National News

What's in a settlement?

Marketplace - American Public Media - Wed, 2014-07-09 13:19

Word on the street today is that Citigroup is close to settling with the Department of Justice over mortgage bonds it issued before the housing crash. Rumor has it, Citi will pay $7 billion to settle allegations of wrongdoing. That’s a lot of money, to be sure, but it’s a far cry from the $13 billion JPMorgan paid last year to settle similar allegations.

Turns out, there's an art and a science to figuring out a settlement like this. "They begin by looking at what’s actually underwritten by Citibank and the next things is trying to compare that with what happened before," says James Cox, professor of corporate and securities law at Duke University. What happened before being JPMorgan’s settlement.

"Their total global settlement was about $13 billion on $460 billion of residential mortgage backed securities underwritten. That represented about a 3 percent penalty" says Charles Peabody, a partner at financial research firm, Portales Partners.

Using that formula, Citigroup should only owe about $2.5 billion, not $7 billion. Citi sold about $90 billion worth of mortgage backed securities. But, Peabody says, Citi played a more active role in its investments. "Most of Citigroup’s losses were in bonds that they underwrote themselves, where a lot of the losses that came from JP Morgan came from firms they acquired during the financial crisis." Namely, toxic mortgage machines Bear Stearns and Washington Mutual, which JP Morgan acquired, under the supervision of the government.

And then there’s the element of negotiation.

Citigroup may have floated the $7 billion dollar figure to see how shareholders would take it.

"They may resist and push back more if they’re getting a very negative reaction from the market," says John Coffee, director of Columbia University’s Center on Corporate Governance.

So far, Citigroup investors are holding pretty steady. Coffee says that could tempt Citi execs to approve the $7 billion settlement and hope the news moves on quickly. After all, next on the chopping block is Bank of America, the biggest mortgage underwriter of them all. Its fine is expected to be as high as $20 billion. 

NCAA president advocates "scholarships for life"

Marketplace - American Public Media - Wed, 2014-07-09 13:19

This final note on the way out today, in which the president of the NCAA tries to have it both ways. Mark Emmert told a Senate panel today that college athletes ought to receive "scholarships for life."

I'm guessing he means getting the skills to succeed in life, because he went on to say that athletic scholarships ought to cover the whole cost of being in school, not just the bare bones.

He also said - and this is the having it both ways part - that he figures the current model of amateurism is working well for most people.

Man Tied To Nazis Dies In Michigan At Age 93

NPR News - Wed, 2014-07-09 13:19

John Kalymon, who became a U.S. citizen in 1955, was under a deportation order for serving in a Nazi-controlled police force during World War II. But he had denied he had ever shot at Jews.

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Obama Stumps In Colorado, With Women's Vote As Backdrop

NPR News - Wed, 2014-07-09 13:15

In a state that hosts one of the nation's closest Senate races, the president spoke about the women's issues that could turn the election. But Sen. Mark Udall opted not to appear alongside Obama.

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Google deleted a BBC reporter's article. Is it right?

Marketplace - American Public Media - Wed, 2014-07-09 13:10

Google decided to do some summer cleaning, removing some unwanted links from their search engines. They're taking their cue from the European Union's highest court's "right to be forgotten" ruling, put in place a few months ago.

One of the articles removed was written by BBC Economics editor Robert Peston in October 2007, about Stan O'Neal, the former Merrill Lynch boss. However, the subject of the article was not the cause of removal.

"These restrictions have been put in place because somebody who left a comment underneath my article no longer wants the world to see his or her comment," Peston says.

The ruling says Google can remove information from its search engine if it's inadequate, irrelevant, no longer relevant or excessive. Peston says there was nothing in the article that met the criteria - and he calls the removal an assault on freedom of the press.

On Opposite Sides Of Israeli-Gaza Border, Feeling The Same Fears

NPR News - Wed, 2014-07-09 13:05

The escalating conflict around the Gaza Strip has turned daily routines upside down. A family in Ashkelon, Israel, and one in Gaza City both take shelter — and struggle to keep their children safe.

