News Cut: June 9, 2009 Archive

Five at 8 - 6/9/09

Posted at 7:48 AM on June 9, 2009 by Bob Collins (0 Comments)

What the TARP payback means

Posted at 11:46 AM on June 9, 2009 by Bob Collins (1 Comments)
Filed under: Economy

Ten banks have been allowed by the federal government to pay back the government's investment in their banks. What does this mean?

Q: Why are banks in such a hurry to pay back the TARP funds?

A: Because of the restrictions and stigma that come with taking them in the first place. Banks that accepted TARP money also were limited on the number of foreign workers they could hire, and had executive compensation restrictions placed on them. Richard Davis, the CEO of US Bancorp called it "a lousy program" last February and said the rules kept changing.

Keep in mind the original goal of the money was to purchase bad mortgages that led to the financial collapse last fall. Banks are still sitting on the toxic, mortgage-backed assets, however.

Q: Do these 10 banks now have a competitive advantage over banks who took the TARP funds?

A: Yes, some "industry experts" say. Those banks have to pay a high dividend on the government's shares that the 10 banks don't. And they could lose high-priced execs to banks that don't have restrictions on their compensation now.

Q: If the TARP money was meant to loosen credit, will paying it back tighten credit?

A: Possibly, although some of the banks are publicly saying they'll continue to lend money. The proof, however, will be in who can borrow. Have you tried to get a loan from a bank lately? How'd it go?

"We fully expect to continue to vigorously offer lending opportunities to our credit-worthy consumer, small business, corporate and institutional customers, invest for future growth and support the U.S. government's overall efforts to stimulate the economy," Richard K. Davis, chairman and CEO of U.S. Bancorp, said in a statement.

Q: Does this mean the banks are safe?

A: Not according to Elizabeth Warren, who administers a TARP oversight panel for Congress. "The notion that you can get out from under some restrictions but still want some government benefits, seems to me to have a foot in both boats, " she said today. She released a report today suggesting the government keep conducting "stress tests" of the nation's 19th largest banks to ensure their viability.

Even without TARP money, the banks are still getting their debt guaranteed by the Federal Deposit Insurance Corp. and credit lines are guaranteed from the Federal Reserve.

"None of this means that we're out of the woods yet; there's a lot of work that the banks have to do and the regulators have to do," Richard Spillenkothen, a director at Deloitte & Touche LLP in New York, told Bloomberg news.

Unemployment is still rising. More people are defaulting on loans because they've lost their jobs. Banks are poised to lose more money.

Q: What happens to the money the banks are paying back?

A: It goes into the Treasury to be used again if the economy gets worse. It's almost as if the Treasury Department isn't sure the recovery is taking hold.

Q: What do the stock markets tell us about today's action?

A: That it's not exactly the financial equivalent of VJ Day. At midday, the Dow industrials are about even. The stock of some of the banks -- including US Bancorp -- drifted lower after the announcement.

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Out with the old...

Posted at 12:54 PM on June 9, 2009 by Bob Collins (0 Comments)
Filed under: Life

Why do demolitions make us sad?

In the case of the old Tiger Stadium in Detroit, the demolition of which started ended this week, it's easy to figure out. Old ballparks have emotional ties.

But what emotion does this picture (taken by MPR's Tom Weber) evoke?

It's a building by St. Joseph's Hospital in St. Paul, no longer good for anything, and getting in the way of progress.

It was almost a year ago when the big smokestack by the river in St. Paul was blown up. Nobody cried, as far as I know, but there was a certain sadness involved.

But they're just stadiums, old buildings, and smokestacks, right?

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The borer business

Posted at 3:20 PM on June 9, 2009 by Bob Collins (0 Comments)

When is bad news good business? When it's about the emerald ash borer and you're in the tree business.

Billboards went up around the Twin Cities this week for eabexperts.com, which turns out to be Rainbow TreeCare, of Roseville and Minnetonka.

"When the news hit that it was in the Twin Cities, we actually had to bring on additional staff to help field the calls, primarily from our current clients but other people who are concerned about it," Dr. John Lloyd, the science and research director for the firm, told me this afternoon. "It's a double-edged sword. We're in down economic times so anything that brings the value of trees to the forefront, it's good from that perspective. But it's not like all we're doing is running around selling EAB treatments and saying 'Yay!'" he said. "That's not the gravy train. It's not going to last."

"Most of the discussion is first about whether the tree you have is actually an ash tree and then the issue is it is something that you want to invest into treating or is it something that if you're going to lose it, let's plan on planing something better."

