams, new business development companies, and existing players increasing balance sheets to be more active in lending. Competition for quality deals remains fierce, supporting high valuations above 8x EBITDA for attractive businesses.
In late 2011, JPMorgan Chase told its Chief Investment Office (CIO) to reduce risky assets. To offset this, the CIO started making large derivative trades that grew in complexity and size over time, dwarfing the original risk. By April 2012, losses had started to accumulate from these trades, reaching an estimated $2 billion by May. By July, JPMorgan announced the loss had grown to $5.8 billion from trades involving credit default swaps made by trader Bruno Iksil, nicknamed the "London Whale". While Iksil was primarily responsible, lack of oversight from CIO head Ina Drew and senior management allowed the risky trading strategy and positions to grow unchecked.
The document discusses a study that analyzed the stock market reactions to debt relief agreements under the Brady Plan for Less Developed Countries (LDCs). The main findings were:
1) LDC stock markets appreciated by an average of 60% after announcing Brady agreements, representing a $42 billion increase in shareholder value. Control countries without agreements saw no increase.
2) US bank stocks with LDC exposure rose 35% after Brady agreements, a $13 billion increase.
3) The results suggest debt relief generated large efficiency gains when countries suffered from debt overhang, as it increased incentives for investment and growth. Stock market responses successfully predicted higher future resource transfers, investment, and growth.
DemiseofBroadlyWrittenMAC - November 2007Kevin Miller
This document discusses the SLM Corporation lawsuit against buyers who sought to back out of an acquisition agreement after legislation negatively impacted SLM's business. It analyzes the definition of a "material adverse effect" in the agreement and debates whether the court will focus on the plain language used, which favors the buyers, or take the perspective of a reasonable acquirer as in previous cases. The outcome could provide guidance on interpreting detailed MAE provisions with numerous exceptions.
The document summarizes a seminar on understanding mortgage regulation at three levels: global, European, and UK. At the global level, increased capital requirements and lack of liquidity have constrained mortgage availability. The Financial Stability Board is developing high-level principles for underwriting that emphasize income verification but allow flexibility. At the European level, a draft directive aims to harmonize rules but may not fit all local markets. Key concerns about the directive include overly broad scope, standardized pre-contractual information overwhelming customers, restrictive advertising rules, and an obligation to deny credit that could exclude some qualified borrowers.
Nicholas Financial is rated a BUY with a price target of $16. Key points include:
1) NICK is underleveraged compared to peers and has achieved high returns on equity given its leverage.
2) NICK could be an attractive acquisition target due to its free cash flow, low price-earnings ratio, and Canadian headquarters.
3) The recent sell-off in price was unwarranted and due to risk-arbitrage fund selling, not a change in NICK's investment outlook. NICK remains undervalued relative to peers and warrants a higher price.
The document discusses how to navigate banking relationships during troubled economic times. It provides an overview of the shifts in the banking industry due to the financial crisis, including increased consolidation and losses from mortgage-backed securities and credit default swaps. It then offers advice on evaluating your bank's health, communicating proactively with your banker, understanding your loan terms and knowing when to seek other options.
Mercer Capital's Atlantic Coast Bank Watch | August 2013Mercer Capital
The August 2013 issue of Bank Watch is available now at www.mercercapital.com, and features articles by Jeff Davis, Madeleine Davis, and the announcement of an upcoming webinar on the recently finalized capital rules.
Middle market M&A volumes declined in Q1 2011 after deals were pulled forward in 2010 due to tax uncertainty. Despite lower volumes, multiples remained high at 7.5x. Middle market lending activity increased in Q1 2011 but was fueled by debt refinancings rather than new LBO deals. The US economic recovery remains uncertain as GDP growth slowed in Q1 2011. Liquidity in the middle market financing space has increased significantly from various sources including banks restarting leveraged lending teams, new business development companies, and existing players increasing balance sheets to be more active in lending. Competition for quality deals remains fierce, supporting high valuations above 8x EBITDA for attractive businesses.
In late 2011, JPMorgan Chase told its Chief Investment Office (CIO) to reduce risky assets. To offset this, the CIO started making large derivative trades that grew in complexity and size over time, dwarfing the original risk. By April 2012, losses had started to accumulate from these trades, reaching an estimated $2 billion by May. By July, JPMorgan announced the loss had grown to $5.8 billion from trades involving credit default swaps made by trader Bruno Iksil, nicknamed the "London Whale". While Iksil was primarily responsible, lack of oversight from CIO head Ina Drew and senior management allowed the risky trading strategy and positions to grow unchecked.
The document discusses a study that analyzed the stock market reactions to debt relief agreements under the Brady Plan for Less Developed Countries (LDCs). The main findings were:
1) LDC stock markets appreciated by an average of 60% after announcing Brady agreements, representing a $42 billion increase in shareholder value. Control countries without agreements saw no increase.
2) US bank stocks with LDC exposure rose 35% after Brady agreements, a $13 billion increase.
3) The results suggest debt relief generated large efficiency gains when countries suffered from debt overhang, as it increased incentives for investment and growth. Stock market responses successfully predicted higher future resource transfers, investment, and growth.
DemiseofBroadlyWrittenMAC - November 2007Kevin Miller
This document discusses the SLM Corporation lawsuit against buyers who sought to back out of an acquisition agreement after legislation negatively impacted SLM's business. It analyzes the definition of a "material adverse effect" in the agreement and debates whether the court will focus on the plain language used, which favors the buyers, or take the perspective of a reasonable acquirer as in previous cases. The outcome could provide guidance on interpreting detailed MAE provisions with numerous exceptions.
The document summarizes a seminar on understanding mortgage regulation at three levels: global, European, and UK. At the global level, increased capital requirements and lack of liquidity have constrained mortgage availability. The Financial Stability Board is developing high-level principles for underwriting that emphasize income verification but allow flexibility. At the European level, a draft directive aims to harmonize rules but may not fit all local markets. Key concerns about the directive include overly broad scope, standardized pre-contractual information overwhelming customers, restrictive advertising rules, and an obligation to deny credit that could exclude some qualified borrowers.
Nicholas Financial is rated a BUY with a price target of $16. Key points include:
1) NICK is underleveraged compared to peers and has achieved high returns on equity given its leverage.
2) NICK could be an attractive acquisition target due to its free cash flow, low price-earnings ratio, and Canadian headquarters.
3) The recent sell-off in price was unwarranted and due to risk-arbitrage fund selling, not a change in NICK's investment outlook. NICK remains undervalued relative to peers and warrants a higher price.
This document discusses interest-only mortgages in the UK, specifically those without a known repayment vehicle. It finds that about a quarter of new mortgages are interest-only, and around 17% of first-time buyers choose this option. However, analysis shows that interest-only borrowers typically have similar or higher incomes than capital repayment borrowers, suggesting affordability is not the main driver. While some interest-only borrowers may be using lump-sum repayments or home price appreciation to repay the principal, overall motivations remain unclear without further research. The Financial Services Authority has expressed concern about the volumes of interest-only lending without plans for repayment.
Mba 665 final project government impact on businessKelly Giambra
Nationstar Mortgage Holdings Inc. is a leading nonbank mortgage servicer that has gained market share since the 2008 financial crisis due to increased bank regulations. However, the Trump Administration now plans to deregulate the mortgage industry and dismantle regulations passed by Dodd-Frank. This could allow big banks to re-enter the market and increase competition for nonbank servicers like Nationstar. The paper analyzes how deregulation may present both opportunities and challenges for Nationstar's business model going forward.
This document discusses the importance of controlling operating expenses to ensure profitability on loans. It provides the following key points:
1) While interest margins have widened as rates have fallen, operating costs as a percentage of assets have risen for mortgage, consumer, and credit card loans.
2) Calculating accurate loan origination and maintenance costs is important for properly pricing loans. Formulas are provided to determine these per-loan costs based on department costs and time spent on origination vs maintenance.
3) Controlling costs, such as by requiring electronic payments, can significantly increase returns on auto loans compared to simply raising rates or fees. Reducing costs preserves competitive positioning versus competitors who rely on price increases.
This document provides a business analysis of Nationstar Mortgage Holdings, Inc. and the U.S. mortgage industry. It discusses the history of the mortgage industry and how the subprime lending crisis and housing bubble burst led to the dissolution of many mortgage lenders. This created opportunities for mortgage servicing companies to acquire servicing rights. The document also analyzes laws and regulations that impacted the industry, including those establishing programs to help homeowners, as well as trends showing non-bank servicers expanding as big banks exit the industry.
The managers of the California Distressed Land Asset Fund believe that while the US housing market appears to be stabilizing, conditions will continue to be difficult in 2010. They plan to take advantage of opportunities by acquiring apartment complexes and portfolios of distressed mortgages at steep discounts. Their experience during previous real estate cycles positions them to profit by buying cheap assets that generate income or have a clear exit strategy. Now is not too late to invest in US real estate but investors must choose managers carefully to navigate the challenging market conditions.
201401 Banking Industry Outlook: Repositioning for GrowthFrancisco Calzado
The document provides an outlook on the 2014 banking industry. It discusses how banks will need to focus on repositioning for growth in a challenging regulatory environment. Key points include:
- Banks will need to improve agility to take advantage of ongoing uncertainty and pivot toward growth while strengthening infrastructure and supporting growth.
- Competition and consolidation in the industry will intensify as large banks specialize in core businesses and geographies with the highest returns, while smaller banks face challenges from high compliance costs.
- Banks will seek to differentiate the customer experience, leverage data for improved reporting and capital efficiency, and build organizational agility to adapt to changing market conditions.
Mercer Capital's Value Matters™ | Issue 1, 2022 Mercer Capital
This document discusses several topics related to family businesses and estate planning:
1) It analyzes different approaches to valuing a business when a key person is involved, arguing that incremental risk or cash flow analysis are better than an arbitrary discount.
2) It notes that the Ford family still significantly influences Ford Motor Company through share ownership.
3) It comments on the high valuation of new electric vehicle company Rivian, in which Ford has a sizable ownership stake.
The survey summarizes the methodology of the 6th annual Real Estate Investor Outlook survey conducted by several real estate organizations. Over 1,100 participants provided responses on current market conditions, future expectations, investment appetite, and risk assessment by sector. The main concerns cited by investors were the availability of financing, creditworthiness of tenants, and potential additional shocks to the economy. Most respondents have extensive experience investing in commercial real estate and have on average $32 million invested across multiple sectors.
This document is the 2007 Factbook for Merrill Lynch & Co., Inc. It provides an introduction to the company and compiles key information for investors and other interested parties. The Factbook summarizes Merrill Lynch's business segments, financial performance, leadership, and other details to assist readers in their analysis of the company. It directs readers to the company's annual report and investor relations website for additional information.
Pivotal Research: Madison and Wall 4 13-12Brian Crotty
Welcome to Pivotal Research’s “Madison & Wall”. The title refers to our work which sits at the intersection between the advertising industry and the financial world. We hope you’ll find these brief notes useful for their contrast to the hyperbole that pervades much of the chatter at that location.
If you are a commercial realtor and you have clients that have been turned down by a bank you should check out this presentation. If you are interested in having your deal funded by private money please contact Megan Krache at mkrache@sensiblelendingsolutions.com. We are actively lending to people the banks have turned down and are able to lend to people/businesses that have losses on their tax returns.
The Vice Chancellor determined Dell's fair value was $17.62 per share, 26% above the buyout offer of $13.96. He developed a hybrid valuation model selecting reliable data from each expert. The Chancellor found issues with relying solely on market price and LBO models in determining fair value. He ultimately weighted two valuation approaches equally to determine Dell's fair value fell between $16.43-$18.81 per share.
