Nicolas Sarkozy Faces Charges Over Corruption

“Preliminary charges have been filed against Nicolas Sarkozy over allegations he took financial advantage of an elderly L’Oreal heiress.

The move means the former French president is under formal investigation, accused of accepting envelopes stuffed with cash from Liliane Bettencourt to illegally finance his 2007 election campaign.

The 90-year-old was declared in a state of dementia in 2006 and was placed under the guardianship of her family in 2011.

The preliminary charges were issued after Mr Sarkozy was questioned for several hours in a Bordeaux courthouse, according to the prosecutor’s office.

A statement said he had been placed under investigation “for taking advantage of a vulnerable person in February 2007 and during 2007 to the detriment of Liliane Bettencourt”.

Under French law, preliminary charges mean the investigating magistrate has reason to believe wrongdoing was committed, but allows more time to investigate. The charges may later be dropped or could lead to a trial.

Mr Sarkozy’s lawyer Thierry Herzog criticised the decision as “legally incoherent and unfair”.

Earlier, the former president was unexpectedly summoned for a face-to-face encounter with Ms Bettencourt’s ex-butler Pascal Bonnefoy over the claims….”

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“Step aside, Tony Soprano: Big banks will now lend money at 300 percent interestwithout threatening to break a leg.

Then again, the payday loans some big banks are offering can have other ill effects, such as financial ruin, according to a new study by the Center for Responsible Lending. Even as public anxiety grows about the dangers of payday lending, with 15 states recently banning the practice, many big banks are offering the service to their customers.

“Despite federal banking regulators’ recognition of the abuses of payday lending and aggressive action blocking previous bank partnerships with payday lenders, a few large banks have begun offering payday loans directly through checking accounts,” the study says. Large banks offering the service include Wells Fargo, U.S. Bank, Regions Bank and Fifth Third Bank.

The average annual percentage rate on a bank payday loan is 225 to 300 percent, the study says. Banks that offer payday loans extract payments automatically from the borrowers’ checking accounts on the next pay cycle. In some cases, that withdrawal cleans out a borrower’s checking account, leading to bounced checks. According to the study, users of paycheck advances are twice as likely to overdraw their bank accounts, leading to even more fees for the banks. And that’s just the start of the potential problems.

“Research has shown that payday lending often leads to negative financial outcomes for borrowers,” the study says. “These include difficulty paying other bills, difficulty staying in their home or apartment, trouble obtaining health care, increased risk of credit card default, loss of checking accounts, and bankruptcy.”

The elderly, already financially vulnerable and short on retirement savings, are making increasing use of these loans. According to the study, more than a quarter of bank payday loan borrowers are on Social Security.

Wells Fargo spokeswoman Richele Messick said the bank has been offering a payday loan service it calls “Direct Deposit Advance” since 1994. Available only to Wells Fargo customers, this loan has a set fee of $7.50 per $100, regardless of the length of the loan, which Messick said compares to the payday loan industry standard of about $17 per $100.

“It is an expensive form of credit, and we’re very clear with our customers that it is an expensive form of credit and not to be used as a long-term solution,” Messick said. “We have policies in place to make sure customers don’t use the service in the long term.”

Wells Fargo will not clean out a borrower’s account when taking money to pay itself back for payday loans, Messick said. The bank makes sure the customer gets to keep at least $100 from each paycheck, and if customers use the service for six months in a row, Wells Fargo will cut them off from more paycheck advances for a bit — what the CRL study calls a “cooling-off” period….”

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“Your sweet tooth could be deadly: researchers have found that 25,000 people died from drinking sugary beverages in the US in 2010 – and 180,000 have died worldwide. The data presents new evidence on the public health hazard triggered by artificial drinks.

Nearly half of all Americans, 48 percent, last year were drinking at least one glass of soda per day, Gallup reported in July. Among soda-drinkers, the average daily amount is 2.6 glasses. With such a high rate of soda consumption, Americans should be worried about new data that Harvard researchers have discovered about the danger of consuming sugary beverages….”

