The Indian Panorama

Tag: Banking

  • Banking Bill paves way for new banks, foreign investment

    Banking Bill paves way for new banks, foreign investment

    NEW DELHI (TIP): The government on Tuesday cleared the decks for the Reserve Bank of India ( RBI) to initiate the process to issue new banking licences and widened the window for infusion of capital into the banking sector. The Lok Sabha cleared the Banking Laws (Amendment) Bill, 2011, after Finance Minister P Chidambaram agreed to drop the contentious proposal on allowing banks to do futures trading. He also clarified status quo would be maintained on the jurisdictions of RBI and the Competition Commission of India ( CCI) in the banking sector. “Since it is important that the Bill is passed, I am dropping the controversial clauses.” While the central bank would regulate the banking sector, the competition watchdog would look at anticompetitive practices, Chidambaram said.

    Most provisions in the Bill are to strengthen RBI. In Parliamentary democracy, give and take was required and rest of the Bill was important as RBI was awaiting more powers, the finance minister added. Changes to the Bill would pave the way for RBI to issue new bank licences. The central bank had been insisting the enabling legislation be put in place before applications were invited for new bank licences. As the Bill has provisions to increase investors’ voting rights in private banks to 26 per cent from the current 10 per cent, it is expected to bring in more foreign investment in the banking sector. In case of public sector banks, voting rights have been enhanced from one per cent to 10 per cent.

    The Bill was passed by voice vote after the amendments proposed by the Left parties were rejected by the House. The Bill would now be taken up in the Rajya Sabha. The insurance Bill,which seeks to raise the cap on foreign direct investment in insurance firms to 49 per cent from the present 26 per cent,would not be taken up for consideration in the ongoing session of Parliament, Chidambaram told reporters after the passage of the Banking Bill. Earlier, during the discussion on the Banking Bill, he highlighted the need for consolidation in the banking sector so that India could have two- three large public sector banks

  • Citi CEO Vikram Pandit Steps Down

    Citi CEO Vikram Pandit Steps Down

    NEW YORK (TIP): In a surprise move, Citigroup’s Indian American chief executive Vikram Pandit stepped down Tuesday, October 16, ending his tumultuous five-year reign atop the banking giant that he had nursed to recovery through the financial crisis. The move came just one day after Citigroup wowed Wall Street with solid third-quarter earnings. Citigroup’s President and COO John Havens also resigned. Mr. Pandit, 55 years old, departed following a clash with the board over strategy and performance, according to senior bank executives and advisers. Citigroup, the nation’s third-largest bank by assets, named Citigroup veteran Michael Corbat, 52, as Mr. Pandit’s successor. Michael Corbat headed the bank’s operations in Europe, the Middle East, and Africa. “Mike is the right person to tackle the difficult challenges ahead, with a 29-year record of achievement and leadership at this company,” said Pandit in a company statement. “Citigroup is well-positioned for continued profitability and growth, having refocused the franchise on the basics of banking.”

  • NY’s Twin Silver Diwali Events

    NY’s Twin Silver Diwali Events

    Hours before the Diwali Mela, there was a pre-Diwali dinner and Awards Ceremony hosted by AIA at the Pierre hotel, a first for the association. This evening was for approximately 200 people, including corporate heads of sponsoring companies, names, etc. This was a “special thank you, celebrating those who support both the Indian- American community, and the exposure of the culture,” said Ranju Batra AIA President.

    “I especially want to thank our sponsors. State Bank of India for the Fireworks, Star Plus TV for Grand Television Media Sponsor, Bank of Baroda for “Kids Fun Zone, India Tourism, Bank of India and Air India for Platinum Sponsor, Toyota, McDonald’s, New York Life who had major presence at the Diwali, wells Fargo for support. I also would like to thank our media sponsors: Rajeev Bhambri, HR Shah, Dr. Visanath, Kamlesh Mehta, Dr. Sudhir Parikh, Penny Sandhu, Sunil Hali, Prof. Indrajit Saluja, and Sudhir Vaishnav to name a few. Lastly, I am grateful to my Executive Committee and my family.” said Ranju Batra. Three rare and special awards were issued; and three special Flags flown on Capital Hill dome.