One client planted three ash trees last year. "I said, 'that was not a good plan,'" said Lloyd, who doesn't sound like much of an ash tree fan in the first place. "The trees do not have any form of genetic resistance to this pest, unlike the bronze birch borer which is a native pest to native trees, they actually have a resistance response to it. So if you keep the trees healthy, they can respond to it. With emerald ash borer, there's no genetic resistance so no matter how healthy the tree is -- how well watered it is -- they can succumb to the emerald ash borer. So the first question is: Are you willing to invest to putting insecticide in the tree every year for the rest of its life?"

That'll run you about $200 per tree. On the other hand, removing a tree can cost $1,000 and he says keeping the tree alive for a few years can give you time to put the money aside to take it down.

Should you cut down your ask now rather than wait? "It depends on the value of the tree in your landscape. If you're asking yourself the question of whether it's worth saving or not, to me it's not worth it," he said.

"And plant what?" I asked.

"I'm not normal," Lloyd said. "Most people say 'I want something that will grow and be a mature, large tree before I die.' We have such a short lifespan compared to trees. I love oak trees. They have some health problems, but it's something we can manage. The faster a tree grows, the poorer the form will be."

Lloyd wasn't always down on ash trees. "Back when I was the university, we recommended planting ash trees because they could survive urban stresses."

Not all ashes are created equal in the eyes of the emerald ash borer, however. The mountain ash, Korean mountain ash, and European mountain ash are not susceptible to EAB. The white ash, a native tree in swampy areas up north, the American ash, and the black ash, however, are in trouble with the infestation.

With foliage on the tree, now is the time, Lloyd says, to identify what kind of ash tree you have. "Generally with ash you can have three and five leaves opposite each other whereas with a mountain ash you have many more than that and they're much smaller."

In other words, this is a bad ash tree to have:

This is a good one:

Here's the company's emerald ash borer fact sheet with more information. Here's more EAB information from the University of Minnesota Extension Service.

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Shooter ungagged

Posted at 5:09 PM on June 9, 2009 by Bob Collins (3 Comments)
Filed under: Crime and Justice

The Associated Press certainly had an ethical question to resolve today when it got an interview with the man accused of shooting two military recruiters, killing one. A judge had issued a gag order in the Little Rock case, but Abdulhakim Muhammad called the AP anyway.

"I do feel I'm not guilty," told The Associated Press in a collect call from the Pulaski County jail. "I don't think it was murder, because murder is when a person kills another person without justified reason."

Never mind that he says the shooting was nothing personal against the men who were shot, and that he only thought of killing a military recruiter on the morning of June 1.

He called it "a act, for the sake of God, for the sake of Allah, the Lord of all the world, and also a retaliation on U.S. military."

After the interview, his attorney sent an e-mail to the AP asking the news organization to withhold the interview. The AP said no.

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The top public high schools

Posted at 5:50 PM on June 9, 2009 by Bob Collins (6 Comments)
Filed under: Schools

Newsweek magazine is out with the top 1,500 public high schools in the U.S. No Minnesota school is on the top 100. "It's only based on advanced placement and international baccalaureate," says MPR education reporter Tom Weber.

The note on methodology attached to the rankings is depressing:

We take the total number of Advanced Placement, International Baccalaureate or Cambridge tests given at a school in May, and divide by the number of seniors graduating in May or June. All public schools that NEWSWEEK researchers Amy Novak and Dan Brillman and I found that achieved a ratio of at least 1.000, meaning they had as many tests in 2008 as they had graduates, are put on the list on the NEWSWEEK Web site, Newsweek.com.

NEWSWEEK published national lists based on this formula in 1998, 2000, 2003, 2005, 2006, 2007 and 2008. In The Washington Post, I have reported the Challenge Index ratings for every public school in the Washington area every year since 1998. I think 1.000 is a modest standard. A school can reach that level if only half of its students take one AP, IB or Cambridge test in their junior year and one in their senior year. But this year, less than 6 percent of the approximately 27,000 U.S. public high schools managed to reach that standard and be placed on the NEWSWEEK list.

Twenty-eight Minnesota schools made the list. Of the twenty-one Minnesota schools that were ranked previously, only 11 improved from their previous ranking:

Patrick Henry in Minneapolis
Edina
Mahtomedi
Irondale in New Brighton
Century in Rochester
St. Anthony Village in St. Anthony
St. Louis Park
Eden Prairie
South in Minneapolis
Wayzata
South St. Paul

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