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Argentina Ditch Dutch On The Way To World Cup Final

NPR News - Wed, 2014-07-09 12:57

Argentina defeated the Netherlands 4-2 in penalty kicks in their World Cup semifinal. The two sides were 0-0 at the end of extra time. Argentina plays Germany in the final on Sunday.

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Do The World Cup's Fluttering Kicks Put Fans' Hearts At Risk?

NPR News - Wed, 2014-07-09 12:17

Researchers found that the number of cardiac emergencies around Munich more than doubled on days when Germany was playing in the 2006 World Cup compared with days when the team was idle.

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What Burritos And Sandwiches Can Teach Us About Innovation

NPR News - Wed, 2014-07-09 12:12

Is a burrito a sandwich? The answer may sound simple to you ... but the question gets at the very heart of a tension that's existed for ages.

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Corruption Convictions Spell 10 Year Sentence For Former NOLA Mayor

NPR News - Wed, 2014-07-09 12:11

Former New Orleans Mayor Ray Nagin has been sentenced to 10 years in prison for bribery, money laundering and other corruption crimes. The counts on which he was convicted cover a span that includes much of his two terms in office.

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The Plight Of Mosul's Museum: Iraqi Antiquities At Risk Of Ruin

NPR News - Wed, 2014-07-09 12:11

Christopher Dickey, foreign editor for the Daily Beast, speaks to Melissa Block about the dangers facing antiquities in a museum and other archaeological sites in the Iraqi city of Mosul.

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In Germany, A Case Against Another Alleged American Spy

NPR News - Wed, 2014-07-09 12:11

U.S.-German relations were further strained Wednesday over reports that prosecutors in Germany are investigating a German soldier accused of spying for the U.S. It's the second such case in a week.

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Lawmakers Unearth Failures To Investigate Campus Sex Crimes

NPR News - Wed, 2014-07-09 12:11

According to survey results released by Sen. Claire McCaskill, D-Mo., many American colleges are breaking the law by failing to respond to sexual assault allegations on campus.

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Golden Road bets big on craft beer

Marketplace - American Public Media - Wed, 2014-07-09 11:03

The craft beer industry keeps getting bigger. The Brewers Association reports that in 2013, the market share of craft beer in the United States had grown to 7.8 percent. Breweries are popping up all across the country including in Los Angeles, where Golden Road Brewing has enjoyed three years of tremendous growth.

Meg Gill and Tony Yanow launched Golden Road in 2011. Their facility now includes a large brewing space, canning line, and a pub. Their beers can be found in grocery stores and restaurants in the area. Their most recent deal puts Golden Road beer in airports across the country, rolling out this summer.

The brewery has been able to find the niche within craft beer with their Los Angeles-based business, Gil says.

“This market is enormous” she says. “We’re already too big for our boots in some accounts.”

Yanow says even with all their growth in the past three years, Golden Road is still far away from achieving the size of the Boston Beer Company, the brewers of Samuel Adams. Gill says craft brewers owe a lot of their success to Boston Beer.

“I think that Jim Cook and that company is one of the most talented businesses in America and they have brought craft beer back to America,” she says.

Yanow acknowledges the number of new breweries opening will slow. “At some point, the rate of growth, of expansion into new breweries has to stop because eventually," he says. "You have more breweries than people.”

But Yanow’s not too worried about a craft beer bubble. “The real question is, can you put the toothpaste back into the tube?... People who like our beer and people who like craft beer like our beer and they’re not going to stop liking our beer.”

How resorts ended up in those oval car decals

Marketplace - American Public Media - Wed, 2014-07-09 10:54

In 1994 Earle F. Williams was on Martha’s Vineyard when a sticker on the back of a car caught his eye. “I saw an oval decal with an MV on it,” remembers Williams.