The document discusses three main proposals for restructuring financial institution regulation that are being debated in the House Banking Committee. It also discusses other related issues like community reinvestment obligations and estimates of future costs to resolve failed banks. The three main regulatory restructuring proposals are: 1) A Bush administration plan to create a single regulator under Treasury; 2) A proposal by Rep. Gonzalez to create an independent regulator; 3) A task force plan to merge two existing regulators and reduce the Fed's role. Debate reflects turf battles among regulators as much as philosophies. The status quo may remain as more proposals complicate reaching a consensus.
DST Systems, Inc. provides technology-based information and servicing solutions. It has segments in financial services, healthcare services, customer communications, and investments. A regression analysis calculated DST's beta against several indices, finding it most correlated to the S&P 500. Compared to the NASDAQ, DST has higher total risk and risk per unit of return but similar systematic risk. DST's financial analysis found increasing shareholder equity and decreasing liabilities over time. Valuation models using conservative growth rates found DST to be overvalued compared to its current stock price.
FIS Research - High Performance Community BankingPaul McAdam
Historically, economies of scale have provided larger financial institutions with the ability to generate lower efficiency ratios and, often, higher returns on assets than community banks. Despite the disadvantages of their smaller size, some community banks outperform larger banks as well as their community bank peers during both good and bad times. This research brief focuses on the financial metrics of high-performing community banks to determine the characteristics that differentiate the elite performers from the rest of the pack.
Commercial Real Estate Loan Workouts- A Basic Overviewclonstein
- The document provides an overview of commercial real estate loan workouts, which are becoming more common as commercial loans default at higher rates due to the economic downturn.
- It outlines key steps for lenders in the workout process, including properly documenting the default, assessing options like restructuring or foreclosure, analyzing loan documentation and collateral perfection, and obtaining a current property valuation.
- The goal is to help lenders make informed decisions about workouts versus pursuing other remedies like foreclosure, based on factors like the property value relative to debt and the ease of liquidating the collateral.
The document provides an overview of Merrill Lynch including its business description, financial profile, competitive environment, and valuation. It discusses Merrill Lynch's core businesses, leadership changes, risk management improvements, growth opportunities in emerging markets and through third party funds, and plans for balance sheet optimization and more efficient use of capital.
The document provides information on legislative activities for the week of July 9, 2012. It summarizes bills scheduled for consideration in the House and Senate that week related to veterans, the farm bill, appropriations, cybersecurity, and education issues. It also outlines regulatory actions and hearings scheduled related to education issues like No Child Left Behind waivers and the gainful employment ruling.
President Signs the JOBS Act into Law to Simplify Capital Formation Patton Boggs LLP
The JOBS Act was signed into law to simplify capital formation for small companies. Key provisions include:
1) Creating "emerging growth companies" that have reduced regulatory requirements for 5 years after their IPO to encourage going public.
2) Allowing general solicitation for private offerings to accredited investors.
3) Increasing the Regulation A offering limit from $5M to $50M and preempting state securities laws.
4) Raising the shareholder threshold that triggers public reporting from 500 to 2,000 shareholders.
Treasury Issues Binding Guidance on Medical Device Excise TaxPatton Boggs LLP
The Treasury Department issued final regulations and interim guidance on the new 2.3% excise tax on medical devices. The final regulations provide additional details on determining whether devices qualify for the retail exemption. The interim guidance provides constructive sales price safe harbors and treats licenses of medical devices as leases subject to the tax. The guidance also addresses donations, convenience kits, and provides penalty relief for the first three quarters of deposits.
This document discusses interest-only mortgages in the UK, specifically those without a known repayment vehicle. It finds that about a quarter of new mortgages are interest-only, and around 17% of first-time buyers choose this option. However, analysis shows that interest-only borrowers typically have similar or higher incomes than capital repayment borrowers, suggesting affordability is not the main driver. While some interest-only borrowers may be using lump-sum repayments or home price appreciation to repay the principal, overall motivations remain unclear without further research. The Financial Services Authority has expressed concern about the volumes of interest-only lending without plans for repayment.
Mba 665 final project government impact on businessKelly Giambra
Nationstar Mortgage Holdings Inc. is a leading nonbank mortgage servicer that has gained market share since the 2008 financial crisis due to increased bank regulations. However, the Trump Administration now plans to deregulate the mortgage industry and dismantle regulations passed by Dodd-Frank. This could allow big banks to re-enter the market and increase competition for nonbank servicers like Nationstar. The paper analyzes how deregulation may present both opportunities and challenges for Nationstar's business model going forward.
This document discusses the importance of controlling operating expenses to ensure profitability on loans. It provides the following key points:
1) While interest margins have widened as rates have fallen, operating costs as a percentage of assets have risen for mortgage, consumer, and credit card loans.
2) Calculating accurate loan origination and maintenance costs is important for properly pricing loans. Formulas are provided to determine these per-loan costs based on department costs and time spent on origination vs maintenance.
3) Controlling costs, such as by requiring electronic payments, can significantly increase returns on auto loans compared to simply raising rates or fees. Reducing costs preserves competitive positioning versus competitors who rely on price increases.
This document provides a business analysis of Nationstar Mortgage Holdings, Inc. and the U.S. mortgage industry. It discusses the history of the mortgage industry and how the subprime lending crisis and housing bubble burst led to the dissolution of many mortgage lenders. This created opportunities for mortgage servicing companies to acquire servicing rights. The document also analyzes laws and regulations that impacted the industry, including those establishing programs to help homeowners, as well as trends showing non-bank servicers expanding as big banks exit the industry.
The managers of the California Distressed Land Asset Fund believe that while the US housing market appears to be stabilizing, conditions will continue to be difficult in 2010. They plan to take advantage of opportunities by acquiring apartment complexes and portfolios of distressed mortgages at steep discounts. Their experience during previous real estate cycles positions them to profit by buying cheap assets that generate income or have a clear exit strategy. Now is not too late to invest in US real estate but investors must choose managers carefully to navigate the challenging market conditions.
201401 Banking Industry Outlook: Repositioning for GrowthFrancisco Calzado
The document provides an outlook on the 2014 banking industry. It discusses how banks will need to focus on repositioning for growth in a challenging regulatory environment. Key points include:
- Banks will need to improve agility to take advantage of ongoing uncertainty and pivot toward growth while strengthening infrastructure and supporting growth.
- Competition and consolidation in the industry will intensify as large banks specialize in core businesses and geographies with the highest returns, while smaller banks face challenges from high compliance costs.
- Banks will seek to differentiate the customer experience, leverage data for improved reporting and capital efficiency, and build organizational agility to adapt to changing market conditions.
Mercer Capital's Value Matters™ | Issue 1, 2022 Mercer Capital
This document discusses several topics related to family businesses and estate planning:
1) It analyzes different approaches to valuing a business when a key person is involved, arguing that incremental risk or cash flow analysis are better than an arbitrary discount.
2) It notes that the Ford family still significantly influences Ford Motor Company through share ownership.
3) It comments on the high valuation of new electric vehicle company Rivian, in which Ford has a sizable ownership stake.
The survey summarizes the methodology of the 6th annual Real Estate Investor Outlook survey conducted by several real estate organizations. Over 1,100 participants provided responses on current market conditions, future expectations, investment appetite, and risk assessment by sector. The main concerns cited by investors were the availability of financing, creditworthiness of tenants, and potential additional shocks to the economy. Most respondents have extensive experience investing in commercial real estate and have on average $32 million invested across multiple sectors.
This document is the 2007 Factbook for Merrill Lynch & Co., Inc. It provides an introduction to the company and compiles key information for investors and other interested parties. The Factbook summarizes Merrill Lynch's business segments, financial performance, leadership, and other details to assist readers in their analysis of the company. It directs readers to the company's annual report and investor relations website for additional information.
Pivotal Research: Madison and Wall 4 13-12Brian Crotty
Welcome to Pivotal Research’s “Madison & Wall”. The title refers to our work which sits at the intersection between the advertising industry and the financial world. We hope you’ll find these brief notes useful for their contrast to the hyperbole that pervades much of the chatter at that location.
If you are a commercial realtor and you have clients that have been turned down by a bank you should check out this presentation. If you are interested in having your deal funded by private money please contact Megan Krache at mkrache@sensiblelendingsolutions.com. We are actively lending to people the banks have turned down and are able to lend to people/businesses that have losses on their tax returns.
The Vice Chancellor determined Dell's fair value was $17.62 per share, 26% above the buyout offer of $13.96. He developed a hybrid valuation model selecting reliable data from each expert. The Chancellor found issues with relying solely on market price and LBO models in determining fair value. He ultimately weighted two valuation approaches equally to determine Dell's fair value fell between $16.43-$18.81 per share.
The document discusses three main proposals for restructuring financial institution regulation that are being debated in the House Banking Committee. It also discusses other related issues like community reinvestment obligations and estimates of future costs to resolve failed banks. The three main regulatory restructuring proposals are: 1) A Bush administration plan to create a single regulator under Treasury; 2) A proposal by Rep. Gonzalez to create an independent regulator; 3) A task force plan to merge two existing regulators and reduce the Fed's role. Debate reflects turf battles among regulators as much as philosophies. The status quo may remain as more proposals complicate reaching a consensus.
DST Systems, Inc. provides technology-based information and servicing solutions. It has segments in financial services, healthcare services, customer communications, and investments. A regression analysis calculated DST's beta against several indices, finding it most correlated to the S&P 500. Compared to the NASDAQ, DST has higher total risk and risk per unit of return but similar systematic risk. DST's financial analysis found increasing shareholder equity and decreasing liabilities over time. Valuation models using conservative growth rates found DST to be overvalued compared to its current stock price.
FIS Research - High Performance Community BankingPaul McAdam
Historically, economies of scale have provided larger financial institutions with the ability to generate lower efficiency ratios and, often, higher returns on assets than community banks. Despite the disadvantages of their smaller size, some community banks outperform larger banks as well as their community bank peers during both good and bad times. This research brief focuses on the financial metrics of high-performing community banks to determine the characteristics that differentiate the elite performers from the rest of the pack.
Commercial Real Estate Loan Workouts- A Basic Overviewclonstein
- The document provides an overview of commercial real estate loan workouts, which are becoming more common as commercial loans default at higher rates due to the economic downturn.
- It outlines key steps for lenders in the workout process, including properly documenting the default, assessing options like restructuring or foreclosure, analyzing loan documentation and collateral perfection, and obtaining a current property valuation.
- The goal is to help lenders make informed decisions about workouts versus pursuing other remedies like foreclosure, based on factors like the property value relative to debt and the ease of liquidating the collateral.
The document provides an overview of Merrill Lynch including its business description, financial profile, competitive environment, and valuation. It discusses Merrill Lynch's core businesses, leadership changes, risk management improvements, growth opportunities in emerging markets and through third party funds, and plans for balance sheet optimization and more efficient use of capital.
The document provides information on legislative activities for the week of July 9, 2012. It summarizes bills scheduled for consideration in the House and Senate that week related to veterans, the farm bill, appropriations, cybersecurity, and education issues. It also outlines regulatory actions and hearings scheduled related to education issues like No Child Left Behind waivers and the gainful employment ruling.
President Signs the JOBS Act into Law to Simplify Capital Formation Patton Boggs LLP
The JOBS Act was signed into law to simplify capital formation for small companies. Key provisions include:
1) Creating "emerging growth companies" that have reduced regulatory requirements for 5 years after their IPO to encourage going public.
2) Allowing general solicitation for private offerings to accredited investors.
3) Increasing the Regulation A offering limit from $5M to $50M and preempting state securities laws.
4) Raising the shareholder threshold that triggers public reporting from 500 to 2,000 shareholders.
