Finance Blog number 1

Silver State Bank, which recently included Republican presidential candidate John McCain’s son on its board, was closed by regulators on Friday, becoming the 11th bank to fail this year, as the struggling economy and falling home prices take their toll on financial institutions.

Andrew McCain, whom Senator John McCain adopted in a previous marriage, formerly served as a director of the Henderson, Nevada, bank, which was closed by Nevada state officials and taken over by the Federal Deposit Insurance Corp.

Andrew McCain sat on Silver State’s board in February and served on the audit committee, bank regulatory filings show.

He resigned in July due to “personal reasons,” the bank said. He previously served as a director of Choice Bank in Scottsdale, Arizona, from 2006 to April 2008 when Choice Bank merged with Silver State.

His involvement in the bank during the current credit and housing problems is a reminder of his father’s alleged role in the massive savings and loans scandal decades ago.

In the late 1980s John McCain was one of five senators known as the “Keating Five.” They were investigated by Congress over their alleged roles in the crisis, which resulted in a U.S. taxpayer bailout.

They were accused of aiding Charles Keating, who was the chairman of the failed California-based Lincoln Savings and Loan Association. McCain and another senator, John Glenn, were cleared in the Senate Ethics Committee investigation.

On Thursday John McCain accepted the Republican Party’s presidential nomination. He and his running mate Alaska Gov. Sarah Palin are battling Democrat Barack Obama and his vice presidential running mate Joe Biden for the White House. 

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John McCain’s acceptance speech at the Republican National Convention in St. Paul Thursday night was watched by more television viewers than Barack Obama’s speech a week earlier.

More than 38.9 million people watched McCain on ABC, CBS, NBC, CNN, Fox News Channel, MSNBC, Telemundo or Univision, according to The Nielsen Co. results. A week earlier, Obama’s acceptance speech at the Democratic National Convention in Denver was watched by 38.4 million viewers.

McCain’s speech also beat that of his controversial running mate, Alaska Gov. Sarah Palin, whose speech Wednesday night attracted 37.2 million viewers, Nielsen reported.

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James Hardway, spokesman for the Hawaii Department of Labor and Industrial Relations, will be stepping down Sept. 9 to become the new executive director of the state’s Workforce Development Council.

Hardway has served as the assistant to the director of the state Labor Department for the last six years.

The Workforce Development Council is a 31-member private-sector led organization that is responsible for advising the governor on workforce development to support further economic and employment opportunities in Hawaii.

“One of the most critical issues facing Hawaii’s economic future when you talk about economic sustainability is work-force development and it was a challenge I felt I’d like to undertake,” Hardway told PBN.

The board, which meets four times a year, appointed Hardway as its new executive director on Aug. 28.

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Sallie Mae has named Kenneth Fischbach senior vice president of corporate finance.

In his new position, Fischbach will oversee debt investor relations at Reston-based Sallie Mae (NYSE:SLM), which manages nearly $172 billion in education loans.

Previously, Fischbach served as managing director at Residential Capital LLC, where he managed investor relations strategy.

He replaces Guido van der Ven, who left the company in August to start a consulting business in the student loan space, called Education Investment Group.

Sallie Mae said it will be a client of the new company, which was also launched by two other former Sallie Mae senior vice presidents.

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Apparel chain Steve and Barry’s is closing one of its three Dayton-area stores.

The bargain retailer is closing its 80,000-square-foot location at the Miami Valley Centre Mall in Piqua.

“We’re disappointed to see them leave,” said Peggy Henthorn, regional manager of the mall. “But it’s out of our control.”

Henthorn said she has not received official notice of the store’s closure, but signs were posted in the store last Friday.

No date has been set for the store’s closing. Henthorn said it may stay open until after Christmas.

Port Washington, N.Y.-based Steve and Barry’s was purchased by BHY S&B Holdings, a partnership between New York investment firms Bay Harbour Management and York Capital Management, whose investors include Steve & Barry’s co-founders Steve Shore and Barry Prevor. The company’s new owners have plans to reduce its 276 stores to about 175.

When Steve and Barry’s filed bankruptcy, Henthorn said the mall began marketing the space.

“We’d hate for it to sit empty,” she said.

Henthorn said the Piqua Steve and Barry’s was on the first list of stores to be cut, with more to be announced. The other Dayton-area locations are at Washington Park Plaza in Centerville and Upper Valley Mall in Springfield.

