WINSTON-SALEM, North Carolina |
WINSTON-SALEM, North Carolina (Reuters) - Three jurors who acquitted former U.S. Senator John Edwards on one count of taking illegal campaign money for his failed 2008 presidential bid said on Friday there was not enough evidence to convict him of five related federal charges.
A mistrial was declared on those five counts on Thursday after the 12-member jury in Greensboro, North Carolina, said it was deadlocked on its ninth day of deliberation.
Three of the jurors, including the foreman, said on NBC's "Today" show they believed Edwards was guilty of at least some of the charges brought against him by the government.
Edwards, 58, was accused of masterminding a plot to funnel more than $900,000 from two wealthy supporters to conceal his pregnant mistress from his cancer-stricken wife and voters during his bid to win the Democratic nomination four years ago.
"I think he definitely had some knowledge of the money, where the money was going," said juror Ladonna Foster.
"But he was just smart enough to hide it," said juror Cindy Aquaro, later adding, "The evidence just was not there for us to prove guilt."
Jury foreman David Recchion said the government's case took a hit due to the lack of credibility of its chief witness, ex-campaign aide Andrew Young, who once falsely claimed paternity of the child Edwards had fathered with Rielle Hunter.
The defense showed that Young made inconsistent statements, benefited financially from a tell-all book about Edwards' affair and pocketed more than $1 million from the cover-up.
"I think unfortunately that was probably the key part of the miss for the prosecution," Recchion said of Young's testimony.
The jurors said emotions sometimes ran high as the deliberations dragged out, but they started each day with calmness and tried to put their personal feelings about Edwards' character aside.
"We actually prayed together as a group," Recchion said.
A law enforcement source said late Thursday that Justice Department prosecutors were unlikely to retry Edwards, but no final decision had been made.
Foster said she thought the government should try again, while Aquaro said she did not think the first trial was money well spent.
But juror Recchion said the campaign finance law itself was flawed. "I think there needs to be some change in campaign finance law before you go through this process, and kind of nailing down what really is and what really isn't a campaign contribution."
(Reporting by Colleen Jenkins; Editing by Jackie Frank)
Book review: Finance and the Good Society, by Robert J Shiller - Management Today
By Robert Skidelsky Friday, 01 June 2012
More innovation in the investment markets and in managing risk is socially as well as economically desirable, argues the author. But Robert Skidelsky is not convinced.
Book: Finance and the Good Society
Author: Robert J Shiller
I met economist Robert Shiller, famous for the Case-Shiller home price index, at a breakfast in London in 2009 to mark the publication of his book Animal Spirits, co-authored with George Akerlof. He explained how financial innovation might be used to limit the volatility of 'animal spirits', a bold claim after an economic collapse often attributed to an excess of financial innovation. I suggested what we needed was financial de-innovation; simpler, not more complex financial systems. Shiller looked puzzled.
In Finance and the Good Society, he looks forward to a rapid increase in the scope of financial services to create a more prosperous, stable and equal society. At its analytical heart lies the conviction that financial innovation is the road to 'complete' markets - markets for all possible desired contracts. Thus it can move the actual market system closer to the ideal market system envisaged by economists such as Arrow and Debreu, despite the absence of the perfect rationality and perfect information that those theorists considered necessary for Pareto efficiency.
Indeed, it is the absence of these conditions that justifies ever more extensive financial engineering, because, if they existed, trades would always be priced correctly, on average, and one would need no financial system at all!
It is the object of financial innovation to make 'previously untradable risks tradable'. Shiller shows how financial inventions (eg, limited liability, stock markets, securitisation, insurance, pensions, mutual funds) have contributed to human wellbeing, and offers his own ideas about how they may continue to do this. For example, the housing market could be made less risky by having continuous work-out mortgages. Instead of issuing debt, governments could issue shares - 'trills' - in the nation's GDP. Tax rates could be set to provide 'inequality insurance'.
Shiller is particularly keen to incentivise good causes. 'Benefit corporations' could specify objectives other than maximising profits; there might be different levels of tax deductibility for various kinds of philanthropic giving; there could be 'participation non-profit organisations', purchase of shares in which would count as charitable contributions, and so on.
As these examples show, Shiller does not rely on markets alone to discover and serve human needs. Government has a vital role in both facilitation and regulation.
Four years after the Great Collapse, a book in praise of finance and its practitioners has an air of both defiance and innocence. But Shiller argues his case skilfully and persistently, and with a wealth of quirky and interesting examples.
The first part, based on lectures to his finance class at Yale, can be highly recommended as a handbook for investors and money managers, as well as for explaining the mysteries of the financial system.
Apart from this descriptive section, Finance and the Good Society is an invitation to argument. First, Shiller ignores the possibility that financial innovation may be subject to diminishing social returns. At the macro level there is no clear correlation between financial intensity and the overall rate of economic expansion. Many countries achieved rapid growth in the period of 'financial repression' from 1945 to the 1970s. Nor have trend growth rates risen after the financial liberalisation of the 1980s. Such considerations have led Adair Turner, a former regulator, to argue that the benefits of financial innovation may vary by stage of development.
