Archive for November, 2009

Will new foreclosure program help?

Foreclosures in Georgia have reached record levels this year as unemployment has climbed above 10 percent.

Today, the Obama administration announced that it will expand a program aimed at helping people remain in their homes, the Associated Press reports.

The goal is to increase the rate at which troubled home loans are converted into new loans with lower monthly payments, Treasury spokeswoman Meg Reilly said.

The new effort includes increased pressure on mortgage companies to accelerate loan modifications by highlighting firms that are lagging in that area, AP reports.

The Treasury also will wait until the loan modifications are permanent before paying cash incentives to mortgage companies that lower loan payments. Under a $75 billion Treasury program, companies that agree to lower payments for troubled borrowers collect $1,000 initially from the government for each loan, followed by $1,000 annually for up to three years, AP reports.

Do you think this new initiative will …

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Power Breakfast: Georgia bank failures prove costly, holiday shopping, Dubai crisis, health reform

It’s not surprising. AJC staffer Paul Donsky reports that the current wave of Georgia bank failures is proving much more costly than the Savings & Loan crisis of the late 1980s and early 1990s.

Back then, he writes, the average failure cost the Federal Deposit Insurance Fund about 10 percent of an institution’s total assets. The figure now: 32 percent.

A similar trend is taking place nationwide, putting a severe strain on the FDIC’s dwindling insurance fund, Donsky reports.

Why the huge jump in the cost of failures?

Experts say today’s problem banks are less diversified, took more risks and are dealing with a worse economy compared with financial institutions a generation ago.

Also in the AJC:

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Supply chain becomes key to efficiency

Supply chain. Logistics. I know, they’re words that sound arcane or boring or both.

Craig Menear

Craig Menear

But before you roll your eyes and move on to the next article, please realize how important they’re becoming in the business world.

That was made clear to me recently by three unrelated events.

First, when I was interviewing Dr. Helene Gayle, chief of CARE, I did not expect to get into a discussion about logistics. But she talked about the importance of developing an efficient supply-chain system so CARE can get disaster relief to calamity-stricken areas as quickly as possible.

What’s more, the Metro Atlanta Chamber of Commerce is targeting logistics as a key growth engine. That’s partially because of the local expertise of companies like UPS, Home Depot and Manhattan Associates, and our position as an airport, rail and trucking hub.

Finally, my 20-year-old son, a junior in college, is taking a required supply-chain course this semester. He can’t get a business degree …

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Power Breakfast: Airport hassles, local bank woes, job losses, health care, deficit

This will be the only Power Breakfast this week, because I’m taking a vacation.

But please return Tuesday morning for my weekly column. This one is with a Home Depot exec who discusses an important business issue.

Thanks and see you next Monday when regular Power Breakfasts will resume. Have a good week!

In the AJC:

In other media:

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Credit card Catch-22

For months, consumers have been trying to shed credit card debt and right their balance sheets.

And for months, credit card issuers have been raising interest rates, reducing credit limits, closing accounts and taking other measures in advance of new legislation that goes into effect early next year.

Now comes Citibank, which is enticing credit card holders to avoid the bank’s rate hikes by — of all things — meeting a monthly spending requirement, the Associated Press reports.

Those who meet the spending minimum — in some cases $750 a month — will be able to get a rebate on their total interest charges for that month, AP reports. The rebate could cover some or all of the interest rate hike.

Does this sound like drinking your way to sobriety?

Citi raises rates, then tries to get you to spend more, so it can make more money and you can avoid the rate hike.

Is this a good way to deal with consumers in this economy?

For instant updates, follow me on Twitter.

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Power Breakfast: Fulton proposes service cuts and furloughs, jobless rate, airport glitch, Georgia Power, health reform

The private economy went into the tank first. Now, the public economy is dealing with the fallout.

The latest victim is Fulton County. It will move forward with a 2010 budget that includes $86 million in direct service cuts and could result in layoffs for hundreds of county employees and tax increases, AJC reporter D.L. Bennett writes.