    A “Silver Diwali Bright Light Award” were bestowed upon three members of congress: Eliot L. Engel, Carolyn B. Maloney and Gregory W. Meeks, with the names of both ambassadors inscribed upon each award. In addition, Cong. Maloney presented 3 American flags flown on the Capitol Hill Dome in honor of India’s Amb. Hardeep Singh Puri, Pakistan’s Amb. Abdullah Hussain Haroon and United States’ Ravi Batra, remarking that Amb. Puri representing India, Amb Haroon representing Pakistan, and attorney Ravi Batra representing the United States, have “made the world safer with their mutual respect and affection.” Amb. Puri called Amb. Haroon “a very dear friend, who wins a gold medal as an ambassador for all the respect and friends he has earned for Pakistan,” and acknowledged Ravi as “the missing link between the two of them.” Amb. Haroon regaled the audience with the history of Diwali and its traditions, that his mother was born on Diwali, and that

    India and Pakistan had to get closer and start to disarm the border between them. Ravi said “these two ambassadors had enhanced the peace-trajectory of 1.5 billion people of the Sub-Continent with willing governments.” “Cong. Maloney has given wings to my pet project – issuance of a Diwali Stamp – by issuance of a Congressional letter in support of the Diwali Stamp. Now, please call your member of Congress and have them sign the Maloney Diwali Stamp Letter” said AIA-NY president Ranju Batra. Aside from the dignitaries and elected officials present, there were leaders from society, banking, media, and noted author Vikram Seth. “This gathering speaks to the actual triumph of “good” over “evil,” and “light” over “darkness.” It even speaks to the power of “goodness” and “mutual respect” said Ranju Batra.

    The program started with justices of the New York Supreme Court leading every American in the audience in a pledge of allegiance to the United States. This was followed by welcome remarks by Rajeev Bhambri, COO of India Abroad, presidential remarks by Ranju Batra, and remarks by elected officials. Senator Ruth Hassell-Thompson spoke
    of her grandson wanting to attend Diwali celebration and Mt. Vernon Mayor Ernie Davis spoke of culture and achievement. NYC council member Dan Halloran celebrated the community’s hard work and achievements. Also presentwere India’s Consul General Prabhu Dayal, India’s Secretary in GOI P.K. Misra and Manjeev S. Puri, India’s Deputy Permanent Representative to the UN. During dinner, the twin keynote speeches were given by Amb. Puri and Amb. Haroon. Bollyarts provided spellbinding dance performances. Sudhir Vaishnav was slated to give the vote of thanks. Traditional boxes of burfi were given to all
    attendees.

  • FIA Needs to Show Leadership

    FIA Needs to Show Leadership

    The Indian American community is in transition today. Never before we were so influential in academics and businesses in USA than we are today. A considerable number of Indian American professionals are making huge contribution in financial, cultural, commercial, banking and small businesses around the country whose role has been well appreciated in the highest quarters of the country.

    Yet Indian American community lacks a strong voice. We are often discriminated against because of color of our skin or our thick accent of English language. When we face injustice in our daily life we look for support which is non-existence. We don’t enjoy a visible profile in the mainstream America.

    I have been very concerned about the state of our community. We celebrate Indian festivals with pomp and show. But we don’t celebrate our culture as Indian people. We celebrate as Gujarati, Punjabi, Bengali, Telugu, Tamil and so on. Where is our Indianness in our social behaviors? Do we need one? The answer is yes!

    Not that we Indians are less patriotic than any other people in the world. History tells us that we quickly get united in times of crisis. But we fail to demonstrate it in front of others. Why?

    In 2011, I raised all the above questions during an informal meeting with my friends. I am fortunate to have friends who represent the mosaic of India. They belong to all regions of our native land. We agreed that there was a need to launch a movement for demonstrating our Indianness. We quickly approached various cultural and social groups in different parts of New Jersey and organized an interesting event in August 2011 to celebrate India’s Independence Day. The event attracted hundreds of people representing all sections of the society. They made the event a great success. People met and greeted each other with love and affection. There was sheer joy in the atmosphere. No one ever thought of their regional affiliation on that day. We were all Indians.

    Encouraged by the success of our Independence Day celebration we, the functionaries of Indian Congress Party, USA, decided to sideline our political affiliation and work for unity in the community. With this vision in mind myself and my associates got into action to organize a grand Gandhi Jayanti celebration on October 2, 2011. We invited young kids from our community to reflect on their knowledge of Mahatma Gandhi. We used the opportunity to familiarize our younger generation with our history of illustrious freedom struggle which was fought by all under the leadership of Mahatma Gandhi. I bet there is no Indian who considers the Mahatma as a Gujarati. He is remembered as an Indian who experimented with truth of ‘Ahimsa’ and inspired the world. We are proud to have recently celebrated Gandhi Jayanti last week on 2nd October where we invited the senior citizens of our community to speak about Gandhi ji. Amazingly, a number of them narrated stories from their past related with the Mahatma. Many of them became very emotional and some of them were even crying on stage.