Second, Shiller's expectations for finance are closely bound up with his view of why markets fail. His explanation is behavioural. Over large swathes of their lives people act irrationally; their decision-making is subject to wide mood swings ('animal spirits') and herd behaviour. On this view, more 'complete' insurance markets, made possible by information technology, can limit the bad consequences of the erratic flight of the human butterfly. But it may be that our problem is epistemological: there are bound to be too few insurance markets, because much of the future is uninsurable - we don't and cannot know enough about it. If this is so, the programme of salvation through better 'risk management' may be misconceived.
Finally, one is left wondering what Shiller means by the 'good society' of his title. He implies that it is one in which all people have the maximum chance to achieve their goals; indeed, 'finance is the science of goal architecture'. On the content of these goals he has little to say. But, without being more specific about the goals, it is impossible to say how much or what kind of finance, or financial innovation, a society needs.
- Lord Skidelsky's latest book, How Much is Enough? (Allen Lane), co-authored with his son Edward, is out this month.
Finance and the Good Society
Robert J Shiller
Princeton £16.95
EU finance ministers haggle over bank rules - Yahoo Finance
BRUSSELS (AP) -- European Union finance ministers are to meet in in Brussels Tuesday to hammer out an agreement over how high banks should build their defenses against future financial shocks, with the U.K. running the risk of being isolated over who should set the height.
The EU's 27 members agree on the need to increase capital reserves of banks, following an international agreement called Basel III, which was negotiated by the world's largest economies to avoid another financial meltdown such as the one brought on by the collapse of U.S. investment bank Lehman Brothers in 2008.
But the U.K. wants national regulators to be able to set requirements significantly higher than those of the EU — a position opposed by almost all other EU members, who fear investors might then prefer UK banks and flee from those in other countries.
On his way into the meeting Tuesday morning, George Osborne, the British chancellor of the exchequer, was non-committal about the possibility of reaching an agreement.
"This is a time of considerable uncertainty in the eurozone economies," he said, referring to the 17 countries — the U.K. not among them — that use the euro currency. "And that uncertainty is undermining the entire European recovery. And I think we're reaching a point where we've got to make a decision to see the eurozone stand behind their currency. A very important part of that, of course, is strengthening the entire European banking system. And that is what we intend to do today."
Once enacted, Basel III would require lenders to increase their highest-quality capital — such as equity and cash reserves — gradually from 2 percent of the risky assets they hold to 7 percent by 2019. An additional 2.5 percent would have to be built up during good times. All members of the G-20 have agreed to implement Basel III; if the European Union succeeds, it would become the first entity to institute the new requirements.
The U.K. is arguing that, because national taxpayers have to bail out banks when they fail, national authorities should be able to set more stringent requirements to guard against such failures. A compromise proposal offered by the Danes, who hold the rotating presidency of the European Union, would allow national authorities some leeway to increase requirements beyond those called for in the Basel III agreement. That proposal has broad support — except, so far, from the U.K.
The finance ministers can approve the compromise proposal without British support, through what is known as qualified majority voting, in which member countries have different numbers of votes according to their populations. However, there is a tradition in the EU that changes that would affect an industry in a particular country — such as the banking sector in the U.K. — are not forced into effect over the objections of that country, and consensus is sought.
"I think there should be a unanimous decision on such an important issue," Swedish Finance Minister Anders Borg said on his way into the meeting.
FOREX-Dollar falls versus yen, euro after jobs data - Reuters UK
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Wiring Money, Feeling Squeezed - New York Times
Both resent having to pay Western Union a $10 fee to send money abroad and an additional cut to convert dollars to pesos. But these charges have fueled the company’s record profits and made it a relative outlier in the financial services industry.
As billions of dollars in fee income has evaporated at the nation’s largest banks because of regulations passed in the wake of the financial crisis, the money-transfer industry has escaped the crackdown.
Soon, however, the companies, which are largely regulated by states, will be subject to new federal rules. Starting in February, they will have to disclose more to customers about transfer fees and currency exchange rates. The rules, part of the Dodd-Frank financial regulation law, will also require companies to give customers up to 30 minutes after a transaction to get a full refund.
But consumer advocates are raising alarms that money-transfer companies face fewer restrictions because the rules do not touch the pricing of services.
“You still have a situation where customers are subjected to these predatory products with no cap on fees or exchange rates,” said Oscar Chacon, the executive director of the National Alliance of Latin American and Caribbean Communities in Chicago.
Money-transfer companies say that they offer an invaluable service for customers who might not have access to traditional banks and who would otherwise have no way of transmitting money to their families.
“The money-transfer industry is very competitive, and consumers have a range of choices for sending money,” said Tom Fitzgerald, a Western Union spokesman.