Treasury Issues Binding Guidance on Medical Device Excise TaxPatton Boggs LLP
The Treasury Department issued final regulations and interim guidance on the new 2.3% excise tax on medical devices. The final regulations provide additional details on determining whether devices qualify for the retail exemption. The interim guidance provides constructive sales price safe harbors and treats licenses of medical devices as leases subject to the tax. The guidance also addresses donations, convenience kits, and provides penalty relief for the first three quarters of deposits.
A Christine Martin Comp 100 Final Projectcmbmartin
This document presents an agenda to compare products from Dell, HP, and Gateway. It includes links to product pages for speakers included with a keyboard and mouse from Dell for $754.96. It also provides links to monitor and keyboard/mouse/speaker products from HP and Gateway. The document aims to present, compare features of, and create a chart for the products listed from the three companies.
This document summarizes recent developments in antitrust enforcement and investigations. It notes that in 2012, the DOJ obtained over $1 billion in criminal antitrust fines, driven by large fines against companies involved in price fixing for auto parts and LCD screens. It predicts that the investigations into auto parts and alleged rigging of LIBOR interest rates will remain active areas in 2013 and potentially yield further prosecutions and penalties. While 2012 saw record fines, fewer new criminal antitrust cases were actually filed compared to 2011.
PTO Director Updates Senate Judiciary Committee on Implementation of the Amer...Patton Boggs LLP
Director Kappos updated the Senate Judiciary Committee on the Patent and Trademark Office's (PTO) implementation of the America Invents Act (AIA). Key points included that the new Track One prioritization program has received over 4,000 applications and allowed over 500, the first satellite office will open in July, and road shows have reached over 1,300 people. The PTO aims to reduce application pendency and backlog while improving examiner training and retention. Senators discussed issues like patentable subject matter, fees, and administrative review standards under the AIA.
The document summarizes updates from the FCC and Congress regarding regulatory fees, spectrum transactions, and funding appropriations. It also provides updates on public safety broadband networks, the 4.9 GHz proceeding, conflicts of interest, Connect America funds, mobile phone health effects, cybersecurity legislation, the Tennis Channel carriage complaint, video competition reports, the mobility fund auction, E-Rate funding, USF/ICC reforms, and rural health care broadband support.
This document provides an overview of technology spending by U.S. bankers in 2012. It discusses key themes in the banking industry like channel shift, disintermediation, customer engagement, and improving customer experience. The document also summarizes the state of the banking industry in 2011, noting continued challenges from the mortgage crisis but signs of recovery. Technology spending growth is projected to be modest at 1.8% in 2012 due to uncertainties. The rest of the document breaks down projected spending areas and provides expert opinions on trends in mobile banking, analytics, compliance, security and other technologies.
A round-up of the latest UK economic news, including a reminder of the key announcements in George Osborne's Budget, inflation falling to 0%, the latest unemployment figures and David Cameron's comments about his re-election.
Mercer Capital's Bank Watch | February 2022 | Acquire or Be Acquired (AOBA) 2...Mercer Capital
Brought to you by the Financial Institutions Team of Mercer Capital, this monthly newsletter is focused on bank activity in five U.S. regions. Bank Watch highlights various banking metrics, including public market indicators, M&A market indicators, and key indices of the top financial institutions, providing insight into financial institution valuation issues.
2015 banking outlook: The future is bright, but change your password Grant Thornton LLP
Organic growth will remain elusive, but banks can boost performance by focusing on honing operational efficiencies and shoring up risk management.
Learn more - http://gt-us.co/1uaqYal
The Pepperdine Private Capital Markets Project, available at http://bschool.pepperdine.edu/privatecapital, is the first comprehensive and simultaneous investigation of the major private capital market segments. The initial research survey examined the behavior of the private capital market participants, investment types, expected and historical rates of return, financial ratio thresholds, coupon rate distributions and other investment characteristics.
Theme Capital Structure and leverageAssignment Case 3Deluxe.docxsusannr
Theme: Capital Structure and leverage
Assignment Case 3
Deluxe Corporation
Case 35 page 479
GUIDANCE SHEET
Synopsis
In July 2002, an investment banker advising Deluxe Corporation must prepare recommendations for the company’s board of directors regarding the firm’s financial policy. Some special considerations are the mix of debt and equity, maintenance of financial flexibility, and the preservation of an investment-grade bond rating. Complicating the assessment are low growth and technological obsolescence in the firm’s core business.
The objective is to recommend an appropriate financial policy for Deluxe Corporation and, in support of that recommendation, it is recommended to show the impact on the cost of capital, financial flexibility (i.e., unused debt capacity), bond rating, and other considerations.
Objectives
The following are the analytical objectives of this case study:
· Survey the determinants of corporate bond ratings. The case highlights the important influence of the rating agencies on the costs of debt and the access to capital markets. The case data afford students the opportunity to explore profitability, coverage ratios, and capitalization ratios as measures of credit quality.
· Explore the practical challenges involved in determining the optimal mix of debt and equity, in particular assessing the tradeoff between the benefits of debt tax shields and the costs of financial distress. The case affords the opportunity to highlight methodological problems in estimating the optimal mix.
· Consider the concepts of debt capacity and financial flexibility. The notion advanced in this case is that flexibility is the ability to access capital without falling short of the firm’s minimum target credit rating.
Introduction
In the check printing industry Deluxe has been one of the most dominant companies. The company occupies 49% of the market share and its compound annual was growing at the rate of 12%. The new forms of payments have really encroached on the demand of check printing industry. The demand greatly went down annually. There is a big challenge that is faced by the core business of Deluxe. The company opted to retain Singh was retained by the board of directors and asked him to come up with a plan for the new round of debt issuing. A clear indication is that at some point in the future the company will really struggle. In order to deal with the bad situation in the future, Deluxe must maintain the flexibility of its finances and ensure that it sets its cost of capital as low as possible through adopting the appropriate capital structure. This paper will be trying to find out the recommendations that can help Dluxe company to get back on truck with running its business.
Questions
1. What are the risks associated with Deluxe’s business and strategy? What financing requirements do you foresee for the firm in the coming years? ( HERE YOU ARE SUPPOSE TO ADD NUMBERS CHECK THE SAMPLE AGAIN PLEASE)
The n.
This document provides a summary of a study on mortgage lending performance benchmarking. It analyzes key metrics like pull-through rate, productivity, and cost to close for credit unions. The study found that pull-through rates average around 45% but can be increased through better follow up. Productivity varies widely from 2 to over 14 loans per employee per month. Lenders using a single, integrated system tend to be more productive. Cost to close also varies significantly from around $830 to over $3,200 depending on productivity and use of technology. Case studies on specific credit unions provide examples of how productivity and costs have changed over time in different environments.
Mercer Capital's Value Focus: FinTech Industry | Fourth Quarter 2022 Mercer Capital
Mercer Capital’s quarterly newsletter, FinTech Watch, provides an overview of the FinTech industry, including public market performance, valuation multiples for public FinTech companies, and articles of interest from around the web. This newsletter focuses on FinTech segments, including payment processors, technology, and solutions companies, examining general economic and industry trends as well as a summary of M&A and venture capital activity.
The document summarizes key discussions from the 14th Annual ELFA/IMN Investor Conference. There was high confidence in the equipment finance sector. Competition in the industry was increasing due to more players entering the space, but this also fueled innovation. However, some panelists warned that rising competition could lead to weaker underwriting standards over time. Overall, the investor demand for equipment ABS was strong and continuing to grow the market.
The document analyzes the financial industry using Porter's five forces model. It finds that the threat of new entrants is low due to the lengthy regulatory approval process required. Rivalry is strong as institutions compete for customers and deposits. The threat of substitutes is high as customers frequently use multiple institutions. Suppliers like the Federal Reserve and credit card companies have significant bargaining power. The bargaining power of buyers is low for commercial banks but higher for credit unions which are member-owned.
The document summarizes discussions from the 15th Annual ELFA/IMN Investors Conference about developing strategies in an uncertain economic environment. There was a theme of uncertainty due to geopolitical issues like terrorism, the US election, and China's economic transition. Panelists discussed increasing costs of funds, a sluggish ABS market, and the need to develop strategies to deal with uncertainty and rising interest rates. However, others expressed optimism in the industry's resilience and ability to grow steadily despite challenges. New entrants in areas like marketplace lending and alternative financing were noted as ways the industry is adapting to changes.
Week 5 Discussion Responses – Financial Accounting
Discussion Response 1
BY: E,S
The CFO has more oversight and needs to make sure areas of ethics, integrity are not questioned “He or she is the last line defense in terms of the moral compass of the company and the accuracy of the financial statements” (John Draut, 2017). These are tried and true and keep lawlessness away! With that said there are laws that allow some room to move numbers such as depreciation, and the GAAP allows equipment to be one of those areas. In my company we use this method both on a District and Regional level but with rules of engagement. To me accounting calls for more ethics and integrity and honesty than most fields. Most fields have honest people but in the Business world the CFO in my eyes is a very important and upstanding person. I believe many organizations have CFO as their CEO because of the skill set and complexities that exist today.
“Depreciation begins when a taxpayer places property in service for use in a trade or business or for the production of income. The property ceases to be depreciable when the taxpayer has fully recovered the property’s cost or other basis or when the taxpayer retires it from service, whichever happens first” (IRS Gov).
“Depreciation is an income tax deduction that allows a taxpayer to recover the cost or other basis of certain property. It is an annual allowance for the wear and tear, deterioration, or obsolescence of the property” (IRS Gov.). So in reference to changing asset life does occur occasionally, the question is if it has always been five years and the CFO wants seven years for bonus reasons I do not feel this is appropriate and feel it takes a clear cut situation to a grey area I would not feel comfortable with. Would the IRS look the other way? Could be so for legal reason you may get by, then again there are rules for equipment and if you went from seven years to five you would have to explain the reasoning and tie it to the industry potentially.. What would I do? I would find other areas to generate the $750K they are looking for. The grey area doesn’t make me comfortable and there has to be other areas to generate revenue to gain the bonuses such as safety, turnover, overtime, double shifting, hiring etc. Not knowing the company or the business there generally are cost cutting initiatives that can help offset cost.
Side note: Last two weeks we have discussed Fraud and Ethics----Have you heard about the FBI investigation of NCAA Basketball programs tied to shoe manufactures? Do you think anyone in the accounting departments knew about the large sums being paid out? College sports are big business, and the corruption continues to amaze me.
References:
John Draut
https://www.irs.gov/.../a-brief-overview-of-depreciation
Discussion Response 2
BY: B,R
Ethics is typically not a black and white decision, it often lies in the gray area in between. In general, making an ethical decisi.
This document discusses credit analysis and financial distress prediction. It covers key topics including why firms use debt financing, potential downsides of debt financing, and differences in debt financing practices internationally. It also describes the credit analysis process in private debt markets, including conducting financial analysis and assembling loan structures. Methods of predicting financial distress like Altman's Z-score model are also discussed.
imapct of financial crisis and role of financial institutions in this crisisRanjith Reddy
1. The document discusses the 2007-2008 global financial crisis, which originated from the subprime mortgage crisis in the United States. Risky subprime loans were bundled into securities and spread widely throughout the global financial system.
2. As housing prices declined and subprime borrowers began to default, the value of these securities plummeted. This caused the failure of banks and other financial institutions highly exposed to subprime mortgages.
3. The crisis had ripple effects across borders, with investments devalued and economies impacted around the world. Governments enacted massive bailouts to stabilize the financial system and prevent a global economic depression.
Everything you need to know about the top economic stories from September 2014, including the Bank of England base rate voting split, lower unemployment rate and the No vote for Scottish independence.