    Gandhi ji reminds us that we Indians have a lot in common. We share the same culture, same history and heritage. We don’t have to look at each other with ill feeling. If we work together we will have representation in Washington that will be good for all of us. We can tell the world that Indians are united. Nothing can divide us. We are Democrats and we are also Republicans. But above all we are of Indian origin. Our unity will even inspire our countrymen back home to learn some lessons. Is it feasible?

    A number of positive things can happen. Indian owned businesses and individuals from various fields whole heartedly support the ‘India Day Parade’ organized by FIA. The organization has been showcasing our culture since more than three decades. This organization has a potential to represent all sections of the Indian American community. Unfortunately, many of us feel that the organization must stand the test of time. The organization can represent the Indian community at large only if it echoed the feelings of every person of Indian origin in USA. It can’t afford to alienate any section of the community. It has to demonstrate leadership qualities. The leaders who are in the forefront must not engage in small time considerations. They should show leadership that is responsible, and visionary.

    I have faith in FIA. Many of its office bearers are well educated individuals with remarkable accomplishments. These leaders need to keep in mind the interest of the community and focus on three words: unity, unity and unity. If a mature organization like FIA is conscious of its duties we have nothing to worry, otherwise, a vacuum will be created that must be fulfilled sooner rather than later.

    (Atma Singh is a New Jersey based Community Leader and President, Indian Congress Party, USA. He is a passionate champion of unity of Indians abroad.)

  • Reverse Outsourcing: Indian remedies to a fever-pitch outsourcing debate

    Reverse Outsourcing: Indian remedies to a fever-pitch outsourcing debate

    Presidential elections in the US follow a scripted narrative. As the candidates battle for the highest office, everything is fair game. In a weak economy, that means it is open season on that familiar bogey: outsourcing of jobs. US firms, driven less by altruism than by a desperation to cut costs, send jobs overseas: a well-known story. A deep recession that cost many Americans their jobs fuelled a backlash against outsourcing’s beneficiaries. And as the American economy has been making only a languid recovery, outsourcing has returned to being a political hot potato.
    In his speech accepting the Democratic Party’s presidential nomination, President Barack Obama threw in an allusion to outsourcing. His campaign has accused Republican rival Mitt Romney of investing in firms that moved jobs overseas when he was at the helm of private equity firm Bain Capital. Romney, whose campaign is run on the promise of creating American jobs, has distanced himself from that record and to show his critics where he stands on outsourcing, said earlier this year: “We will not let China continue to steal jobs from the United States of America.” India, of course, gets pride of place in that narrative.

    The truth is less simple. Actually, Indian-origin firms have over the years steadily established a foothold in the US, employing Americans, building the local economies and giving back to the communities in which they have put down roots. This trend is putting a dent in the tired argument that India, the most identifiable beneficiary of outsourcing, only “takes away” American jobs. While their US counterparts tend to be PR-savvy, the Indian companies have been reluctant to announce and promote their accomplishments. Largely due to a cultural difference, says Ameet Nivsarkar, vice-president of NASSCOM, the IT lobbying body

    A NASSCOM report in March found that Indian IT created over 2,80,000 jobs in the US in the past five years, of which about 2,18,000 are held by Americans or Green Card holders. “The US is the largest trading partner in the technology sector for the Indian industry and will continue to be so in the future. Over a period of time, more and more companies are getting closer to their customers. This kind of work can be outsourced, but it can’t be offshored,” says Nivsarkar.

    It isn’t just in the tech sector that desi firms have carved a niche for themselves. They are spread over a broad range of sectors, including education, energy, manufacturing, financial services, healthcare and hospitality. “Hundreds of Indian-origin companies currently operate in the US; these have put down roots, invested millions of dollars, and are today an integral part of the economic and social fabric,” reads a Confederation of Indian Industries report.

    “Rather than send American jobs to India, an Indian company is sending, safeguarding and even creating jobs overseas in the US.” Mani Iyer, President Mahindra US says.