Western Union, which dominates the money-transfer market, notes that it already discloses the amount of money being submitted, the exchange rate and the amount that the recipient will receive. It also tells customers that “in addition to the transfer fee, Western Union also makes money when it changes your dollars into foreign currency.”
MoneyGram, among the largest companies, said, “We believe the new rules essentially standardize across the industry our existing high level of disclosure, which should benefit anyone wishing to send funds.”
Mr. Esparza, who sends money to his children in Mexico City, said that the $10 fee would not be onerous if he were sending a larger amount, but that it seemed exorbitant for $50. “Western Union’s fees are just too high,” he said.
Ms. Gonzalez said that even though $10 might not seem like a lot, “In Mexico, that money goes farther.”
Aside from the transfer fees, Western Union and other similar services profit as they buy batches of currencies at a wholesale rate. The money-transfer companies do not disclose the spreads they benefit from when they set exchange rates.
“It’s a big profit center for these companies, borne on the backs of the people who can least afford it,” said Matthew Piers, a lawyer in Chicago, who successfully brought a lawsuit on behalf of Mexican immigrants against Western Union in 2000 that accused the company of misrepresenting exchange spreads.
Western Union did not admit or deny wrongdoing, but agreed to pay more than $400 million to settle the claims.
Referring to the money it makes off the spread, Western Union said in its 2012 annual filing, “we generate revenues based on the difference between the exchange rate set by us to the customer and the rate at which we or our agents are able to acquire currency.”
Western Union received $1.15 billion in so-called foreign-exchange revenue in 2011, up from $910.3 million in 2009.
For Javaid Tariq, a taxi driver in New York City who sends money monthly to his family in Pakistan, the exchange rate is particularly infuriating because of how much money he loses. When he sent $300 to his family in April, he received 89.2 rupees for every dollar, less than the 91.2 exchange rate that he checks each morning, he said. For his family, that means 599 fewer rupees, or more than a week’s salary in Lahore.
Frustrated, Mr. Tariq said, “They are taking this money from the people who can least afford it.”
Analysts expect the market for money transfers to grow. The value of cross-border transfers is expected to reach $437 billion in 2012, up from $387 billion in 2009, according to the Aite Group, a research and advisory firm. In the United States, this is led partly by a growth in transfers to China and India and an influx of immigrants from western and eastern Africa, said Larry Berlin, an analyst with First Analysis in Chicago.
Western Union and rival companies are poised to profit. Western Union, with the largest share of the market at nearly 18 percent, recorded $4.2 billion in transaction fees last year, up 4 percent from 2010. The fees accounted for more than 75 percent of the company’s total revenue last year. In the first quarter, profits totaled $247.3 million, up 18 percent from the year-ago period, and for all of 2011, net income was $1.16 billion, up 28 percent from the year before.
Western Union and MoneyGram, which has nearly 4 percent of the money-transfer market, according to the Aite Group, are primarily regulated by the states in which they operate. The new rules, however, fall under the oversight of the new federal Consumer Financial Protection Bureau.
In the buildup to the Dodd-Frank rules, Elizabeth Warren, in her former role as a special adviser to President Obama charged with forming the consumer bureau, warned that with money-transfer companies, “you put your money in and take your chances.”
The central idea behind the new regulations was that having more transparency would promote greater competition and allow immigrants to shop for better rates, said Betsy Cavendish, the executive director of Appleseed, a nonprofit organization focused on policy reform that provided public comment during the rule-making process.
In a February speech to the League of United Latin American Citizens, Richard Cordray, the director of the consumer bureau, emphasized that “with our rule, we hope to increase competition.”
But competitors have made little progress in penetrating the money-transfer market largely because Western Union has half a million locations in 200 countries and territories, making it more difficult for others to edge in, industry consultants said. Although there was some hand-wringing in the industry during the rule-making, analysts said that disclosure requirements would not significantly dampen the revenue at Western Union.
“There will be some one-time costs, but not anything significant,” Mr. Berlin said. Western Union, he added, already works to make fees clear to customers.
Already there are signs that competition might be slow to materialize, banking analysts said. They pointed to a growing number of partnerships between Western Union and banks that might have competed for a slice of the business.
Regions Financial, for example, just finished introducing Western Union’s money-transfer services through its 1,800 branches. U.S. Bancorp gives customers access to Western Union services through its online banking site.
Immigrant advocates argue that many people do not have time to shop for better rates.
“These are people working who are often working minimum wage jobs with very little savvy or time about where to price-shop,” said Francis Calpotura, the founder and director of the Transnational Institute for Grassroots Research and Action in Oakland, Calif.
Some immigrants complain that while there might be multiple options to send money from the United States, there are not as many in the countries where their families live.
Mr. Tariq, the taxi driver with family in Lahore, says he must use Western Union to send $300 a month because “they have a monopoly on stores and are in every post office.”
That makes him feel “like a hostage,” he said.
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