Monthly Archives: July 2015

Clinton raising money in finance sector as she raps industry


Hillary Rodham Clinton’s economic agenda targets companies that focus on short-term profits and high-speed trading instead of investing in workers. The Democratic presidential candidate’s finance operation is going after their executives for another purpose — donations.

A day after proposing higher capital gains taxes on short-term investors, Clinton raised at least $450,000 Tuesday night at the Chicago home of Raj Fernando, a longtime donor. His firm, Chopper Trading, specializes in high-frequency transactions and was recently purchased by Chicago-based competitor DRW.

Clinton’s summertime fundraising circuit highlights a central tension of her campaign: how to encourage financial executives to open their wallets for her presidential effort even as she comes out with plans aimed at reining multimillion-dollar paychecks. Since her first presidential campaign in 2008, income inequality has become a bigger force in Democratic politics, with liberal voters clamoring for candidates who will take a sharply populist turn and enforce tough new regulations on Wall Street.

The early outlines of Clinton’s economic plans have included steps to raise taxes on hedge fund and private equity bonuses, penalize short-term investors with higher tax rates and strengthen penalties for rogue executives who are involved in fraudulent deals on Wall Street. She wants further strengthening of financial regulations put in place after the 2008 financial crisis.

In announcing her economic platform in New York, Clinton called some of the financial institutions led by her top contributors “too complex and too risky.” She said “serious risks are emerging from institutions in the so-called shadow banking system, including hedge funds, high-frequency traders, non-bank finance companies.”

In New Hampshire in April, she singled out hedge fund managers who pay lower tax rates. “If it’s just, you know, playing back in forth in the global marketplace to get one-10th of 1 percent advantage, maybe we should not let that go on because that is unfortunately kind of at the root of some of the economic problems that we all remember painfully from ’08.”

Clinton has avoided the kind of rhetoric that Obama used to describe the industry — “fat cat bankers on Wall Street,” the president said in 2009 — after he raised millions from the industry in his first presidential campaign. Obama had pushed for the 2010 regulations.

Alan Patricof, a private equity pioneer and longtime Clinton donor, said Obama was polarizing on the issue but Clinton “is being very realistic” and he’s not aware of donors from the industry holding back from her.

Nor is she shy about turning to them for campaign money, sometimes in events at executives’ homes. As she’s put it about her aggressive fundraising operation, Republicans and their allies will spend billions of dollars to defeat Democrats and “we’re going to have to be in a position where we can defend ourselves.”

In her first campaign finance report, people who listed occupations in banking, finance, investment, money management, private equity or venture capital contributed more than $1.6 million to Clinton’s campaign, according to a review by The Associated Press. The vast majority of those checks were for the maximum legal amount of $2,700.

Following the event in Chicago with Fernando, Clinton was attending a Wednesday fundraiser hosted by George Reddin, a North Carolina-based managing director of FMI Capital Advisors who has specialized in mergers and acquisitions in the construction materials industry.

About a dozen of Clinton’s top campaign bundlers — donors who have raised at least $100,000 for her presidential bid — work in finance and investing, such as private equity investors Imaad Zuberi and Deven Parekh and hedge fund managers Marc Lasry and Orin Kramer.

Clinton also has appeared at fundraisers held by Doug Teitelbaum, founder of investment firm Homewood Capital, and Lisa Perry, whose husband, Richard, is a top hedge fund executive.

Morgan Stanley vice chairman Tom Nides, who worked for Clinton at the State Department, said the new policies haven’t caused any waves on Wall Street and predicted they’re unlikely to hamper Clinton’s fundraising.

As a senator representing New York, Clinton established strong relationships with Wall Street donors and Nides said she has maintained those ties, in part by carefully measuring the rhetoric she uses when she talks about the industry.

“She’s been tough, but I don’t think she’s been irrational,” he said. “People in our industry know they’ll have someone who has a good reputation or at least someone who will listen to them.”


Honda Finance Arm to Pay $25 Million to Settle Discriminatory Lending Allegations


WASHINGTON— Honda Motor Co. ’s American finance arm on Tuesday agreed to pay $25 million to settle allegations that it charged higher loan rates to minority customers, part of a push by federal officials to alter lending practices by car companies.

The Justice Department had accused American Honda Finance Corp. of charging black, Hispanic and Asian car buyers higher interest rates on auto loans. The company won’t pay any civil penalty but will instead pay $24 million to a fund for car buyers who were overcharged, federal officials said. An additional $1 million will pay for a consumer-education effort.

American Honda Finance said it disagrees with the Consumer Financial Protection Bureau and the Justice Department “regarding the methodology used to make determinations about lending practices, but we nonetheless share a fundamental agreement in the importance of fair lending.”