    A list of firms that have established a presence in the US reads like a veritable who’s who of Indian industry. Mahindra USA was incorporated in 1994 in Houston, Texas. It has four assembly and distribution facilities: Houston; Red Bluff, California; Chattanooga, Tennessee; and Bloomsburg, Pennsylvania. Mani Iyer, Mahindra USA president, has a unique take on outsourcing: Mahindra & Mahindra Ltd outsources jobs to the US in the form of Mahindra USA and its partner-supplier relationships. “Rather than sending American jobs overseas to India, an Indian firm is sending, safeguarding and creating jobs overseas in the US,” he says.

    In 1999, Madhu Vuppuluri opened up shop for Essar in North America. Today, Essar Americas has close to 10,000 employees; 99 per cent are Americans. Essar Americas operates three main businesses in North America-iron ore in Minnesota, coal in West Virginia and Kentucky, and BPOs. It has acquired three call centers in the past decade, two of which are based in Texas and are run under the banner Aegis. Its employee base in this sector has grown from around 2,200 at the time of acquisition to 5,000 American employees and around 55,000 employees globally. “We have stabilized the operation, increased the employee base, increased the reach of this company and made it into a truly global BPO company, which has nearshore, onshore and offshore capabilities,” says Vuppuluri, who is president and CEO of Essar Americas.

    Some Indian-origin firms have actually gone out of their way to hire Americans. Akhil Jindal, head of finance and corporate strategy at Welspun, says the company, steel pipe and home textile producers in the US, resisted employing Indians at its facilities. “We actually brought 200 unskilled Americans who had no experience making a pipe to India for training,” says Jindal. “Indian companies probably have thought (in terms) of cost-saving, but at Welspun we have employed more than 600 people in Arkansas, one of the poorest states in America. When the US was going through a very difficult phase, we created more jobs and more opportunities, and that is also good for the company. It is not a social service,” he adds.

    And Welspun has also made greenfield investments, setting up operations from scratch. Similarly, Essar Americas is constructing a $1.7 billion iron ore palletizing project, one of the largest greenfield projects ever undertaken by an Indian corporation outside India, at the iron ore venture in northern Minnesota that it acquired in 2007. This undertaking is the first of its kind in the area in the past 35 years. “We are essentially engaged in manufacturing a revival, in some ways, in that part of the world,” says Vuppuluri.

    “We did not establish a call centre in India and move to the US. We acquired a US call centre and grew it. We were the first ones.” Madhu Vuppuluri, CEO Essar Americas

    Indian firms that have set up BPOs in the US may seem to go against the common wisdom that drives outsourcing. Essar followed a completely different model, Vuppuluri says. “We did not establish a call centre in India and move to the US. We acquired a call centre in the US, we grew that in the US and also grew outside the US. We were the first,” he says. “The driving factor is that instead of setting up shop in India and looking for customers here, we thought we would first try and understand the business as it is run within the US and then try and grow outside the US in a logical way in which to bring value to the customer. We proved we can manage operations onshore and still keep the competitiveness of the onshore operations intact, not by huge but by healthy margins,” Vuppuluri adds.

    The US is an obvious destination for Indian companies looking to grow a global presence. New Jersey-based Maneesh Agarwal, senior VP (finance) at Birlasoft, a global IT services provider, says the US is at an advantage since it has the “largest share of the biggest companies in the world and whatever global expansion they are doing, there are a lot of residual benefits that come to the US, as far as innovation and profits go”.

    Besides employing Americans, Indian-origin companies are making significant contributions to the wider communities in which they are based. In Nashwauk, Minnesota, Essar Americas (the biggest employer in north Minnesota) uses cutting-edge technology, reducing environmental emissions. And Mahindra USA has sponsored a scholarship program that recognizes and celebrates the important role women play in securing the future of the agricultural industry. This year, it has pledged to donate a portion of revenue from its tractor sales to Operation Finally Home, a non-profit body that provides custom-made, mortgage-free homes to wounded and disabled war veterans as also war widows. It has also contributed money and resources to disaster recovery programs, including after Hurricane Katrina. Welspun, meanwhile, has made healthcare for the needy its primary focus in Little Rock, Arkansas.

    For most India-based companies, their US experience has been rewarding, but not without challenges. “Doing business in America is not a bed of roses,” Vuppuluri points out. Yet, their Indian roots haven’t hindered, but appear rather to have helped, firms seeking innovative solutions to the constraints posed by a cautious, post-recession US banking system. “We got a financial tie-up of our entire financing before the crisis and suddenly realized that all the banks that had sanctioned us money for the project were not that forthcoming because of their own challenges,” Jindal says. His firm was forced to raise funds from the Indian banking sector. Essar Americas’s Minnesota iron ore project too is financed through a club of Indian banks.