MGT 202Fall 2020Mini-Research Paper on Bank of America CorporaDioneWang844
MGT 202
Fall 2020
Mini-Research Paper on Bank of America Corporation
The following paper will follow the guidelines set out on the syllabus for the mini-research and will cover high-level corporate governance/agency conflicts, unique/systematic risk to the bank, industry risk, capital budgeting decisions, recent financing decisions, current capital structure, analysis made by financial analysts, news coverage in the media & stock prices of Bank of America Corporation. Finally, there will be a short-term and long-term assessment of Bank of America based on the topics covered in the research.
To begin it would be useful to provide an overview what Bank of America Corporation does. Bank of America is a global financial institution, serving individual customers, businesses & institutions operating in 35 countries throughout Europe, the Middle East and Africa, Asia Pacific and the Americas. It has 5 main lines of business that include: Consumer Banking, Global Wealth & Investment Management, Global Banking, Global Markets & ALM. The Corporate alignment is shown in Figure 1 taken from the 2019 Annual Report. Note that the majority and producing lines of business are consumer related. These consist of; customer deposits, Merrill Edge (individual brokerage accounts of $250,000 or less), small business banking, credit & debit card, real estate & vehicle loans and will be discussed more in detail in the analysis section of this paper. It is also fair to note that Bank of America is a global leader in wealth management, corporate and investment banking, and trading across a broad range of asset classes. The bank provides services to corporations, governments, institutions, and individuals (newsroom.bankofamerica.com). These attributes make it one of the United States largest money center banks along with Citi, JP Morgan, Wells Fargo & others.
Figure 1
The size and scale of Bank of America’s operations has also shaped Bank of America’s corporate governance profile, spotlighting agency conflicts & pronouncing the need to mitigate the individual and industry risk characteristics of the bank. These factors have and can be considered in the firm’s capital budgeting decisions, finance decisions and ultimately capital structure.
The main idea behind Bank of America’s current corporate governance policy & risk mitigation is responsible growth. This is a response to the 2008 Financial Crisis that saw the housing bubble burst, and Bank of America receive a $45 billion dollar bailout in the form of a TARP loan from the United States federal government. At the time, Bank of America had announced the acquisition of Countrywide Financial in January of 2008 and completed the deal on July 1, 2008 for $2.5 billion. However, according to an August 17, 2014 article by Rick Rothacker in The Charlotte Observer, has cost Bank of America $50 billion and counting in settlements, payments to investors for soured loans, accounting write-downs and operatin ...
The document discusses credit rating agencies and their role in evaluating the creditworthiness of corporations and governments that issue debt securities. It notes that credit rating agencies have been in existence since 1900 but it was in 1975 when the SEC formally recognized nationally recognized statistical rating organizations (NRSROs) and instructed broker-dealers to only use NRSRO ratings. The document goes on to discuss how financial institutions could satisfy capital requirements by investing in securities that received favorable ratings from NRSROs. It indicates that NRSROs are regulated by the SEC and that their ratings provide investors with objective analyses and independent assessments of risk associated with securities issued by corporations and governments.
WG Consulting & ZE PowerGroup Lunch and Learn: Presenting a Dodd-Frank Softwa...WG Consulting
During a Lunch and Learn held with one of our esteemed Partners, ZE PowerGroup, our panel of experts discussed the challenges corporations find with Dodd-Frank and presented the software that WG Consulting and ZE PowerGroup built as an answer to those challenges.
Legal & General Surveying Services have published an interview with Robert Sinclair, Chief Executive at AMI and AFB, in their magazine Perspective.
Robert Sinclair, Chief Executive at AMI and AFB, helped establish the Association of Mortgage Intermediaries (AMI) as an independent entity in 2012. He joined the former parent trade body, AIFA, in October 2006, initially looking after the Association of Finance Brokers. He looks after the day-to-day running of AMI and AFB delivering member information and services, lobbying regulators and policy-makers and developing press relations.
Pivotal Research Group LLC: Madison and wall 3 30-12Brian Crotty
Madison & Wall
A Recurring Review of Topics Affecting Advertising-Supported Media
March 30, 2012
Welcome to Pivotal Research’s “Madison & Wall”. The title refers to our work which
sits at the intersection between the advertising industry and the financial world. We
hope you’ll find these brief notes useful for their contrast to the hyperbole that
pervades much of the chatter at that location.
Similar to Business Leasing and Finance News (BLFN) 2012 Summer Edition (20)
Crimea: U.S. Response Intensifies As Congress, President Obama Issue More San...Patton Boggs LLP
The U.S. has intensified its response to Russia's actions in Crimea through additional sanctions passed by Congress and issued by President Obama. The House passed legislation authorizing sanctions on those responsible for corruption or undermining Ukraine. President Obama signed an order allowing sanctions on broad sectors of the Russian economy. The U.S. has also frozen export licenses to Russia and designated more individuals under prior orders. Further sanctions may be imposed if Russia takes additional actions in Ukraine.
Update: Employer Responsibilities Under the Affordable Care ActPatton Boggs LLP
This document summarizes employer responsibilities under the Affordable Care Act that take effect in January 2015. It outlines key timelines employers should be aware of, including penalties for employers with 50 or more full-time employees in 2016. It provides guidance on determining if a company qualifies as a large employer based on number of full-time equivalent employees. It also discusses options for employers who are subject to penalties, such as providing affordable health insurance or paying penalties.
Crimea: U.S. Executive Actions and Legal Implications of Overlapping Global S...Patton Boggs LLP
The document summarizes the recent executive actions taken by the United States and European Union imposing sanctions in response to Russia's annexation of Crimea from Ukraine. It provides details on:
1) The new U.S. Executive Order signed on March 17th authorizing sanctions on senior Russian officials, the Russian arms sector, and those providing support. So far 11 individuals have been sanctioned.
2) The EU publishing a list on March 18th sanctioning 21 Russian and Ukrainian officials, including some also sanctioned by the U.S.
3) The legal implications and scope of sanctions authorized by the new U.S. Executive Order, including asset blocking and visa bans.
Protecting Patient Information - Feds Find Security Lapses in State and Local...Patton Boggs LLP
This document summarizes two recent announcements from the Department of Health and Human Services highlighting the need for state and local governments to regularly review their policies and procedures for protecting patient health information. An audit found serious cybersecurity lapses in 10 state Medicaid systems, including lack of security plans, encryption of laptops, and disaster recovery testing. Additionally, Skagit County, Washington agreed to a $215,000 settlement for exposing patient information on a public server in violation of privacy and security rules. Both announcements emphasize the importance of risk assessments, administrative and technical safeguards, and compliance with health information privacy laws.
American University International Law Review Annual Symposium: Managing the G...Patton Boggs LLP
DC Partner Frank Samolis will address participants during a symposium hosted by American University’s Washington College of Law on February 18, 2014. The event will examine issues around international trade and the environment through dialogue on the Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership negotiations, the state of Article XX of the General Agreement on Tariffs and Trade, enforcement mechanisms under regional trade agreements, and potential future means of protecting the environment through International Trade Law Society. Mr. Samolis will serve as a panelist during a discussion on TTP talks and TTIP negotiations at 12:45 p.m. during the symposium.
This newsletter provides summaries of recent reinsurance case law and regulatory developments from March 2014. It includes summaries of cases from New York, Tennessee, and California federal courts related to arbitration awards, protected cell reinsurance agreements, preclusion of subsequent arbitrations, and common interest privilege with reinsurers. It also summarizes cases related to tax treatment of retrocessional agreements, dismissal of defenses in a facultative reinsurance dispute, denial of stay in a mortgage reinsurance case, and assumption versus reinsurance.
With increasing demand on limited public resources, national and local governments are recognizing the need for a new approach to social services that emphasizes the identification of effective, innovative ideas. However, a lack of available funding and the reluctance to take on the risk that a promising, but unproven, idea might fail have created obstacles to this new approach. The social impact bond model is designed to eliminate these obstacles.
Supreme Court Agrees to Hear Two Cases on Attorneys' Fees in Patent CasesPatton Boggs LLP
The Supreme Court agreed to hear two cases that deal with awarding attorneys' fees in patent cases. In the first case, Octane Fitness v. ICON Health, the Court will consider whether to lower the standard for determining an "exceptional case" in which fees can be awarded. In the second case, Highmark v. Allcare Health, the Court will determine how much deference appellate courts must give to lower court decisions on awarding fees. These rulings could make it easier for prevailing parties to recoup fees and deter patent holders from filing weak infringement claims.
FTC Announces Study of "Patent Assertion Entities"Patton Boggs LLP
The FTC announced it will conduct a study of patent assertion entities (PAEs) by collecting detailed information from 25 PAEs and 15 other companies through its authority under Section 6(b) of the FTC Act. The FTC will seek information about PAE operations, patent acquisitions, assertion activities like litigation and licensing, costs and revenues. Responding companies may be able to keep some information confidential, but it could also be subject to disclosure. The FTC must get approval from the OMB before collecting information and is seeking public comment on the study by December 2nd.
ALJ Ruling on Heart Attack Reporting Requirements Creates Split of AuthorityPatton Boggs LLP
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2) The regulations require immediate reporting of accidents involving injury with a potential for death; the ALJ found a heart attack was an illness, not an injury.
3) However, the ALJ distinguished cases where CPR was required or the victim was unresponsive, requiring immediate reporting in those scenarios still. The full Commission has yet to address this issue definitively.
New TCPA Requirements for "Prior Express Written Consent" Effective October 16Patton Boggs LLP
This document summarizes new requirements under the Telephone Consumer Protection Act (TCPA) for obtaining "prior express written consent" before making telemarketing calls or texts. Beginning October 16, 2013, companies must get written permission that specifically authorizes automated calls or prerecorded messages to wireless or residential lines. The rules also eliminate exceptions for current customers and require consent for each phone number. Violations of the new consent rules could result in substantial damages in consumer lawsuits. Companies are advised to review their practices to ensure compliance.
This newsletter provides summaries of recent reinsurance cases:
1) The US Supreme Court clarified that arbitrators have broad authority to interpret contracts and their decisions should not be overturned even if their interpretation is incorrect, as long as they construed the contract.
2) A California court ordered parties to complete their arbitrator selection process and let the panel decide issues of consolidation and contractual provisions, rather than the court making those decisions.
3) A Connecticut court compelled arbitration in a fronting dispute, finding the reinsurer agreed to arbitrate based on references to underlying reinsurance agreements in an assumption agreement.
The newsletter also provides brief summaries of several other reinsurance court cases.
The U.S. Chemical Safety Board to OSHA: Get to Work on Combustible DustPatton Boggs LLP
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The Transatlantic Trade and Investment Partnership: The Intersection of the I...Patton Boggs LLP
This document summarizes a client alert from the law firm PattonBoggs regarding the Transatlantic Trade and Investment Partnership (TTIP) negotiations between the EU and US. It notes that digital commerce and data privacy will be key issues discussed, as the EU and US have different approaches to these matters. Specifically, the EU views data privacy as a fundamental right while the US takes a sector-specific approach. Recent NSA surveillance revelations have heightened these differences. The next round of TTIP talks in October will likely start substantive discussions on finding common ground regarding data privacy standards.
The document provides a summary of legislative activities in the United States Congress for the week of July 29, 2013. In the Senate, cloture was filed on several nominations including the nomination of James Comey as FBI Director. The Senate also passed a bill tying student loan interest rates to Treasury rates. In the House, the agenda for the week includes consideration of an appropriations bill and several other pieces of legislation under suspension of the rules. The document also summarizes legislative activities relating to various policy areas such as agriculture, budget, cybersecurity, and defense.