Federal officials said it is the first settlement where an auto lender has agreed to alter its lending practices, something they hope will become a blueprint for other car companies.

“We are looking at the entire spectrum of the auto-lending market,” said Vanita Gupta, head of the Justice Department’s civil-rights division. She said discriminatory practices in auto loans is a “pervasive problem,” while declining to identify specific companies.
Ms. Gupta said Honda’s new lending compensation system “balances fair compensation for dealers and fair lending for consumers. We hope that Honda’s leadership will spur the rest of the industry to constrain dealer markups to address discriminatory

Aust shares shaken on China fears


The Australian sharemarket’s volatile roller-coaster ride continues, with the benchmark index reversing yesterday’s momentum and swinging lower, as concerns surrounding Greece and China trouble investors.

After staging a 2 per cent rally yesterday — the local sharemarket’s best session in five months — gloom re-entered the bourse as China’s stockmarket rout became more pronounced.

Wall Street’s volatile session overnight paled in comparison to China’s panic sell-off. The Shanghai Composite Index had fallen 7.8 per cent at the close, the Shenzhen Composite Index dropped 4.1 per cent, and Hong Kong’s Hang Seng Index fell 4.6 per cent.

More than half of the companies listed on the Shanghai and Shenzhen markets have been suspended from trade in a bid to halt the bear market, but concerns of a broader economic impact have been felt widely, sending jitters across the Australian sharemarket.

At the 4.15pm (AEST) market close, the benchmark S&P/ASX200 index was down 111.9 points, or 2 per cent, to 5,469.5, while the broader All Ordinaries index had declined 107.5 points, or 1.93 per cent, to 5,456.5.

China has moved to ease fears by cutting reserve requirements for banks, along with its official interest rate. Regulators have also banned short-selling, suspended all initial public offerings, increased liquidity to its financial institutions, and instructed state-owned pension funds to withhold from selling stocks at all.

But the regulations amounted to little, with the markets continuing to plummet.

“The Chinese authorities have done much to stabilise the market and it’s counted for pretty little — that’s an unsettling aspect,” CommSec analyst Tom Piotrowski said.

“To see the Shanghai Composite down 7 per cent at the open is deeply unsettling,” he added.

Mr Piotrowski said to see yesterday’s performance, with no obvious catalyst pushing the market high, and then followed with today’s retracement, painted the “character of the market in a poor light”.

He said if there was enduring economic fallout from China’s stockmarket decline, such as an economic slowdown of 1 per cent, it’d have a material impact on the Australian economy.

“In terms of household and business confidence, if we had that sort of a knock we’d be dealing with some real world economic fallout.”

The Australian market was also suffering from a further collapse in commodity prices, pushing the Australian dollar to a fresh six-year low of US73.90c during the morning trading session.

The S&P/ASX200 Materials Index dropped 3 per cent to its lowest point in five months — the biggest drag on the local market today.

Overnight, iron ore prices plummeted nearly 5 per cent, slipping below $US50 a tonne as signs of rising supply out of Brazil and Australia, combined with weakening demand from China, become evident. Speculation is mounting that the commodity could test a 10-year low of $US46.70 in coming weeks.

BHP Billiton gave up 3.12 per cent to $25.43 and Rio Tinto yielded 3.25 per cent to $50.06. Fortescue plunged 6.16 per cent to $1.675, while South32 dropped 4.96 per cent to $1.725.

Meanwhile, energy stocks declined 2.53 per cent as a sector, despite the oil price holding largely steady. Woodside lost 2.94 per cent to $33.62 while Santos shed 3.25 per cent to $7.45.

IG chief market strategist Chris Weston said there is no denying the downside moves we are seeing in copper, nickel and iron ore will have an impact on Australia.

“We have for the first time seen real selling coming into the ASX200 on Chinese stock weakness,” he said, but added that he felt Australia was a long way from China’s equity falls having a material impact on local economics.

Financials were down, with the big four banks deep in the red. ANZ dipped 2.3 per cent to $32.27, Commonwealth Bank subtracted 2.19 per cent to $85.77, National Australia Bank gave up 2.57 per cent to $33.33 and Westpac slid 1.78 per cent to $33.16.

Consumer staples were down 1.15 per cent collectively, as the supermarket stocks retreated. Woolworths slipped 0.29 per cent to $27.35, while Wesfarmers lost 1.56 per cent to $39.72.

Meanwhile, Qantas sank 2.33 per cent to $3.35 and Telstra declined 1.75 per cent to $6.16.

Looking ahead, tomorrow the Australian Bureau of Statistics will release the official jobless rate, which economists expect to rise slightly.