    Yet such challenges have done little to deter their quests to grow their operations in the US. Jindal summed up the experience thus: “All in all, it’s been a good experience in a difficult time.” It’s an assessment many would agree with.

  • As i see it: Dollar Billionaires in Poor Countries India’s Philanthrocapitalism

    As i see it: Dollar Billionaires in Poor Countries India’s Philanthrocapitalism

    In this time of global financial crisis, when so many are suffering financial hardship, most countries have witnessed increases in their number of dollar millionaires. These ‘High Net-Worth Individuals’ (HNWI), according to a report by Capgemini and Merrill Lynch Wealth Management, have in recent years more than doubled in India. In 2008-09, India had 84,000 HNWIs. By 2010, it had risen by 50 per cent (126,700), the biggest increase of all countries.

    In the worldwide list of dollar billionaires for 2010, India ranked third with 69, behind China (128) and the US (403). Forbes states, however, that the wealthiest 100 Indians are collectively worth $276 billion, while their top 100 Chinese counterparts are worth $170 billion. The three richest Indians together had more wealth than the top 24 Chinese billionaires combined.

    You don’t have to look very far for evidence of their wealth, with more than 30 luxury skyscrapers springing up in Mumbai. For the rich occupants, the taller, the better, to escape from the reality of India below – the railway tracks, low-rise tenements, choking traffic and the 55 per cent of the city’s population who live in slums. People are paying nearly two million dollars for a designer apartment, built in complexes with private cinemas, swimming pools, floodlit tennis courts and high-level security. Developers believe each year Mumbai can absorb between 30,000 and 40,000 more homes in the one million dollar-plus category. (Another housing bubble in the making?)

    Such extreme wealth doesn’t go unnoticed. In the UK, people are questioning the decision to keep giving India some $460 million of aid annually, which makes India the largest single recipient of British aid. Many ordinary Brits are asking if it can be right that the downtrodden British taxpayer gives such sums to a nation that boasts such wealth (albeit highly concentrated).

    Siphoning off the country’s wealth

    Some of the most damning comments about India come from French author Dominique Lapierre, whose book royalties from ‘City of Joy’ fund projects for the underprivileged in India. He is frustrated by the greed and corruption that he encounters.

    Lapierre’s nonprofit organization, City of Joy Aid, runs a network of clinics, schools, rehabilitation centers and hospital boats. It operates 14 projects in India, most in the Sunderbans area. However, 90 per cent of free medicines get stolen in the journey from Delhi to Kolkata, and the project is thus forced to buy them at high prices from the market.

    A few years ago, Lapierre set up in Delhi a trust which offers a tax-deductible certificate for all donations. With more than a hint of disappointment, he notes the foundation still does not have any funds from affluent Indians who seem reluctant to help their fellow country-folk.

    Quite the opposite, it seems. Much of India’s wealth has been creamed off into Swiss banks, robbing ordinary folk of a quality of life they can now only but dream of. According to some estimates, it could be over Rs 7,280,000 crore (around $1.6 trillion). Data from the Swiss Banking Association in 2006 indicated that India had more black money than the rest of the world combined, or 13 times India’s total national debt. Global Finance Integrity notes this siphoning of wealth has served to widen the gap between rich and poor and asserts the main guilty parties have been private organizations and High Net Worth Individuals.

    By contrast, Global management and consulting firm Bain notes philanthropic donations amount to just 0.6 per cent of India’s GDP. This is not too good when compared to giving in the US and UK, for example, but is better than rates in other developing countries like Brazil and China. In the US, individuals and corporations are responsible for 75 per cent of charitable gifts, whereas in India individual and corporate donations make up only 10 per cent of charitable giving. Some 65 per cent comes from India’s central and state government, and the remaining gifts are provided by foreign organizations.

    In India, giving does not rise with income and education. As a percentage of household income, donations by the wealthy actually decrease. From an analysis of 30 HNWIs in India, Bain noted that they contribute, on average, just around one-fourth of one per cent of their net worth to social and charitable causes.

    All of this is not meant to imply that philanthropy is absent in India. Far from it. Vineet Nayyar’s Rs 30 crore gift (just under $7 million) to the Essel Social Welfare Foundation is a high-profile example of philanthropic giving. Over the years, Rohini Nilekani has donated $40 million to numerous causes that try to tackle the root causes of social problems and not merely the symptoms. Her biggest contribution has been to Arghyam, a Bangalore foundation that promotes clean water and hygiene, which now has projects in 800 villages. Philanthropy can and does positively impact people’s daily lives.