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More than half of the offices in the Oregon State Capitol will reopen on Wednesday as cleanup from last weekend’s fire continues.

An environmental assessment concluded that the building is safe and that many offices can reopen Wednesday morning. Officials hope to re-open the entire building on a limited basis by the end of the week.

“Smoke and water damage from the fire was extensive,” said Senate President Peter Courtney, in a statement. “The biggest concern at present is air quality and some areas will have to remain closed pending a thorough cleaning of portions of the Capitol’s ventilation system.”

State employees in offices that will remain closed are being asked to work from home.

The offices that will reopen on Wednesday include the state treasurer’s office, the House offices for the speaker and majority staffers, Senate offices for both Democrats and Republicans, the chief clerk’s office, the Senate secretary and the facility’s state police office.

Other areas opening on Wednesday include facilities services, legislative supply, the pressroom and the legislative media, counsel and fiscal offices.

The information services office in the building’s basement will be open, as will the Indian services office and the governor’s staff offices in Room 160.

Offices remaining closed include those housing staff for the secretary of state, legislative administration, financial services, employee services, committee services and capitol offices for other legislative assembly members. The Legislative Revenue Office, Information Services Development Office, visitor services, gift shop and hearing rooms will also remain closed.

Gov. Ted Kulongoski’s staff will occupy temporary offices two blocks from the Capitol building. The fire started early Saturday morning outside Kulongoski’s ceremonial office. Some parts of the capital received extensive smoke and water damage.

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Swiss economic growth unexpectedly accelerated and inflation eased, reinforcing the case for the central bank to keep interest rates unchanged.

Gross domestic product, the value of all goods and services, rose 0.4 percent from the first quarter, when it increased 0.3 percent, the State Secretariat for Economic Affairs in Bern said today. Economists expected growth to slow to 0.2 percent, the median in a Bloomberg survey of 19 forecasts shows. August inflation unexpectedly slowed to 2.9 percent from 3.1 percent.

Growth in emerging markets including India and China is fueling demand for exports like power networks and machinery while the lowest unemployment in six years is boosting Swiss spending. Exporters may see sales growth evaporate as the economies of the country's main trading partners cool. The 15-nation euro-area economy shrank in the second quarter and its manufacturing and service industries contracted in August.

“It's amazing we didn't see the same effects in Switzerland that we saw in Europe from high oil prices and slower global growth,'' said Jan Amrit Poser, chief economist at Bank Sarasin in Zurich. “There's no case for rate cuts in September. The Swiss National Bank doesn't need to act right now.''

Franc Rises

The franc gained as much 0.2 percent to 1.6061 against the euro from 1.6099 before today's figures were released and traded at 1.6094 at 10:09 a.m. in Zurich. Against the dollar, the Swiss currency rose to as high as 1.1008.

The SNB kept its key rate at a six-year high in June as it balanced risks to growth and inflation. At 2.75 percent, Switzerland's benchmark rate is the third lowest among major economies after Japan's 0.5 percent and the U.S.'s 2 percent. The SNB holds its next monetary policy meeting Sept. 18.

Investors expect Swiss interest rates to remain unchanged through the end of the year, futures trading shows. The implied rate on the 3-month Liffe contract expiring in December gained 0.1 percentage points from yesterday to 2.75 percent at 10:41 a.m. in Zurich. That compares with 3.42 percent on June 13.

Economic growth will slow more markedly in the second half of the year than it did in the first six months, SNB President Jean- Pierre Roth said in an newspaper interview last week.

Outlook Dims

Slower growth and the 27 percent drop in the cost of oil from a record $147.27 a barrel on July 11 may ease price pressures further in the coming months. Swiss leading economic indicators declined to the lowest in five years in August and a consumption indicator fell to the lowest since December 2006.

“What's worrying is that we have quite a significant slowdown in investments and a build-up of inventories,'' Poser said. “Those two things will weigh on growth going forward. We're probably in for a phase of below-potential growth.''

Investment contracted by 0.7 percent in the second quarter after growing the first three months of the year, today's report showed. Equipment purchases fell by 0.9 percent from the previous quarter while construction declined 0.3 percent.

From the second quarter of last year, the economy grew at a rate of 2.3 percent, down from 3 percent in the previous three months, today's report showed. Private spending grew 2.5 percent from a year earlier and 0.6 percent from the previous quarter.

