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Boston Financial – MBTA Mega Projects – Dream On Greater Boston… No Way…

Boston Money — Mon, 24 Aug 2009 18:36:01 +0000

On the slow train to financial reality

THE MBTA, Turnpike Authority, and other parts of a sprawling transportation bureaucracy are about to be consolidated into a single agency. One job for this new authority must be to rethink which mega-projects the state should pursue aggressively. Some projects, including the long-discussed $8 billion tunnel linking North and South stations, won’t survive such closer scrutiny.

For years, Massachusetts has been blessed with leaders who understand the vital importance of public transportation, so planners are in the habit of thinking big, rather than saying no. But the need for restraint is apparent. Federal transportation officials rejected a long list of proposed transit and highway projects in 2007 in part because it lacked any fiscal modesty. While the state slashes health programs amid plunging revenues, it expects to spend $29 million to design a connection downtown between the Red Line and the Blue Line – never mind that the money to build the $300 million project won’t come through anytime soon.

Local drawing boards are replete with potentially worthy conceptions, a few of which have been lingering on the vine for so long that John Volpe and Frank Sargent probably discussed them during the Nixon administration. The more recently proposed Urban Ring, a bus-rapid-transit circuit through Boston’s outer neighborhoods and inner suburbs, would involve a $1.7 billion tunnel at the Longwood Medical Area. A $1.5 billion tunnel connecting the two parts of the Silver Line would give Roxbury and South End residents “one-seat’’ access to Logan Airport and the new business district emerging on the South Boston Waterfront.

And that’s just the tunnels. Other projects once listed as high priorities for the region include expansion of the Green Line to Medford, the Blue Line to Lynn, and the commuter rail system to Fall River and New Bedford.

This page has supported virtually all of these projects. But maybe, just maybe, some of them won’t be built anytime soon – or ever. As debts associated with the $14-billion-plus Big Dig hobble transportation agencies in Massachusetts, the prospect of building four more tunnels under Boston is a distant fantasy.

A lack of vision?

To Fred Salvucci – the visionary who planned the Big Dig and a strong supporter of public transportation – giving up on some projects looks like defeatism. There’s no telling where money and political support will end up, he says. When he served as transportation secretary under Michael Dukakis, he was convinced that the Blue Line would reach Lynn long before the Red Line, which at the time ended at Harvard, would be extended to Alewife. Events proved otherwise. So Salvucci argues for identifying an array of desirable projects and then pushing hard for all of them. The state has to be willing to do design work on a variety of projects, he says, because having well-developed plans is crucial to getting federal funds.

Yet nearly all major projects require substantial local matching funds. And to many current officials, the fiscal requirements look quite daunting. The Legislature just committed $275 million in new revenues to transportation, but for operations, not capital improvements, notes Marc Draisen, head of the Metropolitan Area Planning Council. The state, he says, must not “keep telling every advocate, ‘Keep designing, we’ll get to you eventually.’ ’’ Making too many promises can be expensive: Design work generally eats up 7 to 10 percent of a project’s budget.

Progress toward pragmatism

Some signs of progress toward creating a more realistic, actionable set of priorities is evident. Transportation Secretary James Aloisi has called for funding all of a few projects rather than parts of many. A state-led planning group is about to release a slimmed-down regional transportation plan for Greater Boston. The list of transit projects is limited to the Green Line expansion to College Avenue in Medford, a new Orange Line station in Somerville, new commuter rail parking spaces, and design of the Red Line-Blue Line connector – all of which the state agreed to complete in a Big Dig-related legal settlement with the Conservation Law Foundation. Before a new regional plan is due two years from now, the planning group and the new transportation agency should make a more detailed review of big-ticket projects.

A Green Line expansion would top a sensible list of major improvements, not least because it extends rapid transit through underserved but densely populated areas of Somerville and Medford. And a version of the Urban Ring would complement the current transit system, which consists mainly of spokes radiating from downtown – but that project must be scrutinized more closely for affordability.

In evaluating a project, state planners consider how many car trips it might prevent, what effect it might have on land use, and how its benefits measure up against its costs. We would add other criteria: Are there cheaper ways to achieve the same transportation and environmental goals? Can objections from community residents be addressed?

Focusing on a long list of big-ticket transit projects only makes it harder to zero in on the most important ones and then muster the financial, political, and technical expertise necessary to make them happen.

It’s admirable to dream, but the immediate post-Big Dig era of Massachusetts transportation will be one of practicality over promises.

Boston Financial – Boston Based Swiss Bank Snitch Gives up the Rich and Famous Off Shore $Cash$

Boston Money — Sun, 23 Aug 2009 15:43:40 +0000

A Privileged World Begins to Give Up Its Secrets

By GRAHAM BOWLEY – Article Courtesy of the New York Times CLICK HERE

About 10 years ago, when I was working in Frankfurt, Germany’s banking capital, I was invited to the top floor of the glittering skyscraper headquarters of one of the country’s most venerable banks. There, I was treated to something that, it was made clear to me, few eyes usually had the privilege of seeing — a tour of its private art collection, an impressive spattering of modern and ancient European and American masters.

The point was, those pictures reflected the bank’s wealth. And the fact the secretive treasures were kept forever behind closed doors for the enjoyment of the privileged few reflected its power.

If that seems like a different era, it is. Banks around the world are reeling, as we know; the European banks’ losses are among the most ruinous. And their prestige and putative secrecy and independence received a further blow last week, when the government of Switzerland agreed to release to the United States the names of 4,450 American citizens suspected of using secret Swiss accounts at UBS, the country’s biggest bank, for tax evasion.

The victory for the United States was made possible by evidence from an American-born whistleblower — code name Tarantula — a disgruntled former UBS employee from the Boston area who was working in Switzerland. Until he left the bank, he was part of a UBS team that made frequent trips across the Atlantic to aggressively market investment strategies to rich Americans to elude the scrutiny of the Internal Revenue Service.