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“In what promises to be a major public relations headache for Maine’s Department of Corrections, local media have released raw footage of a restrained inmate being subdued with pepper spray and then left unattended for over twenty minutes.

The story and video first appeared in this week’s Maine Sunday Telegram, and were further reported on by the Portland Press Herald, with a shorter clip accompanied by some two hours of additional video. The raw footage depicts Windham Correctional Center inmate Paul Schlosser being bound to a restraint chair, flanked by five prison officials – three of them in riot gear – protesting that guards “watch his arm,” and subsequently being pepper sprayed in the face at close range by Captain Shawn Welch….”

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“College graduates are defaulting on growing amounts of the staggering $1 trillion in student loans in the United States, and some universities are suing to get their money back.

Well-known schools among those filing suit for nonpayment include Yale, the University of Pennsylvania and George Washington University, NBC News reported.

College students are defaulting on nearly $1 billion in federal student loans earmarked for the poor, which could jeopardize the revolving Perkins loan fund intended for those with extraordinary financial hardship, according to Bloomberg.

Unlike most forms of debt, student loans cannot be forgiven even by declaring bankruptcy. Colleges are obligated to recover the money on behalf of taxpayers, according to Bloomberg.

“With $80,000 worth of debt, even if you get a job that pays $60,000, which is about the average for a lot of college-level jobs, you’re still below the water and the potential for you to default is much higher,” Jonathan Robe, research fellow for the Center for College Affordability and Productivity, told Fox Business Network.

“I think that’s what’s happening here — the students feel like they just flat out don’t have the money.”

At public universities, enrollment declined slightly in 2012 to 11.5 million students, but state and local support per student declined 9 percent to $5,896 per student, the lowest level in 25 years, according to the State Higher Education Executive Officers Association.

Even as student loans are going bad at a growing rate, the demand for student loan securities by investors remains high….”

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“Although eurozone countries have reduced their deficits and decreased their borrowing costs, people in those countries have yet to see their lives improve, writes Pimco CEO and co-CIO Mohamed El-Erian in a blog for The Huffington Post.

In fact, economic conditions for many eurozone residents continue to deteriorate.

And the longer their lives remain mired in hardship, the harder it will be to turn things around, he warns in a guest blog for the Huffington Post.

“With the exception of a few countries — particularly in northern Europe — the old continent is struggling; and the most vulnerable segments of the population are at great risk,” El-Erian says.

He says he gained insights from a taxi driver while on a business trip in Spain. Many of the taxi driver’s friends and family are unemployed, and they believe their prospects are dim while their savings continues to dwindle. In addition, they have little faith in their government’s ability to help them.

“For the average Spaniard,” he states, “the recent improvements in financial indicators have not materially boosted living conditions.”

As for the potential threat to bank deposits following the proposed, and rejected, levy on Cypriot bank deposits? That’s not a worry. Many Europeans like the taxi driver don’t have money to put in a bank.

But the challenges are not limited to lower and middle classes, El-Erian writes. High-level professionals also feel pressure and uncertainty. “People we know well are now unemployed, and many are increasingly unable to meet their mortgages and rents,” one professional told him.

“They too,” El-Erian notes, “are now sensing little relief from the improvements in the financial indicators.” …”

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“Tiffany TIF -2.47% & Co.’s fiscal-fourth-quarter earnings rose slightly from a prior year weighed down by headquarters-relocation costs.

Tiffany on Friday said it expects fiscal-first-quarter adjusted earnings to decline about 15% to 20% because of pressure on margins and higher marketing costs, while analysts were looking for flat profit. The company predicts earnings growth in all subsequent quarters.