    Philanthrocapitalism: a plaster on a gaping wound

    What is really required, though, is a proper redistributive system of taxation, effective welfare provision and genuine economic democracy through forms of common ownership to help address inequality and poverty. In the absence of such things, wealthy philanthrocapitalists will have a major say in deciding which problems are addressed and how, and some will be highly selective.

    For instance, critics of Bill Gates say his foundation often ends up favoring his commercial investments. Instead of paying taxes to the state coffers, he donates his profits where it is favorable to him economically, such as supporting GM crops in Africa or high tech patented medicines. ‘Giving’ often acts as a smokescreen for channeling funds into pet projects and ‘business as usual’, with rich corporations receiving money to shape the world in their own image and ultimately for their own benefit. Apparent benevolence can have sinister motives, just like certain governments which provide money in the form of ‘development aid’ that is intentionally used to fund actions that serve geo-political self interest and ultimately undermine the recipient state.

    Philanthropy isn’t necessarily opposed to capitalism; it’s very much part of it. Capitalism is designed to ensure that the flow of wealth goes upwards and remains there via, among other things, the privatization of public assets, deregulation of the financial sector, the use of subsidies and tax policies that favor the rich, the legal obligation to maximize shareholder profits and the consistent downward pressures on labor costs.

    Professor Ha Joon Chang of Cambridge University says that economics isn’t a social science anymore, but adopts the role the Catholic Church played in medieval Europe. Essentially, economic neo liberalism is secular theology used to justify the prevailing system, with the hope that some drops of wealth will trickle down an extremely thin funnel to placate the mass of the population. Widening the funnel slightly by making benevolent donations will not address the underlying issues of a failed system.

    For example, consider that one in four people in India, is hungry and every second child is underweight and stunted. Environmentalist Vandana Shiva argues that hunger is a structural part of the design of the industrialized, globalize food system and of the design of capital-intensive, chemical-intensive monocultures of industrial agriculture. The long-term solution for hunger lies in moving away from and challenging the centralized, globalised food supply controlled by a handful of profiteering corporations.

    This type of built-in structural inequality, whether it concerns hunger, poverty, housing, income or health, is part and parcel of a development process that is skewed by elite interests in India and at the World Bank and by the corporations that pull the strings at the World Trade Organization, who have all succeeded in getting their ‘globalization’ agenda accepted. No amount of philanthropy, regardless of how well meaning it may be, will remedy the overall destructive effects of the type of capitalism (and massive corruption) being embraced by India’s economic and political leaders.

    (Originally from the northwest of England, Colin Todhunter has spent many years in India. He has written extensively for the Bangalore-based Deccan Herald, New Indian Express and Morning Star (Britain). His articles have also appeared in many other newspapers, journals and books. His East by Northwest site is at: http://colintodhunter.blogspot.com)

  • Bank of America to cut Jobs

    Bank of America to cut Jobs

    NEW YORK (TIP): Bank of America Corp. is accelerating a broad cost-cutting plan and has set a target of shedding 16,000 jobs by year’s end-cuts that would see the company relinquish its title as U.S. banking’s largest employer.
    Daniel Fitzpatrick reports on Markets Hub.

    The reductions for the final six months of the year, outlined in a document given to top management, are part of a larger effort to retool Bank of America into a leaner and more focused enterprise. The plan is designed to make the company take less risk, generate more revenue out of existing customers and use an investment banking operation inherited from Merrill Lynch & Co. to become a major deal maker around the world.

    On Main Street, the refocused company will have fewer branches and a smaller mortgage operation, the document shows.
    The proposed year-end total of 260,000 would be the lowest count since 2008 and likely give Bank of America a smaller workforce than J.P. Morgan ChaseJPM -0.87% & Co., Citigroup Inc. C -1.02% or Wells FargoWFC -0.40% & Co. The final year-end number could still fluctuate depending on business volumes, said a person familiar with the plans. Bank of America is the second-biggest bank by assets after being surpassed by J.P. Morgan last year.

    Chief Executive Brian Moynihan is trying to speed the company’s transformation into a smaller and more efficient operation as he tries to persuade investors that expenses can be adjusted to compensate for revenue lost to new regulations, an uneven economy and shaky markets. Since becoming CEO in 2010, he has shifted away from a nationwide expansion strategy embraced by his predecessors Hugh L. McColl Jr. and Kenneth D. Lewis, and shed many of the businesses that he considers to be nonessential.