But it would be wrong to see the settlement as a one-off strike against just one bank by a single government. It is in fact the result of a broader political moment created in the wake of the global financial crisis when disenchantment with financial globalization is causing governments to repatriate wealth back to within national borders, especially at a time when countries badly need to balance their books.

Just a few years ago, in the pre-crisis era, the shadowy workings of cross-border banking — and what may or may not have been happening there — were generally overlooked.

And, while some of the alleged tax evaders may be the war criminals, gunrunners or despots usually linked with secret foreign bank accounts, the target of the latest efforts are much more likely to include rich businessmen and high-net-worth individuals. “There is a political movement because of the financial debacle,” said one veteran European banker who insisted on speaking anonymously because he has retired. “They are turning toward the so-called rich and want to hurt them.”

Of course, the United States looks at it a bit differently. Prosecutors have contended that in the UBS case alone, wealthy Americans hid billions of dollars, thereby evading taxes of hundreds of millions of dollars a year.

While Switzerland is arguably the largest off-shore center, it is not the only one. Supporters of its banking secrecy code point out that the code is wrapped up in the country’s claims to neutrality and being above the global political fray. But secrecy has also turned out to be immensely lucrative; according to some estimates one-quarter of the world’s offshore money now resides in Switzerland.

Other countries or territories have copied the model — Liechtenstein, Bermuda, the Cayman Islands, Macao and Hong Kong among them. And while Switzerland is probably seen as the most conservative, blue chip, upstanding offshore haven, the others are measured by a sliding scale of probity and association with dubious business practices, if not crime. The European banker said that in the early 1990s, following the fall of the Soviet Union, he worked in Switzerland where he said agents of Russian expats would show up with “boxes of cash” from Cyprus, a popular haven for capital fleeing the Russian authorities and the country’s post-collapse chaos.

The backlash against this illicit world has not been confined to the United States; it is apparent across Europe, too.

France will become of one of the first European countries to put in place a new tax treaty with Switzerland to improve transparency and access to banking information. Germany is in discussions with Liechtenstein over issues related to tax evasion by German companies and individuals. Liechtenstein has also struck a disclosure agreement with Britain, encouraging British clients of Liechtenstein banks to volunteer information to British tax authorities in return for reduced penalties. In Italy, tax officials have started an investigation into whether the estate of the late Gianni Agnelli, the former chairman of Fiat, has money hidden away in Switzerland. In Britain, the government has become particularly exercised by tax competition — the offering of low tax rates and other advantages like tax secrecy to lure capital away.

In the Swiss settlement last week, the American authorities got the information they needed after they saw an opportunity in the weakness of UBS, a bank that once enjoyed a sterling global reputation but has suffered billions of dollars in losses linked to United States subprime securities and had to be saved by a big government bailout last October. For the Swiss government, the deal lifts the immediate threat of heftier legal action and frees the bank — one of the mainstays of the Swiss economy — to concentrate on recovery.

But will anything really change? Although the United States is supposed to learn the identities of a few thousand tax evaders, those names will go first to an intermediate tax administration in Switzerland for review. The actual process of recovering the names may become lost in bureaucracy and foot-dragging.

Moreover, as The Times reported last week, smaller Swiss banks say they are confident that they can continue to profit by finding new, more elaborate ways to protect the privacy of their clients. Those banks continue to help clients hide billions of dollars through complex structures in offshore havens.

But the I.R.S. commissioner, Doug Schulman, said the agreement with UBS was a “major step forward” in the government’s efforts to pierce bank secrecy, and he warned that “wealthy Americans who have hidden their money offshore will find themselves in a jam.”

In the new political climate, expect to see a few rich Americans shifting uncomfortably.

Boston Financial News – Bond Portfolios and Retirement

Boston Money — Fri, 21 Aug 2009 14:11:23 +0000

Retirees Ignore Bonds At Their Own Risk

Robert Powell – Robert Powell is the editor of Retirement Weekly. Learn more about Retirement Weekly here .

BOSTON — When it comes to investing, most retired Americans have it backwards. Instead of investing in bonds — things that provide a return on capital, those seeking retirement-income security tend to invest in things that provide a guaranteed return of capital. Doing so could lower one’s standard of living, especially when short-term interest rates fall.

“Retired households seeking a secure and dependable income should prioritize return on capital over return of capital,” wrote Anthony Webb, author of a report released this week by the Center for Retirement Research at Boston College.

“Households need to make a conscious effort to learn to focus less on the market value of their investments and more on the consumption they can support,” he said.

To Webb’s way of thinking, “the true risk-free asset is a portfolio of bonds and, in particular, inflation-protected bonds of appropriate maturities.” In other words, Treasury Inflation Protected Securities or TIPS. Read his report.

That’s not what most investors are doing now. Most retired Americans prefer investments such as Certificates of Deposit and T-bills — investments that provide safety and liquidity. For instance, 86% of households nearing retirement have bank accounts, while just 33% own stocks directly and just 7% own bonds directly, according to another CRR study. Read that study (PDF).

Yes, short-term deposits do provide a guaranteed return of capital, but they don’t offer guaranteed returns, Webb said. And that’s what most retired households need.

“The ultimate objective of retirement saving is to finance consumption,” Webb wrote. “The standard of living of a household that invests in short-term deposits is at risk if short-term interest rates fall. In contrast, changes in interest rates and bond prices may have no effect on the standard of living of a household investing in bonds.”

Given that, how might you re-jigger your portfolio?

Ladder your bonds

In a perfect world, if you knew in advance how much of your capital you planned to consume or spend in the future, you would put together a bond portfolio with income payments that matched your consumption needs. In other words, you would ladder your portfolio. And you would match your asset (the bond) with your liability (your expenses.)

For his part, Michael Zwecher, author of a forthcoming book on retirement, said another way to achieve the nearly same result is to ladder Treasury STRIPS or what are sometimes called zero-coupon securities. These are securities that pay a fixed rate of return and are stripped down to single payment components, he said. As single payments, they sell at a discount and rise over their life to pay par on maturity.