`Bucking the Trend'

“Swiss consumers are bucking the trend,'' said Reto Huenerwadel, senior economist at UBS AG in Zurich. “Inflation hasn't impacted private consumption, but if you look at employment growth it doesn't appear to be sustainable going forward.''

Consumer prices fell 0.3 percent from July. Heating oil dropped 10.5 percent from July, carrots fell 11.1 percent and cabbage prices declines 13.3 percent.

Still, “inflation risks are far from over,'' Eoin O'Callaghan, an economist at BNP Paribas in London, said in a research note. Core inflation, excluding food, energy and seasonal products, rose 0.2 percent from the previous month when it fell 0.7 percent.

Company spending on construction slid 0.5 percent from the first quarter, when it decreased 0.3 percent, today's report showed. Imports rose 3.8 percent from the previous quarter, when they declined 3 percent. Exports grew 3.6 percent and consumption expanded by 0.7 percent.

In the year, the economy will probably grow between 1.5 percent and 2 percent after expanding 3.3 percent last year, the central bank forecasts.

“In all, the release and breakdown confirm that the Swiss economy is slowing,'' and “it is doing so in a relatively elegant way,'' O'Callaghan said.

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Flat wages, a 28 percent rise in unemployment, and a dramatic slowing of job grow have combined to make it harder for Florida workers to get by, according to a university study.

The new study, released by the Research Institute on Social and Economic Policy at Florida International University, found job growth rose just 0.5 percent last year, down from a high of 4 percent in 2005. That’s compared to a national rate of 1.1 percent.

Now that the nation’s economy is slowing, the industries that elevated Florida above the rest of the country are dragging it down.

The construction industry felt the most pain, losing 54,000 jobs, according to the report’s co-author, Bruce Nissen, a professor of labor studies at FIU.

During the boom, Florida performed better than the country overall in job growth because of hyper-accelerated growth in construction and real estate. But, the gains spurred by the real estate boom have retreated, Nissen said.

“These numbers show that Floridians have already begun to feel the effects of the slowing economy, job loss and flat wages,” he said. “This, plus the simultaneous increases in the cost of living, makes the near future look very worrisome for working Floridians.”

Worker wages were flat last year and the wage gap for minorities is growing wider.

The high cost of living particularly impacts laborers. Workers here depend heavily on cars to travel to and from work. In the last seven years, the Miami-Fort Lauderdale and Tampa Bay metropolitan areas had the second- and third-highest rates of inflation compared to other major metro areas nationwide.

One of the state’s most attractive financial features – its low tax rate – is a mirage that undercuts its growth, the report said. Floridians pay an average of 7.4 percent in state and local taxes – one of the lowest in the nation. But most of the taxes are not tax-deductible, so the tax burden on Florida residents is actually higher than it is for people outside the state.

The FIU study points to several steps needed to take to improve the lives of Floridians. It suggests Florida officials expand the state’s job sector beyond tourism and real estate, improve the education system, facilitate a more fluid relationship between educational institutions and industry, and reform the state’s tax system.

“The challenge has to be met head on, with an understanding that all the parts depend on each other,” the report stated. “An employer needs educated workers. Those workers need good teachers. Good teachers need the support of taxpayers, and taxpayers need to understand how their money is being invested.”

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GrandLuxe Rail Journeys of Evergreen has ceased operations.

The company, formerly known as American Orient Express, began offering luxury rail service late last year.

Tom Raider, chairman and owner of GrandLuxe, shut down Friday after the train returned from Tacoma, Wash., the day before. The travel website Leisuregrouptravel.com quoted a letter to clients from Rader in which he wrote, "We are financially unable to continue operations."

GrandLuxe offered 10 different four- to 12-day trips aboard a 21-car train.

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A Seattle company has made its second investment into Triangle apartments with the purchase of a student housing complex in Raleigh.

Horizon Realty Advisors paid $21 million earlier this month for the Village Green apartment complex along Lake Wheeler Road, according to Wake County land records. The complex, which offers individual leases, mostly houses students at North Carolina State University and Meredith College.

There are 156 units in the complex. The property also includes a 4,000-square-foot clubhouse.

Reed Cos., a Florida developer of student housing, was the seller for the complex, built in 2003. According to its Web site, that company owns no other apartment properties in the Triangle.

The purchase of Village Green gives Horizon three student-housing apartment complexes in Raleigh. The company also owns sister complexes Centennial Ridge and Centennial Village, with the former located off Tryon Road and the latter at the corner of Gorman Street and Avent Ferry Road.

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