Any employee who survives the layoffs, which will be determined over the next 10 weeks, would be forced to take 10 furlough days under an option approved Thursday. Fulton would convert all of its holidays to unpaid time off.

Commissioners were quick to point out the series of votes Thursday approving that option doesn’t set anything in stone, Bennett writes. It merely sets direction for staff who must now recommend specific cuts.

Next month, commissioners would decide on those recommendations. A final budget adoption won’t happen until late January.

Also in the AJC:

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Power Breakfast: Georgia job losses to continue, Sony Ericsson move, flood loan deadline, FAA, AT&T vs. Verizon

There are three key issues for the economy right now: Jobs, Jobs and Jobs!

The painful flow of job cuts in Georgia will slow in coming months but continue through 2010, setting up a third straight year of losses, according to a new forecast reported by AJC staffer Michael Kanell.

The state’s job losses next year are estimated at 60,600, down  from an estimated 214,700 lost in 2009, said Rajeev Dhawan, director of the Georgia State Economic Forecasting Center at the center’s quarterly forecasting conference.

Job growth will resume in 2011, with payrolls expanding by 67,100 positions, Kanell reports.

Many previous recessions were followed by strong recoveries, with the sharp drop and bounce-back forming a ‘V.’ This time, Dhawan said, it will look more like the Nike “swoosh,” with a steep drop and shallow recovery.

“It may be 2012 or 2013 before we get back to where we were,” he said.

Also in the AJC:

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Why is Ford on such a roll?

Ford did not need a federal bailout like GM and Chrysler did and it has been posting considerably better financial results.

Now comes word that the 2010 Ford Fusion was named Motor Trend magazine’s car of the year, beating out the Toyota Prius, BMW 7-Series, Chevrolet Camaro and others in the closely watched competition, Associated Press reports.

It was yet another accolade for Ford Motor Co.’s midsize sedan, which got high reliability scores in the most recent rankings from Consumer Reports and was the top-selling car made by a Detroit automaker through October.

What’s more, Ford, Subaru and Volkswagen lead the insurance industry’s annual list of the safest new vehicles, according to a closely watched assessment used by car companies to lure safety-conscious consumers to showrooms, AP reports.

Why has Ford been doing so well? Leadership? Innovation? Marketing? Execution?

Does its recent string of successes influence your buying decision?

For instant updates, follow me …

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Power Breakfast: Bank leaders suspended, jobless benefits, Home Depot performance, Delta offer to JAL

In another fallout from the banking crisis, AJC reporter Paul Donsky writes that troubled Appalachian Community Bank in Ellijay has placed its CEO and two other top executives on administrative leave pending an internal review into possible violations of bank policy.

Officials at Appalachian, one of the state’s largest community banks, said the review involves foreclosed property, but declined to provide more details.

They said Tuesday the review so far has turned up some “compliance issues,” but nothing that would harm the safety and soundness of the bank, Donsky writes.

The executives –- CEO Tracy Newton, chief credit officer Adam Teague and bank-owned property officer Rusty Beamon — were suspended on Nov. 2.

The investigation is being overseen by the bank’s board of directors. On Tuesday, the banks said the board had hired veteran Georgia banker Danny Jett as interim chief operating officer, Donsky writes.

Also in the AJC:

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Unlike many companies, Chick-fil-A is ready for succession

Truett and Dan Cathy

Truett and Dan Cathy

Note to readers: Henry Unger wrote this column in 2009.

Companies big and small don’t do succession well.

“The CEO succession process is broken in North America and is no better in many other parts of the world,” author Ram Charan wrote in Harvard Business Review.

Locally, you only have to look to Coke and Home Depot to see how two of our most important companies failed to get it right when they were replacing legendary leaders several years ago. Thankfully, they learned from their mistakes and moved on to better leaders.

It’s no picnic at smaller family-owned firms, either. The reasons are many, including ego and the loss of talented people who bolt after they lose the CEO horse race to another heavy hitter.

I decided to see if Truett and Dan Cathy at Atlanta-based Chick-fil-A had any answers. They run sort of a hybrid company — family-owned, but larger than most with $3 billion in revenue. Arguably, they straddle both parts of the business …

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