“They can be set up in a ladder to provide steady or customized income streams,” he said. Plus, STRIPS are highly safe and liquid. What’s more, STRIPS are standardized and mature on either Feb. 15 or Aug. 15 each year. Currently they can be bought to cover maturities ranging from 2010 to 2039, he said. Learn more about Treasury STRIPS at this site.

Meanwhile, Aaron Skloff, chief executive officer of Skloff Financial Group said that corporate bonds currently provide “excellent risk/reward” for retirees. “Fears of mass defaults have waned, as the ‘definite’ collapse of the global financial system has once again become a remote probability.” He said investors concerned about buying a “bad” bond should consider a basket through an ETF or bond fund.

Duration matching

Unfortunately, laddering a bond portfolio “probably requires more knowledge and patience than most households possess,” Webb said. Instead, you might try what he calls the simple version of this strategy. “Invest in a mutual fund or exchange-traded fund investing in bonds with an average duration that equals the household’s life expectancy,” he said.

“Early in retirement, the household would invest mostly in long-dated bonds. Later in retirement, it would gradually rebalance its remaining assets in favor of shorter maturity bonds, matching the reduction in its remaining life expectancy,” Webb said.

Optimize your asset allocation

To be sure, you wouldn’t invest 100% of your retirement nest egg in bonds. Instead, Webb suggests that to optimize the amount you invest between stocks and bonds. And to do that you need to consider your entire retirement-income portfolio. For instance, he said Social Security is similar to owning TIPS. And having a defined-benefit pension plan is similar to owning regular or what he calls nominal bonds.

“Those sources of income are good substitutes for inflation-protected and nominal bonds in household portfolios, and households with large amounts of these sources of income should invest larger proportions of their financial assets in equities than otherwise similar households,” he said.

Others also urged investors not to over-invest in bonds just because they provide a guaranteed rate of return. Don’t confuse certainty with safety, said Harold Evensky, the president of Evensky & Katz. “The payment on bonds, assuming no default, may be certain but for most investors a total allocation to bonds is certainly not safe,” he said.

“The problem is that most investors require a real after-tax return that significantly exceeds the return provided by fixed-income investments. As a result, an over-concentration in bonds will result in a gradually decreasing living standard.”

What’s more, Evensky said it’s important to consider all the risks that come with investing in bonds, including interest-rate risk, credit risk, and inflation risk, before you start moving money out of CDs and T-bills.

“Unless the [Center for Retirement Research] is in the business of pumping bond sales, I think that it would do well to frame the results of its study with the reality of risks other than market volatility.” he said.

Robert Powell is the editor of Retirement Weekly. Learn more about Retirement Weekly here .

Boston Radio – WBCN – GONE!

Boston Money — Thu, 16 Jul 2009 15:03:28 +0000

Rocking no more

Its eye on sports, CBS pulls plug on legendary WBCN

By James Reed and Erin Ailworth, Globe Staff | July 15, 2009

It was more than 40 years ago, on a March night in 1968, when WBCN-FM (104.1) decided to break from its classical music format. Instead of Bach, listeners that evening heard “I Feel Free,’’ by the Eric Clapton-led rock band Cream, and right then Boston’s local music scene was transformed.

Yesterday, it was upended yet again, by the same station.

CBS Radio Boston, which owns WBCN, announced it would pull the plug on the station, which helped make household names of some of the biggest musical acts to come out of Boston, so it could accommodate other changes in local radio.

Next month, a sports talk radio station, The Sports Hub, will replace the music station WBMX, or Mix 98.5 FM, adding a third sports radio show in a town that seems to have an insatiable appetite for all things sports. Mix 98.5 will then take its “modern rock, conservative format’’ to WBCN’s slot.

And WBCN, whose slogan, “The Rock of Boston,’’ had become as seminal as some of the performers the station championed early on – including Aerosmith, The Cars, J. Geils Band, U2, and Elvis Costello – will morph into an online-only station available at wbcn.com.

New sports talk station will take on WEEI.

It was stunning news for generations of Boston music fans, who grew up with the station at a crucial time in rock music’s evolution, and for local bands, who had come to rely on WBCN as the one place that might land them their big break. WBCN came of age with some of rock’s pivotal figures, from Janis Joplin to Jimi Hendrix, and its disappearance from the dial is as much a signal of the changing musical scene as it is of drastically changed listening habits. (One word: iPod.)

“Once their ratings started going down the tubes, I thought to myself, ‘Somebody’s not getting it in corporate,’ ’’ Charles Laquidara, one of WBCN’s quintessential personalities from 1969 to 1996, said from his home in Hawaii. On his Facebook page, he addressed WBCN’s fans: “It was a great station. It was also a great time in radio history. I know we can never go back to that, but there will be something someday.’’

Mark Hannon, senior vice president and market manager of CBS Radio Boston, said in an interview yesterday it is a “sad moment to see a station with 40-plus years of heritage coming out of format.’’ But, he said, “the rock genre in this marketplace is extremely crowded, and ’BCN has struggled in the past few years to stay competitive.’’

The decision, which will take effect Aug. 13, will ripple well beyond the airwaves, too, given the station’s longtime support for local bands.

In addition to “Boston Emissions,’’ ’BCN’s two-hour, weekly program showcasing local talent, the WBCN Rock ’n’ Roll Rumble has been a popular battle of the local bands since 1979. Occasionally, its winners went on to find national success. After winning the Rumble in 1983, ’Til Tuesday, Aimee Mann’s new-wave band, was signed to Epic Records; the cabaret-punk duo the Dresden Dolls emerged victors in 2003.

Anngelle Wood, who organized this year’s Rumble, said yesterday she was not sure of the event’s future. “Boston Emissions,’’ which she also hosts, will move to sister station WZLX in August.