This document provides a summary of legislative activity in Congress for the week of July 22, 2013. It covers developments in various policy areas including the farm bill, appropriations bills, cybersecurity legislation, and hearings scheduled. The Senate is expected to take up the transportation appropriations bill this week but there may be a budget point of order raised. The House will consider the defense appropriations bill but there are disagreements over amendments. In cybersecurity, a Senate committee plans to mark up a bipartisan bill by the end of the month focusing on NIST coordination and workforce issues.
The document is a summary of frequently asked questions from the CFTC's cross-border guidance. It defines key terms like U.S. person, foreign branch, and affiliate conduit. For U.S. person, it provides a broad definition that includes natural persons residing in the U.S., entities organized in the U.S., certain trusts, collective investment vehicles majority-owned by U.S. persons, and entities with unlimited liability that are majority-owned by U.S. persons. It also considers factors like a party's connections to U.S. commerce in determining U.S. person status. For foreign branches, it notes they are considered part of the principal U.S. entity but may
Tony Abbott and the conservative National Liberal Coalition secured a landslide victory over the Labor party in Australia's federal election. Abbott stated that Australia is now "under new management and open for business." The Coalition is expected to focus on economic policy, including repealing the carbon tax, increasing infrastructure spending, returning the budget to surplus, and abandoning Labor's emissions trading policy in favor of a direct action climate plan. Julie Bishop will remain as Australian ambassador to the United States, and Kevin Rudd has stepped down as Labor leader.
"Advance Australia Fair" - The Australian Federal Election 2013Patton Boggs LLP
This document summarizes the key issues of the upcoming Australian federal election on September 7, 2013. It outlines the stances of the ruling Labour Party and opposition Liberal National Coalition on climate change, the economy, national security, and asylum seekers. On climate change, Labour supports moving to an emissions trading scheme while the Coalition prefers "direct action." Both parties aim to reduce carbon emissions by 5% by 2020 but the Coalition has made no commitments beyond that. The economy and returning the budget to surplus are also major issues. National security policies focus on continued US defense cooperation and engagement in the Indian Ocean region. The parties differ on their approaches to offshore processing of asylum seekers.
U.S. Securities and Exchange Commission Proposes New Rule on Pay DisclosurePatton Boggs LLP
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The Impact of Generative AI and 4th Industrial RevolutionPaolo Maresca
This infographic explores the transformative power of Generative AI, a key driver of the 4th Industrial Revolution. Discover how Generative AI is revolutionizing industries, accelerating innovation, and shaping the future of work.
STREETONOMICS: Exploring the Uncharted Territories of Informal Markets throug...sameer shah
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Vicinity Jobs’ data includes more than three million 2023 OJPs and thousands of skills. Most skills appear in less than 0.02% of job postings, so most postings rely on a small subset of commonly used terms, like teamwork.
Laura Adkins-Hackett, Economist, LMIC, and Sukriti Trehan, Data Scientist, LMIC, presented their research exploring trends in the skills listed in OJPs to develop a deeper understanding of in-demand skills. This research project uses pointwise mutual information and other methods to extract more information about common skills from the relationships between skills, occupations and regions.
Fabular Frames and the Four Ratio ProblemMajid Iqbal
Digital, interactive art showing the struggle of a society in providing for its present population while also saving planetary resources for future generations. Spread across several frames, the art is actually the rendering of real and speculative data. The stereographic projections change shape in response to prompts and provocations. Visitors interact with the model through speculative statements about how to increase savings across communities, regions, ecosystems and environments. Their fabulations combined with random noise, i.e. factors beyond control, have a dramatic effect on the societal transition. Things get better. Things get worse. The aim is to give visitors a new grasp and feel of the ongoing struggles in democracies around the world.
Stunning art in the small multiples format brings out the spatiotemporal nature of societal transitions, against backdrop issues such as energy, housing, waste, farmland and forest. In each frame we see hopeful and frightful interplays between spending and saving. Problems emerge when one of the two parts of the existential anaglyph rapidly shrinks like Arctic ice, as factors cross thresholds. Ecological wealth and intergenerational equity areFour at stake. Not enough spending could mean economic stress, social unrest and political conflict. Not enough saving and there will be climate breakdown and ‘bankruptcy’. So where does speculative design start and the gambling and betting end? Behind each fabular frame is a four ratio problem. Each ratio reflects the level of sacrifice and self-restraint a society is willing to accept, against promises of prosperity and freedom. Some values seem to stabilise a frame while others cause collapse. Get the ratios right and we can have it all. Get them wrong and things get more desperate.
Enhancing Asset Quality: Strategies for Financial Institutionsshruti1menon2
Ensuring robust asset quality is not just a mere aspect but a critical cornerstone for the stability and success of financial institutions worldwide. It serves as the bedrock upon which profitability is built and investor confidence is sustained. Therefore, in this presentation, we delve into a comprehensive exploration of strategies that can aid financial institutions in achieving and maintaining superior asset quality.
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
OJP data from firms like Vicinity Jobs have emerged as a complement to traditional sources of labour demand data, such as the Job Vacancy and Wages Survey (JVWS). Ibrahim Abuallail, PhD Candidate, University of Ottawa, presented research relating to bias in OJPs and a proposed approach to effectively adjust OJP data to complement existing official data (such as from the JVWS) and improve the measurement of labour demand.
Every business, big or small, deals with outgoing payments. Whether it’s to suppliers for inventory, to employees for salaries, or to vendors for services rendered, keeping track of these expenses is crucial. This is where payment vouchers come in – the unsung heroes of the accounting world.
Abhay Bhutada, the Managing Director of Poonawalla Fincorp Limited, is an accomplished leader with over 15 years of experience in commercial and retail lending. A Qualified Chartered Accountant, he has been pivotal in leveraging technology to enhance financial services. Starting his career at Bank of India, he later founded TAB Capital Limited and co-founded Poonawalla Finance Private Limited, emphasizing digital lending. Under his leadership, Poonawalla Fincorp achieved a 'AAA' credit rating, integrating acquisitions and emphasizing corporate governance. Actively involved in industry forums and CSR initiatives, Abhay has been recognized with awards like "Young Entrepreneur of India 2017" and "40 under 40 Most Influential Leader for 2020-21." Personally, he values mindfulness, enjoys gardening, yoga, and sees every day as an opportunity for growth and improvement.
Dr. Alyce Su Cover Story - China's Investment Leadermsthrill
In World Expo 2010 Shanghai – the most visited Expo in the World History
https://www.britannica.com/event/Expo-Shanghai-2010
China’s official organizer of the Expo, CCPIT (China Council for the Promotion of International Trade https://en.ccpit.org/) has chosen Dr. Alyce Su as the Cover Person with Cover Story, in the Expo’s official magazine distributed throughout the Expo, showcasing China’s New Generation of Leaders to the World.
TEST BANK Principles of cost accounting 17th edition edward j vanderbeck mari...Donc Test
TEST BANK Principles of cost accounting 17th edition edward j vanderbeck maria r mitchell.docx
TEST BANK Principles of cost accounting 17th edition edward j vanderbeck maria r mitchell.docx
TEST BANK Principles of cost accounting 17th edition edward j vanderbeck maria r mitchell.docx
Business Leasing and Finance News (BLFN) 2012 Summer Edition
1. Summer Edition - 2012 -
Issue 91
Business Leasing and Finance News (BLFN) Summer Edition 2012
1. Latest Decisions in Lease
Accounting Project Cloud FOUNDER'S NOTE
Industry’s Future By David G. Mayer
2. Aviation Industry Buffeted
by FAA Plans for Non-Citizen INDEX DOLDRUMS
Trusts
3. BLFN Case & Comment: BLFN has been out of circulation for a while, but we are happy to be here.
Secured Creditors Win Back Thanks to all the loyal readers of BLFN for asking me where the next
Rights to Credit Bid in RadLAX edition is or how to subscribe. Happily, despite the hiatus, BLFN is still
Gateway Hotel, LLC, et al. v. growing worldwide and has never had so many subscribers.
Amalgamated Bank
4. Finance 101: What is the Most of what I hear from you is how businesses in the past several months have dipped their
“ACORD 23: ‘Vehicle or toes in the cool or frigid economic waters only to pull back. They continue to wait for any
Equipment Certificate of
encouraging economic signals that indicate it is safe to deploy capital, hire new employees
Insurance’?”
and make significant new financial commitments. So much uncertainty throttles our
businesses, inhibits our decision-makers and shakes our confidence.
About BLFN: David G.
Mayer, a Media articles and surveys often paint divergent pictures of the economy and its direction.
Business Department The latest economic news implies that businesses have again retreated; they seem reluctant
partner at Patton Boggs LLP, to go near the water. Corporate cash continues to rise, unemployment remains stubbornly
founded this monthly e-
high and a new round of economic stimulus does not seem to be in the cards.
newsletter in January 2002.
BLFN’s mission is to provide
leasing and financing Amid the economic doldrums, the Institute for Supply Management-Chicago Inc. (ISM)
strategies for your success.
reported an unexpected increase to 53.7 (50 means growth) in consumer confidence, the first
gain in five months. See Consumer Confidence in U.S. Unexpectedly Climbed in July,
Subscribe for Free: Sign up
Bloomberg Business Week (July 31, 2012). Unfortunately, this good news promptly
to receive BLFN’s bimonthly
editions for free! Just click succumbed to the bad news from ISM that the manufacturing index fell to 49.7 from 53.5 in
subscribe for free. Our May. At a score of 50 or less, the ISM indicates that manufacturing is contracting; it did so in
subscribers hail from about June for the first time since the recession ended in June 2009. See Manufacturing in U.S.
33 countries and our Unexpectedly Contracted in June, Bloomberg (July 2, 2012). The July Manufacturing ISM
readers include business,
finance, risk management, offered no good news either. In its August 1, 2012 news release, ISM said: “The PMI
tax, accounting and legal registered 49.8 percent, an increase of 0.1 percentage point from June's reading of 49.7
professionals; government percent, indicating contraction in the manufacturing sector for the second consecutive month,
officials; entrepreneurs; and following 34 consecutive months of expansion.” Manufacturing is crucial to economic recovery
members of the media. Join
and capital investment, including equipment finance.
us today!
The Monthly Confidence Index - Equipment Finance Industry (MCI-EFI) (July 2012) in July
offers a mixed bag of concern and confidence. Published by the Equipment Leasing & Finance
Foundation (ELFF), the monthly confidence index reports in part that “12.9% of survey
respondents believe demand for leases and loans to fund capital expenditures (capex) will
increase over the next four months, an increase from 8.1% in June. 71% believe demand will
“remain the same" during the same four-month time period, up from 64.9% the previous
month. 16.1% believe demand will decline, down from 27% in June.” The surveys suggest
that the equipment finance business has a very long way to achieve sustainable growth and
prosperity.
As lessors and lenders, you still can profit by differentiating your products from other funders
2. and applying your intellectual capital to out structure your competition. Though this point may
be spot on, it sounds so optimistic, even Pollyanna would approve. Perhaps the only way to
win business in this market is to buy it: Find the cheapest money available and use it with
abandon to offer the lowest market rates to customers. As is often the case, the best
approach probably lies somewhere in the middle.
The indices may benefit from the success of your business, but the underpinnings of the
indices seem unlikely to confer any benefit on your business. It is clearly up to you to find the
right balance in the face of the economic challenges ahead. It would be welcome, indeed, for
the indices to swing from the doldrums into positive territory and stay there. It’s anyone’s
guess when that will happen.
Enjoy the balance of the summer! Thanks very much for reading BLFN. Keep in touch; it is
always great to hear from you.
1. Latest Decisions in Lease Accounting Project Cloud Industry’s
Future
Some fog cleared in London on June 13, 2012 when the FASB and IASB met there and made
additional decisions regarding their lease convergence project (Project). They conducted a
videoconference Board Meeting on July 17, 2012 where they made more tentative decisions.