For the quarter ended Jan. 31, Tiffany reported a profit of $179.6 million, or $1.40 a share, up from $178.4 million, or $1.39, a year earlier. Last year’s per-share earnings were $3.60 excluding costs to relocate Tiffany’s New York headquarters staff.

The company’s November projection was for per-share earnings of $1.35 to $1.55.

Sales increased 4.1% to $1.24 billion, short of analysts’ expectations for $1.25 billion. Excluding the effect of foreign-currency translation, sales rose 5%. Same-store sales were flat with the prior year….”

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“Health insurers are privately warning brokers that premiums for many individuals and small businesses could increase sharply next year because of the health-care overhaul law, with the nation’s biggest firm projecting that rates could more than double for some consumers buying their own plans.

The projections, made in sessions with brokers and agents, provide some of the most concrete evidence yet of how much insurance companies might increase prices when major provisions of the law kick in next year—a subject of rigorous debate.

The projected increases are at odds with what the Obama Administration says consumers should be expecting overall in terms of cost. The Department of Health and Human Services says that the law will “make health-care coverage more affordable and accessible,” pointing to a 2009 analysis by the Congressional Budget Office that says average individual premiums, on an apples-to-apples basis, would be lower.

The gulf between the pricing talk from some insurers and the government projections suggests how complicated the law’s effects will be. Carriers will be filing proposed prices with regulators over the next few months.

Part of the murkiness stems from the role of government subsidies. Federal subsidies under the health law will help lower-income consumers defray costs, but they are generally not included in insurers’ premium projections. Many consumers will be getting more generous plans because of new requirements in the law. The effects of the law will vary widely, and insurers and other analysts agree that some consumers and small businesses will likely see premiums go down….”

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“People usually say they go into government to perform public service. If they came from Wall Street, however, their former employers often provide another service.

Banks, including JPMorgan Chase,Goldman Sachs and Morgan Stanley, all have provisions that allow acceleration of payments owed to senior executives if they take government jobs, a new study finds.

Such a benefit was highlighted recently during the confirmation hearing for Jacob J. Lew as Treasury secretary. His previous employer, Citigroup, had guaranteed him preferential financial treatment if he were to leave to take a job in the government. When Mr. Lew left Citigroup he held stock that he could not immediately cash worth as much as $500,000, according to a government filing.

“These companies seem to be giving a special deal to executives who become government officials,” says the study, to be released Thursday by the Project on Government Oversight. “In exchange, the companies may end up with friends in high places who understand their business, sympathize with it, and can craft policies in its favor.”

The study looked at the compensation policies of several financial institutions….”

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“For the first time in over six months, the supply of homes for sale is beginning to rise.

While inventories are still down nearly 20 percent from a year ago, they did rise more than the seasonal norm in February from January, according to a new report from the National Association of Realtors.

The raw number of for-sale listings rose 10 percent month-to-month, and when seasonally adjusted, they were up 2.6 percent, the biggest jump in over two years.

“Tight inventory has been a critical issue for the housing market: The limited supply of homes has fueled bidding wars and has meant that buyers have little to choose from and agents have little to sell,” said Trulia.com’s Jed Kolko. “Inventory has been tightening because construction levels are still low, adding little new housing stock, and homeowners are waiting to sell until they have more positive equity. This inventory spiral been especially severe since prices bottomed.” …”

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“From Citi‘s Steven Englander, some big-picture thoughts about what this crazy Cyprus weak meant.

Basically, the real fallout comes next time.

In any future crisis depositors have an incentive to shift their assets at an early stage of the crisis and any investor with exposure has an incentive to liquidate any exposure as soon as possible. This may speed up the time in which such crises occur and also force policymakers to make their move earlier in a crisis. The power of the state in being able to impose a levy literally overnight makes it harder for them to convince residents and investors that they won’t do so if push comes to shove….”

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“Nike Inc. (NKE), the world’s largest sporting-goods company, gained after easing investors’ concerns that its profitability and business in China were weakening.