    Those include several international credit-card units, private-equity holdings, an insurance unit and stakes in overseas banks.

    As a result, total assets have dropped by 7%, to a recent $2.16 trillion.

    The company’s shares are up 69% this year but have dropped 37% since Mr. Moynihan took over for Mr. Lewis in 2010.
    Hitting the new staffing target would fulfill a year early Mr. Moynihan’s pledge to slash the bank’s workforce by approximately 30,000.

    “If they want to make any headway toward improving profitability,” said Sterne Agee & Leach Inc. senior banking analyst Todd Hagerman, “they need to accelerate the timeline.”

    A Bank of America spokesman declined to comment.

  • US Healthcare System Wastes $750 Billion a Year: Report

    US Healthcare System Wastes $750 Billion a Year: Report

    WASHINGTON (TIP): The U.S. health care system squanders $750 billion a year – roughly 30 cents of every medical dollar – through unneeded care, byzantine paperwork, fraud and other waste, the influential Institute of Medicine said Thursday, September 6 in a report that ties directly into the presidential campaign.

    President Barack Obama and Republican Mitt Romney are accusing each other of trying to slash Medicare and put seniors at risk. But the counter-intuitive finding from the report is that deep cuts are possible without rationing, and a leaner system may even produce better quality

    “Health care in America presents a fundamental paradox,” said the report from an 18-member panel of prominent experts, including doctors, business people, and public officials. “The past 50 years have seen an explosion in biomedical knowledge, dramatic innovation in therapies and surgical procedures, and management of conditions that previously were fatal …

    “Yet, American health care is falling short on basic dimensions of quality, outcomes, costs and equity,” the report concluded.

    If banking worked like health care, ATM transactions would take days, the report said. If home building were like health care, carpenters, electricians and plumbers would work from different blueprints and hardly talk to each other. If shopping were like health care, prices would not be posted and could vary widely within the same store, depending on who was paying.

    If airline travel were like health care, individual pilots would be free to design their own preflight safety checks – or not perform one at all.

    How much is $750 billion? The one-year estimate of health care waste is equal to more than ten years of Medicare cuts in Obama’s health care law. It’s more than the Pentagon budget. It’s more than enough to care for the uninsured.
    Getting health care costs better controlled is one of the keys to reducing the deficit, the biggest domestic challenge facing the next president. The report did not lay out a policy prescription for Medicare and Medicaid but suggested there’s plenty of room for lawmakers to find a path.

    Both Obama and Romney agree there has to be a limit to Medicare spending, but they differ on how to get that done. Obama would rely on a powerful board to cut payments to service providers, while gradually changing how hospitals and doctors are paid to reward results instead of volume. Romney would limit the amount of money future retirees can get from the government for medical insurance, relying on the private market to find an efficient solution. Each accuses of the other of jeopardizing the well-being of seniors.

    But panel members urged a frank discussion with the public about the value Americans are getting for their health care dollars. As a model, they cited “Choosing Wisely,” a campaign launched earlier this year by nine medical societies to challenge the widespread perception that more care is better.

    “Rationing to me is when we are denying medical care that is helpful to patients, on the basis of costs,” said cardiologist Dr. Rita Redberg, a medical school professor at the University of California, San Francisco. “We have a lot of medical care that is not helpful to patients, and some of it is harmful. The problem is when you talk about getting rid of any type of health care, someone yells, ‘Rationing.’ ”

    More than 18 months in the making, the report identified six major areas of waste: unnecessary services ($210 billion annually); inefficient delivery of care ($130 billion); excess administrative costs ($190 billion); inflated prices ($105 billion); prevention failures ($55 billion), and fraud ($75 billion). Adjusting for some overlap among the categories, the panel settled on an estimate of $750 billion.

    Examples of wasteful care include most repeat colonoscopies within 10 years of a first such test, early imaging for most back pain, and brain scans for patients who fainted but didn’t have seizures.
    The report makes ten recommendations, including payment reforms to reward quality results instead of reimbursing for each procedure, improving coordination among different kinds of service providers, leveraging technology to reinforce sound clinical decisions and educating patients to become more savvy consumers.