The longtime ’BCN personality who became known simply as Oedipus said the loss of the station will cut deeper than some might realize.

“WBCN was a fabric of the community,’’ he said. “It was part of Boston, like the Red Sox. It was more than just music. It completely enveloped the lifestyle of people in Boston and the Northeast. And it no longer does that. It had to make this change. It’s reflected in the ratings.’’

Word of ’BCN’s demise was greeted with mixed emotions at competing stations, where program directors, many of whom grew up listening to ’BCN, said they’d been expecting the downfall. A Cornerstone Research Inc. report looking at men ages 18 to 49 in metro Boston shows ’BCN ranking in the number 11, 12, and 13 spots from January to May, with roughly 4 percent of the area’s listening market.

“The general public must be very surprised, but industry insiders have known they had their problems – let’s just leave it at that – for a number of years. So, we’re not really stunned,’’ said Ron Valeri, program director at WAAF and Mike FM. Still, he said it’s “a bittersweet victory.’’

At 101.7 WFNX, program director Keith Dakin recalled the heyday of WBCN, when personalities like Laquidara and Mark Parenteau graced the station’s airwaves.

“It’s great for us. We’ve lost an alternative rock competitor,’’ said Dakin. “Don’t get me wrong. It’s sad to lose a legendary rock station in this market, but as far as the competitive landscape, it’s great for a station like ’FNX.’’

Parenteau, a DJ at WBCN for 20 years, beginning in 1978, said that before corporate ownership, the station encouraged its on-air talent to be outrageous and play what they wanted.

“We didn’t make a lot of money, but we had a lot of freedom. We could play jazz, comedy, whatever,’’ Parenteau said. “But as we made more money, we had less freedom. It was like a deal with the devil.’’

Still, the station was enormously influential.

“If ’BCN added a band, 30 or 40 stations would add that band because we seemingly knew what we were doing,’’ he said. “The sort of station ’BCN used to be is definitely dead. Radio today is all driven by boards of directors looking at the stock market. They want the sure thing, and they want to play it over and over.’’

Before he was lead singer in the J. Geils Band, Peter Wolf was one of the founding DJs at WBCN. He started there in 1968, interviewing the likes of Van Morrison, Jeff Beck, Sun Ra, and Roland Kirk. Wolf said he is neither surprised nor upset the station is going away. “For me, ’BCN ended a long time ago,’’ he said. “When it became corporatized, it lost the unique qualities that made it vital to the community.’’

Despite its founding in 1955 as a classical station, ’BCN became “the underground rock station in Boston,’’ said Scott Fybush, editor of NorthEast Radio Watch, an industry trade journal. “They were playing stuff that had no other home on the radio and people who had never had a reason to own an FM radio before were going out and buying an FM radio to hear this.’’

The station struggled for at least the last decade, propped up by its coverage of the Patriots and, at least for a time, Howard Stern’s syndicated show

Fybush called CBS Radio’s emphasis on building a sports station with Patriots coverage, a “smart move,’’ because it gives listeners something they can’t necessarily load onto their iPods – live coverage of games.

Of course, more sports and more talk means less rock for Boston listeners.

But Sean Ross, vice president of music and programming at Edison Media Research, said for many around Boston, that change had already begun.

“The ’BCN that most people are going to be sad about losing this afternoon,’’ Ross said, “went away a while ago.’’

Mark Shanahan and Don Aucoin of the Globe staff contributed reporting.

Local Financial – Boston Magazine Slumps

Boston Money — Sun, 05 Jul 2009 16:27:34 +0000

Glossy in search of new sheen

Boston magazine hoping change at top will bring lift

By Megan Woolhouse, Globe Staff

Boston Magazine - Financial Challenge

Larry Platt, the top editor of Boston magazine, is from Philadelphia and it shows. During a breakfast interview last week, his description of an upcoming story about recently indicted former House speaker Salvatore F. DiMasi hit a pronunciation snag. “Is it Di-May-si or Di-Mah-si?’’ he asked with a hint of uncharacteristic bashfulness.

Platt – who is also editor of Philadelphia magazine, both owned by Philadelphia-based Metrocorp Inc. – is unfamiliar with the scene in the Massachusetts capital and unapologetic about it. But he intends to make Boston magazine a “must read’’ that “gets the movers and shakers in Boston shaking.’’

In the process, he also hopes to halt a sales slump that has caused the glossy monthly to lose money this year for the first time in its nearly 40-year history.

“I think an outsider can bring fresh perspective that can challenge the parochialism,’’ Platt said.

But the Philadelphia native, who became editorial director of both magazines in February, faces a daunting challenge.

Like magazines nationwide, Boston is struggling because of the recession and the migration of readers to online publications. Overall circulation has dropped 24 percent since 2005 to about 100,000. Newsstand sales – driven by customers who make an impulsive decision to pay full price – are off 35 percent since 1999, according to Metrocorp, which is privately held.

The magazine is noticeably lighter because of fewer advertisements and thinner content: The May issue was 152 pages, down from 282 last year.

In addition, city and regional magazines like Boston have faced increased competition from a flurry of niche products. In recent years, The Improper Bostonian has grown into a slick biweekly angling to be the city’s “premier entertainment and lifestyle guide.’’ Boston Common, as well as specialty publications like FB, Lola, and Design New England – all three published by Boston Globe Media – also target a high-end demographic.

Last month, Platt made his first major moves by firing four staffers, including editor James Burnett. Platt replaced him with Andrew Putz of Minnesota Monthly, who will start July 22 and report to Platt.

The move stunned surviving staffers, who had just started assembling the annual “Best of Boston’’ issue.

“The biggest shock was the timing,’’ said Jolyon Helterman, the features editor who resigned in protest the same day. Helterman, 39, said the firings showed a lack of confidence in the content and unfairly condemned the staff for the magazine’s financial woes.

It was as though they were saying “editorial is broken,’’ Helterman said, when the real problem is “people aren’t buying ads because no one has any money.’’