At the time he sold sports-imprinted decals and memorabilia to colleges. His first thought when he saw the sticker was, I wonder if that thing is copyrighted. “I wanted to make sure we wouldn’t step on somebody’s toes.” Luckily for Williams, it wasn’t.

A few months later he started making his own stickers with the initials VT for Vermont. It being the Green Mountain State, he sold them in green. Since then he’s made countless versions of the white oval. This year he sold a little over a million decals, out of his house in Stowe, Vermont. That’s about half as many as he sold at the peak of his business, pre-recession. 

Though Williams markets his stickers as the Original Ovals, they were actually created by the United Nations in the 1940’s, as “Distinguishing Signs Used on Vehicles in International Traffic.” They were a way to identify the country of origin on automobiles traveling through Europe.

In the U.S., they became a status symbol. EH for East Hampton, or ACK for Nantucket, secret codes that said, the driver of this car lives or vacations in America’s most elite resorts.

“I think the temptation is to be a little disdainful when you see those,” said Cornell economics professor Robert Frank. “If people were really confident of their position in life, they wouldn’t feel a need to advertise it.”

Frank says these bumper stickers in and of themselves aren’t a big deal. But they are an indicator of larger economic trends. The wealthiest Americans are building larger and more ostentatious homes. “They’re not bad people because they do that," he says. "That’s what everyone does when they get more money. But the fact they build bigger houses shifts the frame of reference for the people just below the top, they build bigger too,” And that trickles down the income ladder. Meanwhile lower and middle class wages have stagnated. So everyone ends up spending more of their income to keep up.

There is a similar competition to get into the prestigious educational institutions, not just universities, but increasingly grade schools, even preschools. “When a parent’s child gets into a prestigious institution, the first thing that happens is a decal on the back window of the car, announcing that fact to the world,” Frank says.

As for the white oval decals, David Ewing isn’t a fan. He grew up in Swampscott, Massachusetts, just outside Boston. His father was a lawyer at a Boston law firm and his roots go way back in New England. “My dad’s ancestor was one of the founders of Northampton, Massachusetts, so it was the 1600’s,” Ewing says.

He spent his summer vacations in southern Maine and Nantucket. But he says his family would never have put a sticker on their car advertising that fact. “It was against their sensibility to show off, to the world at large anyway, he says. “There was a distaste for ostentation and a distaste for -- the term when we were growing up was status symbol.”

Today Ewing lives in California and he understands the impulse to put a sticker on your car that shows where you are from. “If you are a long way from home you’re sort of waving your hand going, 'anybody else out there?'” But he says if he saw a white oval with an MV for Martha’s Vineyard or an MH for Marblehead in his neighborhood, he wouldn’t go up to the owner of that car and strike up a conversation. “I’d avoid ‘em like the plague,” he said.

What Happens When Israeli Mourners Visit A Palestinian Family

NPR News - Wed, 2014-07-09 10:17

The scene was predictably awkward, even painfully so. But as NPR's Ari Shapiro reported for today's Morning Edition, the visit also brought a moment of grace for many of those involved.

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Senate Confirms Julian Castro As Housing Secretary

NPR News - Wed, 2014-07-09 10:11

The 39-year-old mayor of San Antonio is Hispanic and a rising star in the Democratic Party. He succeeds Shaun Donovan, who was tapped to be White House budget chief.

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Rivals Claim Victory In Indonesian Presidential Election

NPR News - Wed, 2014-07-09 09:47

Jakarta Gov. Joko Widodo based his claim on early results, which have been accurate in the past. But his rival, Suharto-era Gen. Prabowo Subianto, is refusing to concede.

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Germany Widens Spy Investigation Reportedly Involving U.S.

NPR News - Wed, 2014-07-09 08:27

News reports say police raided the home and office of an official in the German Defense Ministry. It comes just days after the arrest of a man last week for allegedly passing secrets to the U.S.

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