    The report’s main message for government is to accelerate payment reforms, said panel chair Dr. Mark Smith, president of the California HealthCare Foundation, a research group. For employers, it’s to move beyond cost shifts to workers and start demanding accountability from hospitals and major medical groups. For doctors, it means getting beyond the bubble of solo practice and collaborating with peers and other clinicians.

    “It’s a huge hill to climb, and we’re not going to get out of this overnight,” said Smith. “The good news is that the very common notion that quality will suffer if less money is spent is simply not true. That should reassure people that the conversation about controlling costs is not necessarily about reducing quality.”
    The Institute of Medicine, an arm of the National Academy of Sciences, is an independent organization that advises the government.

  • The rise and fall of the euro

    The rise and fall of the euro

    LONDON (TIP): Just one decade after the European single currency was launched amid fanfare and fireworks, its future looks uncertain as the debt crisis that engulfed Greece, Ireland and Portugal threatens the entire bloc — and the wider global economy.

    Spain, the bloc’s fourth-largest economy, is the latest country to be swept. In June, it was forced to seek up to €100 billion in aid from its eurozone peers to shore up its banking sector, says a CNN report.
    Spanish Prime Minister Mariano Rajoy said the deal had demonstrated the advantages of cooperation within the bloc and meant “European credibility won, the future of the euro won [and] Europe won.”

    But the markets have remained skeptical, pushing up the costs of Spain’s borrowings despite the bailout. Italian borrowing costs have also gone up as investors fret the problems will spread. Greece, meanwhile, faces its second election on June 17 and risks being ejected from the bloc.

    Many analysts saw it all coming of course, arguing that one fiscal system could never work for 17 EU countries that adopted the euro, serving more than 330 million people.

    The flaws were exacerbated after some countries were suspected of fudging their numbers, including Greece which in 2004 admitted it gave misleading information to gain admission to the eurozone. The crisis exploded after Greece revised its figures to show its 2009 budget deficit would be 12.7% of gross domestic product — far higher than the eurozone limit of 3%.
    The bloc — whose financial fractures may not have been apparent during the boom years — then began to unravel.
    After Greece’s dire numbers were revealed, investors panicked and the country was unable to raise money to fund itself. The country was forced to take a €110 billion bailout from its eurozone peers and the International Monetary Fund.

    But Greece’s bailout, rather than stemming the panic, served as a harbinger to the debt crisis.
    The European Financial Stability Facility, or European bailout fund — set up to deal with further financial stumbles — was quickly tapped again..

    Ireland, felled by a black hole in its banking system, was forced to take a €67.5 billion bailout package in November 2010. After the markets then closed their doors to Portugal, it was also forced to take a €78 billion bailout.
    The troubled nations implemented austerity measures to try to rein in their hefty piles of debt, but confidence in the bloc’s ability to stabilize itself continued to fall.

    The crisis may yet engulf Italy, which makes up 17% of the eurozone economy. Greece, Ireland and Portugal make up less than 6% between them.

    And so Europe’s politicians and officials have desperately tried to sort out the mess by coming up with ideas including boosting the bailout fund, bringing the disparate economies closer financially, and tapping other markets for funds.

    Their previous measures proved ineffective, as the markets — and the world — remained unconvinced at the bloc’s ability to survive in its existing form

  • LS passes 2 Bills amid pandemonium

    LS passes 2 Bills amid pandemonium

    NEW DELHI (TIP): Even as the BJP stalled Parliament for the seventh consecutive day on Aug 30, the ruling UPA managed to get passed two important Bills in the Lok Sabha amid pandemonium. This was the first of piece of serious legislative work since August 22. In the Rajya Sabha, the BJP forced two adjournments at 11 am and noon before it was adjourned for the day at 2 pm. The two Bills were passed even as BJP members entered the Well of the House seeking resignation of the Prime Minister over coal blocks allocation. The Lok Sabha was adjourned for the day within minutes of the passing of the two Bills around noon. A Bill regulating chemical weapons in accordance with international convention and another to set up more AIIMS-like institutes were passed with voice vote amid sloganeering by BJP MPs. However, five other Bills-relating to money laundering, banking laws, protection of women against sexual harassment at workplace, North-Eastern reorganisation and the national institute of mental health sciences-could not be taken up. The All-India Institute of Medical Sciences (Amendment) Bill, 2012, will replace the ordinance that allowed six AIIMS-like institutes to become operational from September 15. The Chemical Weapons Convention (Amendment) Bill seeks to amend the Chemical Weapons Convention Act, 2000, on the prohibition of development, production, stockpiling and use of chemical weapons and their destruction