Platt said economics made the layoffs necessary. As for the decision to cut jobs now, he said, “There is no good time to do this kind of thing. The longer you wait, the more of an economic hole you dig yourself into.’’

Samir Husni, director of the Magazine Innovation Center at the University of Mississippi in Oxford, said profits at city and regional magazines nationwide have dropped, causing them to cut employees and pages. Their lifeblood – ads for luxury services, restaurants, and jewelry stores – has dried up.

“When the economic collapse happened, it took the entire business model with it,’’ Husni said. “So everybody is trying to reinvent’’ themselves. For example, he said, some are charging more for subscriptions to offset losses in ad revenue.

Mark Jurkowitz, the Globe’s former media critic, now an associate editor at the nonprofit Project for Excellence in Journalism in Washington, D.C., said industry changes and the dour economy mean Boston will have a “rough go’’ this year. But masthead churn at the monthly is nothing new, he said.

“Philadelphia magazine was always seen as the star’’ by Metrocorp, said Jurkowitz, who had a brief stint at Boston. “Philly was always the big brother.’’

Stories about turmoil at Boston magazine almost always invoke the name of its owner, D. Herbert Lipson, who is a looming presence on the Philadelphia scene, and well known for trumpeting his conservative politics. Even at 80 years old, Lipson remains in charge of Metrocorp and does not hesitate to voice his opinion about the magazines.

He bought Boston magazine in 1970 from the Boston Chamber of Commerce, which produced it, sparking controversy from the start. Chamber members wanted to buy it themselves, so when Lipson outbid them, they promptly walked out.

Lipson, whose father purchased Greater Philadelphia Magazine from that city’s Chamber of Commerce in 1951, was hardly deterred by the exodus.

“We put together the magazine with spit and chewing gum,’’ he said in the 1987 anniversary issue of Boston. “Our first efforts were remote, with Philadelphia involved, and that led to some bad editorial choices. I wanted to address social issues, literary issues, and it took us a while to get on track.’’

Lipson, who writes a monthly “Off the Cuff’’ column for Philadelphia, lives outside Atlantic City, and has a few thin ties to Massachusetts: He spent his childhood summers on the North Shore and his father came from Worcester. Lipson declined to be interviewed for this report, but in Philadelphia magazine last year he talked about what inspired his publishing career five-plus decades ago.

“There was nothing worse than being ignored,’’ he said. “We were driven.’’

Over the years, Boston has published a wide range of stories, from an article on the 1970s busing crisis to a recent cover piece on Red Sox owner John Henry’s engagement, as told by a friend of the bride. But its staples include features on pricey restaurants, fashion boutiques, and luxury real estate. The magazine also pioneered the “best and worst’’ model, eventually dropping the “worst’’ in what was viewed as a concession to advertisers.

Both Metrocorp magazines, and several ancillary publications, have won a host of awards over the years and generated a steady stream of advertising dollars, making Lipson wealthy. At a company Christmas party five years ago at the Charles Hotel, Lipson proclaimed he was “backstroking in green,’’ according to someone who was there.

David Rosenbaum, editor of Boston from 1986 to 1991, said Lipson did not care much for editors, but tolerated them when profits were robust. “When the economy turns and it [the magazine] gets skinny, he figures the editor is an idiot,’’ he said.

And they often paid a price: A dozen editors came and went between 1975 and 2000.

Rosenbaum said Lipson frequently pushed him to be irreverent, “going after poor people, Democrats, the handicapped, minorities,’’ he said. “He’s to the right of Attila the Hun. At least he was. I haven’t spoken to him since the day he fired me.’’

John Wolfson, a former senior editor who left Boston last year, said he often cringed when Lipson spoke, but that his advice was sought after in industry circles. “Lipson’s a tough customer,’’ Wolfson said. “But he knows what he wants and puts out a good magazine.’’

Metrocorp’s 2009 revenues have fallen 10 percent to 15 percent from last year, according to David Lipson Jr., president of Metrocorp and Herb Lipson’s son.

Platt said he has a plan for reinvigorating Boston magazine: There are 250 influential people who compose any city’s power structure, he said, and the key is to write vivid stories about them. But sorting out the city and its workings might be tougher for Platt now that some staffers with deep local roots are gone, and his editor, Putz, is from Minnesota.

Marketing director Dawn Curtis Hanley, daughter of Boston newscasters Chet Curtis and Natalie Jacobson, was among those fired. So was Rockport resident and creative director Patrick Mitchell. And former publisher Dan Scully, a Boston native, retired last year after 24 years.

“I still have a few people I care about there, so I’d like to see the whole thing succeed for their benefit,’’ Scully said. “I wish them the best with these changes.’’

Burnett, the latest editor to be dumped, said his severance agreement prevents him from saying much publicly about his tenure. “I understood going in that the editor of Boston magazine could have a limited shelf life,’’ he said. “But what I tried to do is not let that inhibit us.’’

Platt began courting Putz, 35, about two months ago. Putz wrote “buzzworthy’’ stories for Minnesota Monthly, Platt said, including pieces on Al Franken’s senatorial bid and the massive I-35W bridge collapse. While city and regional magazine sales dropped 14 percent nationally in the last year, Minnesota Monthly’s sales grew 3 percent under Putz, according to Platt.

Putz acknowledged Boston editors often have a short tenure. “I’m going to be there as long Larry Platt and Herb Lipson want me,’’ he said.

Jim Bandera, a former sales director at Boston magazine who left the company last fall, said Putz will probably bring a fresh sensibility to the job and hire writers who understand Boston.

Putz said it is too early to say what changes he will make at the magazine. “I’m not going to pretend to have some knowledge that I don’t have,’’ he said. “I’m like a well-informed tourist.’’

Johnny Diaz of the Globe staff contributed to this report. Megan Woolhouse can be reached at mwoolhouse@globe.com.