The fog did not clear in July; rather, it is giving way to dark clouds for equipment leasing and
partly sunny skies for real estate leasing.
As of last fall, Grant Thornton reported that the Project could affect more than $1.25T of
leases (real estate and equipment) on an undiscounted basis for U.S. listed companies alone
(without even counting other companies).
Even though experts view the Project as making one of the most significant global accounting
changes in the past decade, Grant Thornton also found that 54 percent of global businesses
are not aware of, and are therefore unprepared for, the cascading effect of the changes that
the Project will impart on balance sheets and the leasing business.
*Terms to Know: FASB refers to the Financial Accounting Standards Board, which establishes
standards of financial accounting that govern financial reports of nongovernmental entities.
The IASB is FASB’s international counterpart and accordingly, it “is the independent standard-
setting body of the IFRS Foundation.” The FASB and IASB (collectively, the Boards) have
been working on converging their standards since 2002.
The Project overhauls FAS No. 13 (FAS 13), which is the 1976 Financial Accounting Standard
governing lease accounting in the U.S. The Project aims to create one uniform standard for
lease accounting that largely displaces FAS 13.
According to the IASB: “The boards undertook the leases project to address the widespread
concern that many lease obligations currently are not recorded on the balance sheet and that
the current accounting for lease transactions does not represent the economics of all lease
transactions.” Not surprisingly, the FASB articulates a similar view.
Timeline to Next Exposure Draft
The timeline for the Project from the June 13, 2012 meeting until the effective date of the final
exposure draft (ED), the document that will set forth the converged accounting guidance, is:
s Begin drafting the ED
s Issue the ED in the fourth quarter of 2012 with a 120 day comment period
s Review the comment letters and revise the ED if necessary in the first half of 2013
s Issue the final standard late in 2014
s Set an effective date of 2017 or later (a transition year) to allow lessees and lessors
3. time to develop systems, extract lease data and prepare comparative financials under the
new models
*Warning: The transition will be complicated. If you are a lessee, the Boards decided that you
can either recognize a “Right of Use” (ROU) asset for each outstanding lease or apply a full
retrospective approach. Watch for the optimal way, if there is one, to handle the front-ended
costs for existing (and new) leases.
s Address issues specific to non-public entities at a future FASB-only meeting
Action Point: When the new ED emerges, lessors and their lessee customers should send a
comments letter to the Boards; the letters can still make a difference.
Board Decisions
In their June 13, 2012 meeting, the Boards made key decisions on lessee and lessor
accounting in the Project. Mostly, the Boards appeared to offer bad news for equipment
lessees and good news for real estate lessees and lessors.
Decision on the Two Lease Approach
Although the Boards were spilt with the FASB favoring a two-lease model and the IASB
favoring a one lease model, they took a second vote in an earlier meeting on whether
compromise was possible to get a converged standard. In the second vote the majority
agreed it could compromise on a two-lease model approach for both lessees and lessors with
both using the same dividing line to determine which accounting approach to use.
*Terms to Know: The “line” generally refers to FAS 13 type criteria examined when selecting
the appropriate accounting method for a lease. Leases on one side of the classification “line”
will use a different accounting method than leases that fall on the other side of the
classification line under FAS 13. However, the line under the ED is more subjective under the
proposed ED than the “bright lines” used in FAS 13.
The Equipment Leasing and Finance Association (the ELFA) has advocated a two-lease
approach since the outset of the Project in 2006. The bad news arises from the way the
Boards drew the classification lines. The Boards distinguish leases that get straight line rent
expense from leases that get front-ended interest and amortization.
*Technical Point: Rent expenses include transaction costs, and imputed interest, which when
combined reduces profit on the books of the lessor.
s Two Lease Approach for Lessees; Disclosures Required
The two lessee approaches (with an exception for short term leases, which may continue
to use the existing operating lease model) are:
s A lessee uses the Interest and Amortization method (I&A) approach (a change of
terminology from “Right of Use” (ROU) approach) when a lease is capitalized, the asset
is amortized straight-line, and interest is imputed on the liability. The result is a front-
end loaded expense pattern; and
s The Single Lease Expense (SLE) method (a change of terminology from the “Whole
Contract Method”) dictates that the asset and liability be capitalized, then adjusted each
month to equal the present value of the remaining payments. The profit and loss
relating to the lease is recognized on a straight line basis, as the average rent is
accrued each rent period and the actual rent paid is charged to the accrued rent
payable account.
*Terms to Know: A “short-term” lease refers to a “lease that, at the date of commencement
4. of the lease, has a maximum possible term, including any options to renew, of 12 months or
less.”
At the July 17 meeting, the “Boards … decided that a lessee should disclose the following:
s A single maturity analysis, which sets out the future undiscounted cash flows relating to all
lease liabilities and reconciles to the total lease liability.
s A separate reconciliation of opening and closing balances for (a) lease liabilities recognized
under the … I&A … approach and (b) lease liabilities recognized under the SLE approach.
The reconciliation should include interest or the unwinding of the discount on the lease
liability.
Additionally, the FASB tentatively decided not to bifurcate the disclosure of the maturity of
contractual commitments associated with services and other non-lease components between
the two lessee accounting approaches.”
In a change of their previous decision regarding disclosure, the Boards tentatively decided
that disclosure “of lease costs incurred in the reporting period to only include costs relating to
variable lease payments not included in the lease liability.”
s Two Lease Approach for Lessors
The two lessor approaches (with an exception for short term-leases) are:
s The Receivable and Residual (R&R) method; and
s The Operating Lease method (same as current used in FAS 13).
The Boards will create a new classification paradigm where real estate leases and equipment
leases are treated differently.
s For equipment leases it is presumed that the lease will be accounted for as an I&A lease
for lessees and an R&R lease for lessors unless the lease term is an insignificant portion of
the economic life of the underlying asset or the present value of the fixed lease payments
is insignificant relative to the fair value of the underlying asset (in that case it is a whole
contract lease for lessees and an operating lease for lessors).
Some leases transfer ownership rights while others merely transfer a right of use. For leases
that only transfer a right of use, the leases should, for accounting purposes, be treated as
executory contracts with a level cost pattern.
*Warning: This new paradigm is drastically different and more unfavorable than the current
lease classification tests in FAS 13 because fewer equipment leases will qualify to recognize
rent expense on a straight line basis. Lessees will have to keep two sets of records to
complete their tax returns. They argue that lease liability should not be classified as debt and
disclose information to potential lenders and lessors for use in assessing credit risk.
s For real estate leases it is presumed the lease will be accounted for as a SLE lease for
lessees, and an operating lease for lessors, unless the lease term is for the major part of
the economic life of the underlying asset or the present value of fixed lease payments
accounts for substantially all of the fair value of the underlying asset (in those cases the
lease will be accounted for as an I&A lease for lessees and an R&R lease for lessors). This
new line is very close to the current FAS 13 lease classification tests so virtually all real
estate operating leases will get straight line rent expense under the proposed new rules –
good news for real estate lessees.
*Tip: If the Revenue Recognition Project views a purported lease as a financed purchase, the
lease should not be considered a lease for purposes of the new lease standard.
5. Where a lessee controls the underlying asset under an agreement called a “lease” the lease
will be considered a financing – not a lease. A lessee will generally control the asset under a
financing where, for example, the lease includes an automatic transfer of title or a bargain
purchase option at the end of the lease term. Accordingly, capital lease accounting should be
used by lessees where a lessee has control of the asset. Correspondingly, lessors should use
sale and loan accounting for such financing leases.
*Term to Know: The Revenue Recognition Project refers to a project of the Boards to clarify
the principles for recognizing revenue and to develop a common revenue standard for U.S.
GAAP and IFRSs, which differ substantively, as do the Boards themselves.
Assessment of Key Decisions
In assessing the decision at the July 10, 2012 meeting, the following observations were
made:
s It is clearly bad news, but not a surprise, that the Boards will terminate leveraged lease
accounting, the exclusion of investment tax credits from revenue recognition in non-
leveraged leases and changes to sales-type lease profit recognition.
s It is good that the Boards decided on a two-lease model as it should be closer to the
economics of leases. However, the paradigm shift for equipment leases is drastically
different than current GAAP, which makes the decision clearly unfavorable for equipment
leases.
s It is bad news that equipment lessees will have a more difficult task of classifying leases
under the proposed line as leases; and it is unclear how the more subjective judgment
than under FAS 13 will affect this classification.
The proposed line is based on a judgment as to whether the lease term or present value of
the rents is insignificant whereas the current FAS 13 lease classification tests are the
opposite – the determination of whether a lease is capitalized arises when the present
value of the rents is a significant part of the rents payable during the lease term (i.e.,
more than 89.9 percent of the present value of fixed rents).
*Term to Know: The term “insignificant” is new to lease accounting. Accordingly, definition
and implementation guidance will be needed to provide context for that term.
Put as a question, is the lease term or the present value of lease payments more than
insignificant compared to the useful life and fair value of the underlying leased asset? If yes,
then the ED will probably require equipment leases to have front-ended costs.
s U.S. lessors may regard the Boards’ decisions on the line drawn for their accounting as
generally good news in comparison to current GAAP. That is the case because (1) there
will be fewer operating leases for bank lessors and finance company lessors, and (2) real
estate, full service and certain short/medium term equipment lessors will be able to
continue using the operating lease method. The proposed lessor accounting will provide
results that are closer to the economic effects of leases compared to current GAAP.
s If the Boards maintain symmetry between lessee and lessor accounting and then move the
line, lessors may find the good news turning to bad. Lessors favor the use of a business
model to define the line with financial lessors using the R&R method while operating lessors
use the operating lease method.
*Tip: As a lessor, discuss these issues with your accounting team soon to decide how to plan
your future transactions in anticipation of the new leasing standard.
Conclusion
Although the decisions of the Boards may look like a step in the right direction, uncertainty
will rein until the Boards issue the next ED in 2014. Any company that leases real and/or
personal property should begin an orderly process of identifying affected leases and prepare
6. to act under a fundamentally different approach when the Boards issue the final standard in
this high-stakes shift of accounting for leases.
Thanks to William Bosco, President of Leasing 101, a lease consulting company, for
contributing this article. He is a member of the ELFA Financial Accounting Committee and a
member of the Lease Project Working Group representing the ELFA. He can be reached at or
914-522-3233. His website is www.leasing-101.com. This article is adapted from reports he
recently published for the ELFA.
2. Aviation Industry Buffeted by FAA Plans for Non-Citizen Trusts
After more than a year of deliberations, the Federal Aviation Administration (FAA) issued
ground rules on entities it will trust in the U.S. aircraft registration system; and non-citizen
owner trusts may not be one of them.
In February, the FAA unveiled a proposed notice on improving the accuracy and integrity of
its aircraft registration system. It focused on those U.S. citizen owner trustees (Trustees) that
hold legal title to U.S. registered aircraft for non-U.S. citizens. The non-U.S. citizens own the
beneficial interest in the trust. Notice of Proposed Policy Clarification for the Registration of
Aircraft to U.S. Citizen Trustees in Situations Involving Non-U.S. Citizen Trustors and
Beneficiaries, 77 FR 6694 (Feb. 9, 2012) (Notice). When completed, the FAA will produce final
guidance based on the Notice, hearings and comments it receives.
*Terms to Know: A “U.S. citizen” refers to individuals who are citizens of the United States or
its possessions (by birth), partnerships and corporations, and those who qualify as resident
aliens. Federal regulations focus, generally, on assuring, for registration purposes, that
corporations are owned, operated and actually controlled by citizens of the United States and
that partnerships are composed entirely of individuals who are citizens of the United States.
The non-citizen owner of the beneficial interest in the trust is also called the “Trustor” or
“beneficial owner.”
