TIMOTHY GEITHNER, THE ARCHITECT OF THE US BAILOUT, JOINS PRIVATE EQUITY FIRM WARBURG PINCUS

Timothy Geithner was seen as playing a vital role in helping the US bounce back from recession. Picture: AP

Former US Treasury secretary Timothy Geithner, a key player in reviving the US economy after the worst recession in decades, is joining private-equity firm Warburg Pincus.

The move marks a departure for Mr Geithner, who has spent most of his career in the public sector and was nominated to Treasury by President Barack Obama in 2009.
The former secretary plans to begin at the New York-based firm, known for its hand in company buyouts, in March, a press release by the company said.
According to the statement, Mr Geithner, 52, will serve as president and managing director "on overall firm strategy and management, investing and portfolio management, organisational and funding structure, and investor relations."
The move puts Mr Geithner in a hands-on role unlike many of the figurehead positions major government officials assume after public service.
Mr Geithner is most famous for designing and overseeing two major bailout packages worth more than $US1.5 trillion ($1.6 trillion) while he lead the Treasury through the financial crisis that began in 2008.
The moves saved major banks and the US auto industry and helped keep unemployment under 10 per cent as businesses and local governments across the country laid off millions of workers in the first months of his term.
Mr Geithner, who served one term as secretary and was replaced in January by Jack Lew, was long keen to return to New York, where he had been president of the local Federal Reserve Bank.
Warburg Pincus, created in 1966, manages more than $US35 billion ($37.4 billion) in assets among a portfolio of more than 125 companies.
"As private equity evolves and as our investing practices and funding models continue to develop, Tim's record of leadership through economic and market complexity will be of critical importance as we continue to build for the future," said Joseph Landy, co-CEO of Warburg Pincus.

http://www.news.com.au/business/timothy-geithner-the-architect-of-the-us-bailout-joins-private-equity-firm-warburg-pincus/story-e6frfm1i-1226761838069

OCCUPY WALL STREET ACTIVISTS BUY FIFTEEN MILLION OF AMERICANS' PERSONAL DEBT

Rolling Jubilee spent $400,000 to purchase debt cheaply from banks before 'abolishing' it, freeing individuals from their bills

Adam Gabbatt in New York theguardian.com, Wednesday 13 November 2013

'Our primary purpose was to spread information about the workings of this secondary debt market,' said Andrew Ross. Photograph: Spencer Platt/Getty Images

A group of Occupy Wall Street activists has bought almost $15m of Americans' personal debt over the last year as part of the Rolling Jubilee project to help people pay off their outstanding credit.

Rolling Jubilee, set up by Occupy's Strike Debt group following the street protests that swept the world in 2011, launched on 15 November 2012. The group purchases personal debt cheaply from banks before "abolishing" it, freeing individuals from their bills.

By purchasing the debt at knockdown prices the group has managed to free $14,734,569.87 of personal debt, mainly medical debt, spending only $400,000.

"We thought that the ratio would be about 20 to 1," said Andrew Ross, a member of Strike Debt and professor of social and cultural analysis at New York University. He said the team initially envisaged raising $50,000, which would have enabled it to buy $1m in debt.

"In fact we've been able to buy debt a lot more cheaply than that."

The group is able to buy debt so cheaply due to the nature of the "secondary debt market". If individuals consistently fail to pay bills from credit cards, loans, or medical insurance the bank or lender that issued the funds will eventually cut its losses by selling that debt to a third party. 

These sales occur for a fraction of the debt’s true values – typically for five cents on the dollar – and debt-buying companies then attempt to recoup the debt from the individual debtor and thus make a profit.

The Rolling Jubilee project was mostly conceived as a "public education project", Ross said.
"We're under no illusions that $15m is just a tiny drop in the secondary debt market. It doesn't make a dent in the amount of debt.

"Our purpose in doing this, aside from helping some people along the way – there's certainly many, many people who are very thankful that their debts are abolished – our primary purpose was to spread information about the workings of this secondary debt market."

The group has focussed on buying medical debt, and has acquired the $14.7m in three separate purchases, most recently purchasing the value of $13.5m on medical debt owed by 2,693 people across 45 states and Puerto Rico, Rolling Jubilee said in a press release.

“No one should have to go into debt or bankruptcy because they get sick,” said Laura Hanna, an organiser with the group. Hanna said 62% of all personal bankruptcies have medical debt as a contributing factor.

Due to the nature of the debt market, the group is unable to specify whose debt it purchases, taking on the amounts before it discovers individuals’ identities. When Rolling Jubilee has bought the debt they send notes to their debtors “telling them they’re off the hook”, Ross said.

Ross, whose book, Creditocracy and the case for debt refusal, outlines the problems of the debt industry and calls for a “debtors’ movement” to resist credit, said the group had received letters from people whose debt they had lifted thanking them for the service. But the real victory was in spreading knowledge of the nature of the debt industry, he said.

"Very few people know how cheaply their debts have been bought by collectors. It changes the psychology of the debtor, knowing this.
“So when you get called up by the debt collector, and you're being asked to pay the full amount of your debt, you now know that the debt collector has bought your debt very, very cheaply.  

As cheaply as we bought it. And that gives you moral ammunition to have a different conversation with the debt collector."

http://www.theguardian.com/world/2013/nov/12/occupy-wall-street-activists-15m-personal-debt

CBA MAKES $2.1 BILLION IN THREE MONTHS – THAT IS 700 MILLION A MONTH, EVERY MONTH

AAP
The Commonwealth Bank of Australian made a $2.1 billion cash profit in the three months to the end of September after lifting revenues and keeping costs under control.
The result follows a cash profit of $7.8 billion for the 12 months to June 30 this year.
CBA on Wednesday also reported an unaudited $2.1 billion net profit for the quarter.
The Commonwealth said a combination of solid revenue growth and cost discipline contributed to the quarterly result.
But the bank's group net interest margin fell during the quarter as a result of the lower interest rate environment.
Lower interest rates helped spur growth in business activity compared to a year ago, though total credit growth was modest due to higher levels of loan repayments.
The Commonwealth said household deposit growth was strong during the quarter while stock market gains had provided a boost for the bank's wealth management business.
Meanwhile, insurance premiums increased two per cent during the quarter.
ASB, the bank's New Zealand subsidiary, recorded solid growth in customer deposits and advances thanks to an improving economy, although lending margins remained under pressure.

http://au.finance.yahoo.com/news/cba-makes-2-1b-three-215909853.html