Boston Financial – Central Bank Concerns

Boston Money — Sat, 27 Jun 2009 18:16:00 +0000

Fed Documents Fuel Concerns About Expanding Central Bank’s Role

By DAMIAN PALETTA

WASHINGTON — Documents unearthed by congressional investigators reveal disagreements among senior Federal Reserve officials about how to handle Bank of America Corp.’s acquisition of Merrill Lynch, fueling concern on Capitol Hill over giving the central bank even more power to regulate the financial system.

Federal Reserve

The glimpse inside the regulatory machinery provided by emails, memorandums and handwritten notes show a Fed that wrestled with how tough it should be on Bank of America, one of the biggest U.S. banks. It also shows Fed officials questioning more broadly their response to the financial crisis months earlier.

In December, Bank of America approached top U.S. officials about abandoning a deal, forged in the heat of the crisis, to buy investment bank Merrill Lynch. In the end, the government arranged a $20 billion rescue package for the bank to cover growing losses at Merrill.

In between, the documents show areas of disagreement within some of the Fed’s 12 regional reserve banks.

The Federal Reserve Bank of Richmond, where supervision of Bank of America’s parent company is based, pushed for a tougher approach than other regulators, emails suggest. Bank of America officials appealed more than once to the Fed’s Washington headquarters to intervene.

Bank of America CEO “Ken [Lewis] may also raise his favorite perennial issue — that is, is the Richmond supervisory team on the same page as the [Fed] Board,” Fed governor Kevin Warsh wrote in an email Dec. 30 to Fed Chairman Ben Bernanke and other senior officials. “Richmond staff was on our call today, but prior to the call, it sounds like they may have threatened a little more than ideal…”

On Jan. 10, Fed General Counsel Scott Alvarez wrote to Mr. Bernanke and others that Richmond Fed President Jeffrey Lacker was raising some issues over the final deal. Mr. Lacker wanted the entire Federal Open Market Committee to vote on any loan to Bank of America.

Mr. Bernanke responded at 2:01 a.m.: “Thanks. If we are nimble we can manage this.”

Whether or not Mr. Bernanke threatened Mr. Lewis’s ouster over the rescue remains a source of contention. Mr. Lewis suggested in testimony to New York Attorney General Andrew Cuomo that the Fed chief did just that. Mr. Bernanke has denied making such a threat to Mr. Lewis.

On Jan. 16, just days before government aid for the deal was supposed to be announced, Federal Reserve Bank of Boston president Eric Rosengren sent Mr. Bernanke an email saying that the Fed shouldn’t dismiss too hastily the idea of tossing management at Bank of America.

Mr. Rosengren suggested such a shake up might be necessary, “particularly if we believe that existing management is a significant source of the problem.”

Mr. Bernanke, at a contentious hearing Thursday, defended the Fed against suggestions it had been too lenient with management.

“The supervisory process is not a onetime thing. It’s an ongoing process, and in an ongoing supervisory process, we have made demands of the Bank of America on terms of their board and management,” he told Rep. Dennis Kucinich (D., Ohio).

The documents reveal Fed officials questioning the central bank’s response to the financial crisis even before negotiations began on the effort to aid Bank of America’s acquisition of Merrill Lynch.

“At this point I have [the] sense that the hearts and minds war in Iraq was handled better than it has been in this crisis, particularly within the Fed system,” wrote Meg McConnell, a top Federal Reserve Bank of New York official, on the day the House of Representatives voted down the Bush administration’s first financial-rescue package, sending the Dow industrials down almost 800 points.

The Obama administration earlier this month proposed giving the Fed powers to oversee and examine the largest companies in the financial system.

The disclosures could bolster the central bank’s argument that it needs more power to manage future crises. One reason for the government’s lurching response last year, officials say, was that it didn’t have the needed tools.

The Fed has been dealing with a steady stream of criticism from Republicans. Democrats have recently joined in, and the disclosures being aired through the congressional inquiry have put the central bank on the defensive.

Write to Damian Paletta at damian.paletta@wsj.com

Boston Finance – Comedy Connection Boston

Boston Money — Tue, 23 Jun 2009 05:55:06 +0000

US – Thursday, June 18

Despite the weak economy, comedy clubs around Boston like the Improv Asylum are seeing a steady flow of customers.

Photo: NICOLAUS CZARNECKI/METRO

Comedy clubs bank on

recession laughs

When the economy is bad, laughter is often an effective way to cope. That’s a good thing for area comedy clubs, several of which say patrons are still crowding their venues for much-needed escapes.

Richard Jenkins, owner of the Comedy Studio in Harvard Square, said business is up 10 percent compared to last year. He pointed to tickets of $10 or less as a major selling point to customers yearning for entertainment on the cheap.

“Stand-up comedy is one of most affordable entertainment options someone has, so to be able to have a good night out and save money looks very appealing,” Jenkins said. “We’re turning away more people, and we’re selling out on a regular basis.”

At ImprovBoston in Central Square, managing director Daniel Binderman said, “Sales holding up pretty well.” Meanwhile, at the Improv Asylum in the North End, a third show on Saturday nights and a Sunday evening show were added in April to meet the growing demand.

“I think the fact that people are looking for more local things at home to do has helped,” said events manager Kristin Martin.

It’s not just smaller venues that are enjoying the business. Sales remain strong at the Comedy Connection — which moved from Faneuil Hall to the 1,100-seat Wilbur Theatre last July — according to marketing director Andrew Mather.

“We are actually are selling very well,” said Mather, who credited part of the reason to more customers from the suburbs, perhaps opting to stay closer to home for excursions. “We’ve haven’t seen a lag in sales at all.”

Boston Comedy Clubs CLICK HERE

Federal Reserve – GE Finance

Boston Money — Fri, 19 Jun 2009 13:50:14 +0000

Fed’s specter could steer GE Capital revamp

Thu Jun 18, 2009 2:13pm EDT

By Scott Malone – Analysis

BOSTON (Reuters) – The possibility of the Federal Reserve gaining regulatory authority over General Electric Co’s hefty finance arm could influence how the company restructures that business.