Price increases enacted last year finally paid off for the Beaverton, Oregon-based company as its gross margin widened for the first time in nine quarters. Meanwhile, the company reported that orders for the Nike brand in China, excluding changes in currency exchange rates, gained after sales there sank 10 percent last quarter for a second straight decline.

The gain in gross margin came in the fiscal third quarter ended Feb. 28, when earnings from continuing operations rose 16 percent to $662 million, or 73 cents a share, from $569 million, or 61 cents, a year earlier, Nike said yesterday in a statement. Analysts projected 67 cents a share, the average of 20 estimates compiled by Bloomberg.

“Nike is firing on all cylinders right now,” said Brian Yarbrough, an analyst for Edward Jones & Co. in St. Louis, who has a hold rating on the shares. “They’ve been talking about, for several years now, expecting gross margins to eventually turn. And now it looks like that has played out.”

Nike rose 8.2 percent to $58.02 at 7:57 a.m. in New York. The shares had gained 3.9 percent this year through the end of yesterday’s regular trading, compared with an increase of 8.4 percent in the Standard & Poor’s 500 Index.

The company gave an initial forecast for fiscal 2014 that was in line with analysts’ estimates. Sales will increase in the mid-single-digit percentage range, and adjusted earnings per share will advance a mid-teen percentage. Analysts projected gains on average of 7 percent for revenue and 14 percent for earnings per share.

Future Orders…”

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“Representative Paul Ryan, chairman of the House Budget Committee, declared this month that the U.S. national debt “is hurting our economy today.” It’s an idea embraced by almost every Republican and even some Democrats.

Economic data — on jobs, housing and investment — don’t support that claim. And economists across the political spectrum dispute the best-known study of the subject, by Carmen Reinhartand Kenneth Rogoff, which found that nations with debt loads greater than 90 percent of their economies grow more slowly.

Three years after a government spending surge in response to the recession drove the U.S. past that red line — the nation’s $16.7 trillion total debt is now 106 percent of the $15.8 trillion economy — key indicators reflect gathering strength. Businesses have increased spending by 27 percent since the end of 2009. The annual rate of new home construction jumped about 60 percent. Employers have created almost 6 million jobs.

And with borrowing costs near record lows, the cost of paying off the debt is lower now than in the year Ronald Reagan left the White House, as a percentage of the economy.

“The argument that heavy debt loads slow economic growth doesn’t hold a lot of water,” says Guy LeBas, chief fixed- income strategist at Janney Montgomery Scott LLC in Philadelphia who oversees $12 billion. “It suffers from a mix-up of cause and effect: When weak economic conditions arise, it tends to encourage deficit spending, which is what has led to more U.S. debt being issued, and not the other way around.”

Tipping Point…”

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“West Texas Intermediate crude rose to narrow its discount versus Brent to the lowest level in eight months. The European benchmark was headed for a second weekly decline.

WTI advanced as much as 0.6 percent, paring its first weekly decline in three, as the euro strengthened against the dollar amid speculation the banking crisis in Cyprus will be contained. Cypriot lawmakers start a debate today on ways to unlock bailout funds to avoid a financial collapse. Libya shut two oil fields because of fighting, according to a report yesterday from the state LANA news agency.

“We do not think that risk appetite has necessarily deteriorated,” said Harry Tchilinguirian, head of commodity- markets strategy at BNP Paribas SA in London, who forecasts that Brent will average $114 a barrel this quarter. “Once the Cyprus issue is resolved and ultimately it will have to be resolved,” crude is likely to strengthen, he said.

WTI for May delivery gained as much as 57 cents to $93.02 a barrel in electronic trading on theNew York Mercantile Exchange, and was at $92.99 at 11:13 a.m. London time. The volume of all futures traded was 49 percent below the 100-day average. The contract slid $1.05 to close at $92.45 yesterday. Prices are down 0.5 percent this week.