A Trustor enters into the owner trust agreement with the Trustee. The owner trust agreement
specifies the duties and obligations of the Trustee. Similarly, it provides certain rights,
benefits and obligations of the Trustor. Acting in its representative capacity in most instances,
the Trustee holds legal title to the aircraft, signs most transaction documents and files
registration forms at the FAA (excluding citizenship affidavits) and uses its name (as trustee)
in public records as the owner of the aircraft. The public record includes the International
Registry created under the Convention on International Interests in Mobile Equipment, and its
Protocol on Matters Specific to Aircraft Equipment - November 16, 2001.
FAA Challenge
The FAA recognizes the importance of meeting its statutory and regulatory standards for the
safety and oversight of U.S aircraft operations. It understands that a Trustee contractually
agrees, in some circumstances, to exercise control of the aircraft for its non-citizen Trustors.
However, in reality, the FAA and the aviation industry know that the Trustor calls the shots on
operating its aircraft. Trustees in the ordinary course of business do not, and have no reason
to, review flight plans or even know who appears on the passenger manifest. As a result,
Trustees typically have no idea what their Trustors are doing at any particular time or on any
particular flight.
Cognizant of this well-settled approach, the FAA has landed in a difficult place. It aims to issue
the clearest guidelines it can to meet its safety and oversight responsibilities while minimizing
negative consequences of the Notice on aircraft operations, registration and transactions.
*Insight Point: The question the FAA has really been pondering is whether it even needs to
alter the common and long-standing practice of permitting non-citizens to operate U.S.
registered aircraft, though it perceives some tension with the applicable statutes and
7. regulatory requirements. It apparently believes that it can enlist Trustees in meeting its safety
oversight responsibilities.
The FAA Two-Step
The FAA’s first step to address safety concerns in its aircraft registration system did not start
with the Notice. Rather, it began nearly two years ago when the administration totally
revamped the aircraft registration process. The FAA requires a one-time registration renewal
and periodic renewals thereafter. See Re-Registration and Renewal of Aircraft Registration, 75
FR 41968 (July 20, 2010).
*Technical Point: More specifically, over a 3-year period, FAA registration terminates on all
aircraft registered before October 1, 2010. Failing re-registration, the regulations require
cancellation of registration numbers (N-numbers). For aircraft issued registration certificates
on or after October 1, 2010, registration of the aircraft expires every three years, at which
time the regulation requires a renewal of registration. For more, see: As the FAA Implements
Re-Registration of More Than 350,000 Aircraft, Will Chaos Prevail?, by Greg Walden, BLFN
(First Quarter 2011).
To accomplish its objectives, the Notice takes the second step to:
s Obtain appropriate operational and maintenance information from Trustees;
s Exercise a greater level of oversight of non-U.S. operations to satisfy its mission as well
as to assist foreign civil aviation authorities; and
s Address directly the concern that some trust agreements do not comply with FAA
regulations.
Mindful of the skepticism and resistance it would face, the FAA scheduled a comment period
with an original deadline of March 31, 2012. It held a public meeting on March 14, 2012. Due
to the operational and legal complexity, the wide-range of businesses affected, and the
volume of comments it received, the FAA extended the comment period to July 6, 2012 and
then again to August 17, 2012. It has also conducted a public meeting on June 6, 2012.
Simply put, the FAA realizes that it needs more time to hear public comments on the Notice.
*Action Item: If you have an interest in the Notice, it is critical to attend the August 17, 2012
meeting and submit comments to the FAA by that date.
Trusts to be Trusted
The Notice provides that, first, the FAA will continue to allow non-citizen owner trust
agreements. The Trustee will still register the aircraft and enter into an agreement with the
Trustor whereby a foreign citizen operates the aircraft, whether for compensation for hire or
otherwise.
Second, the FAA explicitly acknowledges that the FAA Aircraft Registry is an “ownership”
registry, not an “operator” registry. This acknowledgement, however, is not much comfort to
Trustees in light of the requirements the FAA proposes in the Notice to place on such Trustees
(as discussed below).
Third, while the FAA recommends several revisions to the standard trust agreement, it
appears from public statements the FAA made after publication of the proposed Notice that
the FAA may not require the revision of any existing trust agreement.
*Tip: You should consider whether you should nonetheless revise your trust agreements (or
those of your clients) after the FAA publishes the final policy Notice. This action can establish
an agreed process for complying with the FAA regulations unless all existing trust
arrangements are “grandfathered.”
8. Trustee Information Delivery Requirements
The FAA proposes to impose information requirements on Trustees, but, as currently written,
the deadlines for compliance are not practical in some instances. However, the proposed
Notice is not clear on what specific regulatory obligations an aircraft owner has vis-à-vis the
operation of the aircraft by another entity under a lease or operating agreement.
What the FAA calls policy clarification is more like a policy announcement with the following
basic requirements:
s Within two business days of the FAA request, the FAA expects a Trustee to provide the FAA
with (1) the identity of the person normally operating or managing the operations of the
aircraft; (2) where that person lives or has its principal place of business; (3) the location
of maintenance and other aircraft records; and (4) where the aircraft normally is based
and operated.
s Within five business days of the FAA request, the FAA expects the Trustee to respond to
FAA requests for additional information about (1) the operator, crew, and aircraft
operations on specific dates; (2) maintenance and other aircraft records; and (3) the
aircraft’s current airworthiness.
While the industry is expected to weigh in on whether these timeframes are reasonable, the
FAA notes that it will expect immediate compliance with any information request made when
(or if) the FAA issues “an emergency order” or simply identifies the presence of an
emergency. See 77 FR at 6697, 6699, 6702.
Tightening the Operating and Trust Agreements
The FAA has determined that “the operating agreement and the trust agreement are so
intertwined that the operating agreement will always affect the relationship established under
the trust.” See 77 FR at 6697. This is apparently not an idle requirement. A Trustee will be
expected to provide assurances, perhaps by an affidavit, if there is no such operating
agreement or side agreement in place.
*Technical Point: The FAA treats the operating agreement as a “document legally affecting a
relationship under the trust,” (14 C.F.R. 47.7(c)(2)(i)). In doing so, “the FAA will require that
all operating agreements or similar side agreements involving the Trustee transferring
custody and use of the aircraft held in trust to the trustor be submitted to the FAA along with
other documents that affect a relationship under the trust . . .” See 77 FR at 6697.
The proposed Notice also addresses removal and termination provisions in the trust
agreement. Current regulations provide that non-citizens may not have more than 25 percent
of the aggregate power to direct or remove a Trustee. See 14 C.F.R. 47.7(c)(3). The trust
agreement referred to in the Notice “must describe with specificity” the grounds for removal,
and where the Trustor appears to have 100% of the removal power, the FAA must be
“assured” (in the trust agreement or otherwise in writing) “how and why it is that such non-
citizens will not be able to exercise such aggregate power in excess of 25 percent%.” See 77
FR at 6698.
With respect to termination by the Trustor, or resignation by the Trustee, the FAA believes the
likely result would be to end registration or render the registration ineffective. But, here the
FAA provides no new requirement or even much information or guidance in the Notice.
The FAA notes that any provision in a trust agreement that designates a foreign court to
adjudicate a dispute between Trustor and Trustee is “not acceptable.” The FAA allows the
parties to the non-citizen trust to address that issue as they see fit. See 77 FR at 6698.
Revisions to Trust Agreement
9. Over the years a standard trust agreement has been developed and informally accepted by
the FAA Aeronautical Center Counsel. The proposed Notice includes some “suggestions” and
“recommends” revisions to that standard agreement. Consistent with the requirements and
expectations otherwise described in the proposed Notice, the revisions include establish
compliance and information requirements together with limitations on control and removal of
the Trusteel.
The FAA recommends that the standard trust agreement emphasize the Trustor has no rights
or powers to direct, influence or control the Trustee in its duties under the agreement,
including the ownership and operation of the aircraft. This statement, similar to a provision in
the standard agreement, is an effort by the FAA to “make it clear that the Trustor may not
control the Trustee’s duties under the Agreement including, but not limited to, matters
involving the ownership or operation of the aircraft.” See 77 FR at 6699. In the typical setting,
however the Trustor operates the aircraft and in so doing has “operational control” of the
aircraft.
*Technical Point: Recall the FAA Aircraft Registry is not an “operator” registry. According to
the FAA, however, the purpose of this standard agreement provision “is to assure that . . . the
Aircraft shall be controlled with respect to such matters by a Citizen of the United States.” See
77 FR at 6704. The FAA seems to obscure these legally distinct concepts of aircraft ownership
and operational control
To cope with the inevitable changes, Trustees and Trustors may have to alter trust
agreements to:
1. Expand typical representations and warranties by the Trustor and the Trustee that
each has met all the requirements of the Notice, including obtaining FAA approval of
applicable operating agreements (potentially supported by a legal opinion of competent
counsel);
2. Establish specific criteria for “cause” to terminate or remove the Trustee such as the
failure to timely report to the FAA (periodically or in an emergency);
3. Provide that the Trustee cannot resign or be terminated until and unless another U.S.
citizen trustee steps into a qualifying trust agreement before or concurrently with the
resignation or the termination (i.e., to avoid the FAA cancelling or otherwise rendering
ineffective U.S. registration);
4. Empower the Trustee to hire servicers, management companies or consultants
proposed and/or approved by the Trustor, at the Trustor’s cost, to create and
implement timely information gathering and reporting under the final guidance,
including contact with flight departments and crews;
5. Confirm that the non-citizen Trustor’s or the Trustee’s insurance provides coverage
that will protect and indemnify the Trustee while serving in its new duties in good faith
under the final guidance, such as coverage for failing to report when required or
making wrong decisions on operational control of the aircraft;
6. Require each Trustor to provide periodic reporting and updates to Trustees covering
information required under the final guidance (i.e., within two days, and to the extent
feasible, within 5 days) and increase administrative fees for the Trustees and potential
penalties that may be imposed; and
7. Enhance confidentiality provisions to protect the Trustor’s operations, passengers,
security and aircraft with contest provisions that allow the Trustor to define and avoid
public disclosure of confidential information.
*Insight Point: If the FAA’s final guidance remains substantially the same as it is now, it is
conceivable or even likely that some non-citizen aircraft owners will elect to register their
aircraft outside the U.S.
Such an action by non-citizens would be understandable, relatively easy to accomplish and, at
the same time, unfortunate for the aviation community because it may limit the growing
international component of business aviation in the U.S.
10. Conclusion
If the FAA continues its efforts to complete the final guidance as expected, then perhaps it
will, in balancing all interests, develop reasonable and sensible regulations of non-citizen
owner trusts that do not unnecessarily damage the aviation businesses the FAA serves and
regulates.
Thanks to Greg Walden, an aviation regulatory lawyer located in the Washington, D.C. office
of Patton Boggs LLP.
3. BLFN Case & Comment: Secured Creditors Win Back Rights to
Credit Bid in RadLAX Gateway Hotel, LLC, et al. v. Amalgamated Bank
A unanimous ruling of the United States Supreme Court gave a clear victory for secured
lenders that “credit bid” in bankruptcy proceedings. The ruling affirms the Seventh Circuit
Court of Appeals and should thwart any contrary holdings in other courts.
In RadLAX Gateway Hotel, LLC, et al. v. Amalgamated Bank, No. 11-166, ___ U.S. ___
(Decided May 29, 2012), the Supreme Court held that a debtor may not obtain confirmation
of a Chapter 11 “cramdown” plan of reorganization if the debtor “proposes to sell the secured
creditor’s collateral free and clear of liens” without also preserving the secured creditor’s right
to purchase its collateral through credit bidding.