Jeffrey R Immelt GE

When President Barack Obama this week unveiled his proposal for the most sweeping overhaul of U.S. financial regulations since the 1930s, he proposed the central bank oversee not just banks but “other large firms that pose a risk to the entire economy in the event of failure.”

That was a reference to troubled insurer American International Group, which has received roughly $180 billion in government bailout money. But GE investors said the label could just as easily apply to the U.S. conglomerate’s finance business, a major commercial lender.

“I could definitely see that potentially becoming an issue if companies like GE and their finance arms came under more scrutiny,” said Perry Adams, vice president and senior portfolio manager at Huntington Private Financial Group in Traverse City, Michigan, which holds GE shares.

The Fairfield, Connecticut-based company is already working to scale back GE Capital, which has faced a sharp drop in profit through the recession and is a major reason for the 58 percent drop in GE shares over the past year, a sharper decline than the 30 percent slide of the Dow Jones industrial average.

Finance had accounted for half of GE’s profit in 2007, but Chief Executive Jeff Immelt said he plans to downsize the unit so that in the future the world’s largest maker of jet engines and electricity-producing turbines would rely on it for just 30 percent of earnings.

Last year GE Capital earned $8.6 billion, about one-third of the corporate total, and executives said in March it could earn $2 billion to $2.5 billion this year if the conditions envisioned in the Fed’s base case for the economy pan out.

GE aims to reduce its reliance on investments including real estate and on consumer finance, instead focusing more on financing GE products and other heavy equipment.

‘POUND OF FLESH’

While Obama did not name GE Capital, investors said it could easily come in for more federal oversight.

“Anybody who got aid of some sort, whether it was direct or indirect, probably is going to find that the government is going to extract their pound of flesh, have more regulation just because they don’t want to do that again,” said Peter Klein, senior portfolio manager at Fifth Third Asset Management in Cleveland, Ohio, which owns GE shares.

GE did not seek capital under the Troubled Asset Relief Program, but it did participate in Washington’s Commercial Paper Funding Facility and issue debt backed by the Temporary Liquidity Guarantee Program.

GE Capital has braced for more government oversight, but is waiting to see how it will be affected, said spokesman Russell Wilkerson.

“We have anticipated and planned for increased regulation of financial institutions and are supportive of the broad themes of addressing systemic risk and increased transparency,” Wilkerson said. “However, many elements of the administration’s proposal are new and bear further scrutiny.”

Given that the company is already working to downsize its finance arm, it may choose to exit businesses that will face substantial new regulations, investors said.

“What happens with regulation, obviously, is the returns come down,” Klein said. “All things being equal, it will find less pleasure in being a regulated entity, and there may be less emphasis on GE Capital.”

BANK WITHIN FIVE YEARS?

During the worst of the credit crisis last year, GE officials considered seeking a bank holding company charter, which would have given them access to the Fed’s lending window but also would have subjected them to more regulation. They ultimately opted not to seek a federal charter.

But under the new regulatory framework, the company may need to become a bank holding company within the next five years, wrote Goldman Sachs analyst Terry Darling, in a note to clients.

That is not necessarily a bad thing for GE investors, who in March watched the shares fall briefly below $6 — about half their current level — as Wall Street worried that GE Capital contained a “time bomb” or some sort of massive liability that investors did not know about.

GE executives responded by holding a day-long investor briefing where they reviewed GE Capital in great detail, in a bid to assuage Wall Street’s anxiety.

“We believe the ultimate outcome is unlikely to be perilous for GE shares,” Goldman’s Darling wrote. “A strong (GE Capital) is in the best interest of the economic recovery the government is trying to foster.”

(Reporting by Scott Malone, editing by Matthew Lewis)

Financial System – President Obama

Boston Money — Thu, 18 Jun 2009 13:54:56 +0000

Prez targets finance system

Seeks to prevent Wall St. abuses

By Jay Fitzgerald | Thursday, June 18, 2009 | http://www.bostonherald.com | Business & Markets

Photo by AP

President Obama’s plan to overhaul the nation’s financial regulatory system received support yesterday from key Massachusetts congressional members who said changes are long overdue.

Saying America had allowed a “culture of irresponsibility” to grow within the financial industry, Obama proposed giving the Federal Reserve more regulatory powers and creating a new consumer watchdog agency to review new financial products peddled by firms.

“This was a failure of the entire system,” Obama said at a White House event, referring to last fall’s near collapse of the nation’s financial system. “An absence of oversight engendered systematic, and systemic, abuse.”

U.S. Rep. Barney Frank (D-Newton), chairman of the influential House Financial Services Committee, said the plan is an important step toward overhauling the regulatory system. He predicted Congress will have a bill on Obama’s desk before the end of the year.

Frank, who has parted with the administration over some issues, said there will be changes to Obama’s plan, but he said Democrats agree with the “fundamental” thrust of the package.

U.S. Sen. Edward M. Kennedy (D-Mass.) and Rep. William Delahunt (D-Quincy) won a major victory when Obama agreed to create a new Consumer Financial Protection Agency, something the two Bay State pols have pushed for in recent months.

“The plan announced by the president today will protect consumers and investors by restoring much of the regulatory oversight of our financial system that has been systematically dismantled in recent years,” said Delahunt.

But business leaders and Republicans didn’t like most of the proposals.

David Hirschmann, president of the U.S. Chamber of Commerce’s capital markets center, said the president’s plan adds an extra layer of red tape without really fixing the problems that led to last year’s Wall Street meltdown.

“We can’t simply insert new regulatory agencies and hope that we’ve covered our bases,” he said.

U.S. Rep. Scott Garrett (R-N.J.) said the president’s plan could create a cycle of more bank bailouts.