Brent for May settlement was at $107.63 a barrel, up 16 cents, on the London-based ICE Futures Europe exchange. The volume of all futures traded was 2 percent above the 100-day average for the time of day. The grade has lost 2 percent this year. The European benchmark’s premium to WTI fell as low as $14.57, the narrowest since July.

Brent Bottom…”

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“BP Plc (BP/) will buy back $8 billion of shares from investors after completing the sale of 50 percent of Russian oil producer TNK-BP.

BP’s first buyback since 2008 will return the original amount invested in the venture 10 years ago, the London-based company said in a statement today. The sum is twice as much as Chief Financial Officer Brian Gilvary signaled last year would be enough to offset earnings per share lost from selling the stake in Russia’s third-largest producer.

The deal to sell out of TNK-BP gives Chief Executive Officer Bob Dudley a fresh start in Russia after a fractious 10- year partnership with a group of billionaires. BP shares have slumped since the 2010 Gulf of Mexico oil spill and the company faces fines after a trial in New Orleans.

“This shows confidence for BP,” said Iain Reid, an analyst at Jefferies & Co. in London. “It makes them more shareholder-friendly, but I don’t think they’ll recover their luster until the Macondo trial is over.”

BP rose as much as 2.8 percent and traded at 461 pence as of 8:01 a.m. in London.

After selling its TNK-BP stake to OAO Rosneft (ROSN), BP will become the second-biggest investor in Russia’s largest oil company with a 19.8 percent shareholding. Following the buyback, which will take eight to 12 months to complete, BP will retain $4.5 billion in cash from the deal….”

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“Euro-area finance chiefs, pressuring Cyprus to shrink its banking system as the condition for a bailout, are reviving demands they jettisoned last week as too extreme, four European officials said.

Finance ministers for the 17 euro countries are considering a plan to shutter the two biggest banks in Cyprus and freeze the assets of uninsured depositors, said the four officials, who asked not to be named because the talks are ongoing.

Cyprus Popular Bank Plc  and the Bank of Cyprus Plcwould be split to create a so-called bad bank, one of the officials said. Insured deposits — below the European Union ceiling of 100,000 euros ($129,000) — would go into a so-called good bank and not sustain any losses, while uninsured deposits would go into the bad bank and be frozen until assets could be sold, said the four officials.

Losses to unsecured creditors, including uninsured depositors, could reach 40 percent under the plan, which has support from the International Monetary Fund and the European Central Bank. The proposal, a version of which was rejected last week, is considered a better option than taxing insured deposits or allowing Cypriot banks to collapse in a disorderly fashion if they lose access to ECB aid, the officials said.

‘Serious’ Situation…”

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“Russia spurned Cyprus’s offers of assets for a bailout as the island nation’s lawmakers begin debate on legislation to avert a financial collapse.

“I think we aren’t able to get the support that we wanted to get,” Cypriot Finance Minister Michael Sarris said in an interview after checking out of the Lotte Hotel in Moscow. “But we must go back home because things are getting serious.”

Cypriot lawmakers begin debating legislation today to prevent a financial meltdown as the European Central Bank threatens to cut off a lifeline for the country’s banks in three days unless a bailout agreement with the European Union is reached. Russian companies and individuals may have about $31 billion of deposits in Cyprus, which in turn is the biggest source of foreign direct investment in Russia.

“The only thing that Cyprus could hope for is Gazprom buying some reserves from them,” Vladimir Kolychev, head of research at Societe Generale SA’s Rosbank (ROSB) unit in Moscow, said by phone. “It’s not clear what these gas reserves are worth, and apparently Gazprom wasn’t particularly interested.”

Russia has ended talks with Cyprus and will decide on participating in restructuring debt after the so-called troika overseeing euro-area bailouts makes its decision, Finance Minister Anton Siluanov told reporters today. The troika comprises officials from the European Commission, ECB andInternational Monetary Fund.

Door Open…”

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