*Terms to Know: A ”cramdown” occurs when a Chapter 11 debtor confirms a plan of
reorganization over a non-accepting vote of one or more class(es) of creditors. A “credit bid”
or “credit bidding” occurs when a secured creditor uses its unpaid debt like cash to bid on,
and pay the purchase price for, the secured creditor’s own collateral. The debt used to
purchase its collateral is then offset against the secured creditor’s claim against the debtor.
To confirm a “cramdown” plan, a debtor must show that the plan does not discriminate
unfairly. The plan must be “fair and equitable” to the class(es) of claims that did not accept
the plan. See 11 U.S.C. § 1129(b). If there is a sale of assets in a cramdown plan, the credit
bidding process protects the secured creditor from a sale of its collateral it bargained for to
repay its loan in case of a default or bankruptcy.
BACKGROUND: RadLAX Gateway Hotel, LLC and RadLAX Gateway Deck, LLC (Debtors)
entered into a loan agreement to borrow $142 million to purchase and renovate a Radisson
Hotel near Los Angeles International Airport. The Debtors pledged all of their assets to their
secured lenders as collateral. The project cost more than expected, and the Debtors ran out
of funds before it could be completed.
Owing more than $120 million to the lenders, the Debtors filed Chapter 11 bankruptcy cases.
They proposed a cash only auction for the project in the plan of reorganization, with an
opening bid of $47.5 million in cash. The plan of reorganization did not permit the lenders to
credit bid at the auction. Asserting that their plan was “fair and equitable,” the Debtors
planned to cram down their secured lenders – blocking their potential to bid in their debt to
acquire the collateral.
ISSUE: Can a Chapter 11 debtor propose to sell assets free and clear of a secured creditor’s
liens in a bankruptcy plan where the plan prevents a secured creditor from credit bidding?
OUTCOME/DECISION: No. Chapter 11 debtors can no longer prohibit a secured creditor
from credit bidding in a plan that proposes to sell the collateral free and clear of liens. The
only exception arises when the court prohibits credit bidding for “cause.”
A debtor may show its plan to cram down secured creditors is “fair and equitable” if it meets
one of the following conditions: (i) the secured creditor retains its liens and receives certain
cash payments over the life of a plan; (ii) the debtor sells the collateral free and clear of the
11. liens, but subject to § 363(k) credit bidding by the secured creditor; or (iii) the debtor
provides the secured creditor the indubitable equivalent of its claims (i.e., something of
equivalent or greater value to the secured creditor for its interest in the collateral). See 11
U.S.C. § 1129(b)(2)(A).
By paying the secured lenders cash from the auction, the Debtors in this case argued that the
secured lenders received the “indubitable equivalent” of their secured claims under Section
1129(b)(2)(A)(iii). However, the plan permitted the Debtors to act directly contrary to the
second cramdown category under Section 1129(b)(2)(A)(ii), which requires that sales of
collateral free and clear of liens must be subject to credit bidding by the secured creditors. A
more general statutory provision such as the indubitable equivalent cash payment under
category (iii), usually cannot and does not override a more specific statutory provision like
the one in category (ii), which required credit bidding to sell free of the secured lenders liens.
Consequently, the Supreme Court held that the Debtors could not cramdown the secured
lenders by proceeding under the (more general) category (iii) “indubitable equivalent”
cramdown criteria. Its ruling stops debtors from evading the (more specific) category (ii)
cramdown criteria that requires sales of assets free and clear of the secured lender’s liens in
a plan of reorganization be subject to credit bidding.
LAW OF THE CASE: The bankruptcy court and the Seventh Circuit had already both agreed
with the secured lenders that the Debtors’ plan improperly contradicted the second cramdown
category by prohibiting credit bidding. River Road Hotel Partners, LLC, et al. v. Amalgamated
Bank, 651 F.3d 642 (7th Cir. 2011). The Supreme Court more simply found that the Debtor’s
arguments lacked common sense in construing Section 1129(b)(2)(A) of the Federal
Bankruptcy Code and did not comport with rules of statutory construction.
*Warning: A secured creditor is not always guaranteed the right to credit bid on its collateral
in a bankruptcy plan. See 11 U.S.C. § 363(k).
A bankruptcy court can block a secured creditor from credit bidding, but it must have “cause”
– good reasons – to stop credit bidding. Otherwise, a sale without credit bidding arguably
deprives the secured creditor of the benefit of its bargain with the debtor (i.e., realizing the
value of the collateral). However, a debtor can seek to retain the collateral and cramdown the
secured lender through the first or third “fair and equitable” cramdown criteria. If successful,
the debtor is not required to allow the secured creditor to credit bid.
*Warning: The Supreme Court’s holding effectively overrules two contrary circuit cases: one
from the Third Circuit, In re Philadelphia Newspapers, LLC, 599 F.3d 298 (3rd Cir. 2010) and
one from the Fifth Circuit, In re Pacific Lumber Co., 584 F.3d 229 (5th Cir. 2009).
COMMENT: This decision assures that, in practice, a secured creditor enjoys the right to block
the sale of its collateral through a plan for less than what is owed unless the secured creditor
consents or has the right to credit bid. This ruling is good news for secured creditors. It
means that secured creditors can:
s enforce their right to credit bid on their collateral to preserve the potential of realizing
more (either currently or in the future) in value for their collateral than the cash they
would otherwise receive from an auction;
s level the playing field with cash purchasers in a bankruptcy sale if the secured creditors
lack the ability or wherewithal to fund cash bids for their collateral;
s increase the potential to receive the highest auction bids by having credit and cash
consideration compete to acquire the collateral; and
s prevent debtors from delaying the payment of sales proceeds to secured creditors and
even seek to charge some of the bankruptcy costs against the proceeds.
*Tip: Equipment leased under a financing lease (a disguised loan versus a true or operating
lease) can be subject to a sale free and clear of liens in a bankruptcy case. Lenders and
lessors who utilize financing leases also have the same protections as the secured lenders in
12. this case with respect to a sale of their collateral pursuant to a plan of reorganization.
Thanks to Jeff LeForce of the Patton Boggs Bankruptcy Group in the Dallas office for
contributing this article.
4. Finance 101: What is the “ACORD 23: ‘Vehicle or Equipment
Certificate of Insurance’?”
Although insurance may not qualify as a hot topic, if you lend money or lease equipment, you
should be using an ACORD 23 Certificate of Insurance, which has been available for use since
July 30, 2010.
*Terms to Know: ACORD refers to the “Association for Cooperative Operations Research and
Development,” a not-for-profit membership organization that, for 40 years, has set insurance
industry standards including issuing 750 different insurance certificate forms available in the
ACORD library. The ACORD official web site defines a “certificate of insurance” as follows:
A Certificate of Insurance is merely evidence of the policies issued and in force
at the time the Certificate of Insurance is issued. It does not provide assurance
that the certificate holder will be notified if the policy is modified, expires, is
extended or canceled. As governed by insurance law in all states, a Certificate
of Insurance cannot extend or alter coverage provided in an insurance policy in
any way. Certificates of Insurance can be viewed as a summarized,
informational reflection of an insurance policy(s) and it conveys no rights or
privileges. It is a “snapshot” in time. The issuance of Certificates of Insurance
and the information they contain is governed by state insurance regulations.
State insurance regulations require that policy rights and conditions can only be
extended through the policies and binders – no rights are extended or conferred
by the issuance of a Certificate of Insurance. A Certificate of Insurance which
appears to amend, extend, or alter policy coverage should be considered a
violation of applicable insurance regulations in most states.
Simpler Insurance Certificate for Closings
ACORD 23 simplifies the insurance aspects of closing a vehicle or equipment loan or lease for
lenders, lessors, lessees and borrowers. In the past, these parties used at least two forms,
ACORD 24 (property only) and ACORD 25 (liability only), to obtain a description of the
insurance of the named insured, typically the lessee or borrower.
ACORD 23 consolidates these coverage certifications into one form. For example, a lessor
needs both property and liability coverage and can check boxes in the certificate to indicate
both types of insurance apply to the lessor. See ACORD 23 Simplifies Insurance
Documentation for the Equipment Leasing Sector, by Steve Dinkelaker, President of American
Lease Insurance Agency Corporation, ALI News (Aug. 1, 2010).
*Tip: You should make certain that, at closing, the insurance agent issuing the ACORD 23 has
checked a box showing the agent has confirmed the insurer added to the named insured’s
policy the interest of the lessor or lender.
Checking the correct box entitles the lessor or the lender to prior notice should coverage be
cancelled for non-payment of premiums due or for other reasons during the term of the
policy.
*Warning: Avoid allowing the agent to check another box that indicates it merely requested
that the insurer add such interest to the insured’s policy.
Generally, insurers and their agents acknowledge that an ACORD 23 appears to require them
to notify parties of interest when coverage is cancelled during a policy’s term. However, they
13. also universally disclaim any such duty on expiration of such a policy—whether they give the
notice or not.
As a lessor or lender, you should consider asking your administrative staff and/or a qualified
and experienced insurance tracking provider to calendar and follow-up for renewals of
coverage before the expiration of any other coverage.
*Insight Point: Insurance agents typically will not send out renewal Certificates of Insurance
until the named insured has paid its premiums for the next year’s coverage (or made a
monthly premium payment toward the next year’s coverage). However, do not be surprised if
asking for such evidence of insurance prior to policy renewal falls on deaf ears, and you
receive no proof (or inadequate documentation) of continuing coverage before the actual
renewal date.
Lender’s Loss Payee Versus Loss Payee Clauses
A standard “Loss Payee” endorsement to a policy provides that a party of interest in the
policy will follow the fortunes of first named insured under that policy. Comparatively, a
“Lender’s Loss Payee” gives the lender or lessor additional rights to a claim when there is a
loss that is superior to the insured’s. This clause allows the lender or lessor to assert its rights
to payment for such loss.
Where the insured may not have paid premiums in a timely manner, falsely sworn about the
details of the loss, or failed to file the claim in a timely manner, a Lender’s Loss Payee
endorsement will entitle the lender or lessor—in the event and at the time of a loss—the right
to pay such unpaid premiums. Once paid, the lender or lessor can typically make a claim for
loss and ultimately be paid for its interest in the loss even though the insured was not paid.
The Lender’s Loss Payee endorsement is a standard endorsement available to a party of
interest on any insurance policy covering personal property and is equivalent to a “Mortgagee
Clause” standard in all real property insurance policies.
*Tip: As a lender and lessor, you should request to be named as Lender’s Loss Payee in the
insurance clauses of your agreements and in any communications with lessees or borrowers
and their agents and insurers.
There should not be any additional cost to the insured for the Lender’s Loss Payee
endorsement versus the standard Loss Payee endorsement. It also is available as a check
box on the ACORD 23 (in contrast to the 24 or 25, where it has to be typed into a blank space
on those ACORD forms).
Best Forms to Close Deal
Parties in transactions often misunderstand the purpose or effect of a certificate of insurance.
It is not a contract between the lender or lessor and the insurer. See United States Pipe &
Foundry Co. v United States Fidelity & Guar. Co, 505 F. 2d 88 (5th Cir. 1974). It only presents
the insurance in effect at the time of the issuance of the certificate, even though it also
provides assurance that any party of interest named as loss payee or lender’s loss payee
should be notified of any cancellation of such insurance during the term of such coverage in
accord with the terms of the policy.
*Insight Point: Risk management teams or insurance experts should carefully decide on the
best form to use in a particular transaction.
s Insurance Certificate Only: For most lenders and lessors an ACORD 23 certificate of
insurance should suffice to prove coverage in order to close transactions. Using this form
makes sense if the lender or lessor does not require that it has a contractual right against
the insurer.
s Form Endorsement: Other lenders and lessors obtain the insurer’s endorsement (directly