“It perpetuates what we’ve had in the past, said Garrett,” a member of Frank’s Financial Services committee.

The financial industry, including some of Boston’s most powerful mutual-fund companies, have been wary of too much government intervention in the sector, fearing their interests might be hurt.

Article URL: http://www.bostonherald.com/business/general/view.bg?articleid=1179683

US push to overhaul banking worries some
/business/general/view.bg?articleid=1179686

Automotive Financial – Saab SOLD

Boston Money — Wed, 17 Jun 2009 14:20:29 +0000

New investors face tough road ahead to right Saab

by The Associated Press

Tuesday June 16, 2009, 11:19 PM

Eric J. Shelton / APSaab automobiles are seen on the lot of Herb Chambers Saab of Boston on Tuesday. Saab Automobile, General Motors Corp.’s struggling Swedish unit known for its family cars, was rescued Tuesday by a consortium led by Koenigsegg Automotive AB, a tiny company that produces only a dozen custom-made super cars a year.

DETROIT (AP) — For the new owners of Saab Automobile to make money selling small numbers of cars across the globe, they have to return to the Swedish automaker’s roots, industry analysts say.

Somehow, a consortium of investors led by custom sports car maker Koenigsegg Automotive AB must restore Saab to the quirky, cutting edge and reliable brand once favored by professionals who wanted to look smart rather than wealthy.

“It was seen as a discerning choice,” said Tim Urquhart, senior automotive industry analyst with the consulting firm IHS Global Insight in London. “It was a professional’s vehicle, a doctor’s or an architect’s. A quality vehicle, but not an obvious statement like Mercedes or BMW.”

GM announced Tuesday that it has struck a tentative deal to sell the storied brand, which started as a Swedish aircraft maker. The sale is to include a $600 million funding commitment from the European Investment Bank, guaranteed by the Swedish government. Additional funding would be provided by GM and the new investors.

GM gave no details on the financing but said the sale should close in the third quarter. The troubled Detroit-based GM initially will get no return on its investment and apparently will have no stake in Saab. If the new company turns a profit, GM could receive the $150 million in cash that Saab has left over from GM’s ownership, plus the value of Saab’s assets.

The lack of an immediate payoff for GM is similar to the position of Chrysler LLC’s former owners, New York private equity firm Cerberus Capital Management LP, which exited the Chrysler bankruptcy with nothing to show for its $7.4 billion investment.

Koenigsegg, (KOH-nigs-egg), a tiny company which produces only a dozen super cars a year costing more than $1 million each, was founded in 1994 by von Koenigsegg, a Swedish sports car fanatic and entrepreneur who remains chief executive. Its factory and headquarters are located at a former air force base in southern Sweden.

Analysts say GM, which bought half of Saab in 1990 for $600 million and the rest for $125 million in 2000, was unable to differentiate the brand from its other products or find a sales niche.

Von Koenigsegg, in an interview with Swedish television, seemed to agree, saying that the new owners would try to restore some of the brand’s heritage while finding a place in the market between upscale and mainstream.

“This is neither a luxury or a people’s car, but it has its own niche — a bit of postmodern comfort, sporty, but with environmental thinking,” von Koenigsegg said. “We want to capture the Swedish aspect too. GM had a bit more of an international approach, and Saab drowned a little bit in that context.”

GM CEO Fritz Henderson, in a Web chat with reporters on Tuesday, said Saab was never profitable since the acquisition, despite great vehicles and loyal customers.

“We ran out of money just on the eve of launching the newest generation of Saabs, which we think will be outstanding,” he wrote, adding that GM will continue to make vehicles for the new company as well as provide engines, transmissions and other technology.

IHS analyst Urquhart said GM didn’t seem to know what to do with Saab, and failed to set its models apart from mainstream brands. The Saab 9-7X sport utility vehicle, for example, is very similar to a Chevrolet TrailBlazer, and the 9-3 midsize sedan is a close relative of the Pontiac G6.

“Without being too rude about it, GM sucked all the brand value out of it,” Urquhart said.

But Max Stephenson, owner of a Saab-Cadillac dealership near Milwaukee, said GM made Saab interiors far more luxurious and the performance better than other brands. All he has to do to convince customers is get them to drive one, he said.

“When you get people behind the wheel and you’re in the trenches, they’re like ‘Wow, this is a lot more than a TrailBlazer,” Stephenson said of the 9-7X.

But he said the models were a bit too pricey, especially when money for leasing dried up when credit got tight.

Tom Libby, an independent Detroit-area auto analyst, agreed that Saab lost its uniqueness in the now-crowded luxury segment and will have to find a new niche.

“We know that safety is addressed. We know that performance is addressed. We know that pure upscale luxury is addressed,” he said. Saab has to find a “white space that’s not covered. I don’t know what that is right now.”

Urquhart said the company must return to its roots of innovation. Saab was among the first with front-wheel-drive and turbocharging.

Yet it will be difficult, he said, to make money with Saab’s historically small sales volume of around 130,000 units per year. That volume, Urquhart said, has held steady since GM’s acquisition, dropping to 92,000 last year in the global automotive slump.

Von Koenigsegg dismissed criticism about his company having no experience in large-scale production, saying it isn’t needed because Saab has that knowledge. He said Koenigsegg can contribute green solutions and engine technology.

Saab employs about 4,000 worldwide, while Koenigsegg has a full-time staff of 45.

Shareholders in the new company were listed as Koenigsegg Automotive AB with a 23.4 percent stake, von Koeningsegg’s firm Alpraaz AB with 42.6 percent, Norwegian holding company Eker Group with 11.8 percent and San Diego-based Mark Bishop with 22.2 percent.

Saab went into creditor protection Feb. 20, and analysts say it remains to be seen whether the new group has the money to restore its health. Even Sweden’s Enterprise Minister, Maud Olofsson, who said she was pleased to see new owners, said they will need to show proof of resources.

Koenigsegg told Swedish news agency TT that the group has the resources it needs.