Detroit Renegotiates “Swap’’ Deals
The city of Detroit announced it has reached a tentative agreement with UBS AG and Bank of America Merrill Lynch on $85 million worth of deals to settle so-called “swap” contracts.
The contracts, originally worth $1.45 billion, had been negotiated to allow the city to sidestep borrowing restrictions in order to have enough funds for its pension plans, but those original contracts have been a sticking point in the city’s continued attempts to file for bankruptcy.
“We appreciate the banks’ willingness to work with us to reach a solution that we think balances our goal to provide realistic recoveries to creditors while freeing up critical funds that we can invest to improve the quality of life in Detroit,’’ said city Emergency Manager Kevin Orr.
The city was originally going to pay $165 million in a settlement but a U.S. Bankruptcy Judge rejected that deal, saying it was too costly, while also expressing the opinion that the swaps contracts could be challenged in court as illegal, allowing the city to pay nothing at all.
The city entered into the agreements in 2005 and 2006 in hopes of reducing its pension liabilities and locking in a fixed interest rate, but when interest rates fell in 2008, the contracts became prohibitive.
North Korea Continues To Test Missiles
South Korean officials report that North Korea fired two short-range missiles into the sea Monday, the second such launch in the past week.
North Korea is reportedly firing the missiles as a protest against military exercises being executed by army officials from Seoul and the United States. North Korea suggests such military exercises are a precursor to an attack, and is preparing itself for such an event.
South Korea said North Korea fired four short-range missiles into the North’s ocean waters Thursday. The U.S. says such missile launches violate U.N. Security council resolutions that call on North Korea to end its ballistic missile program.
"We urge North Korea to refrain from provocative actions that aggravate tensions and instead focus on fulfilling its international obligations and commitments," State Department spokeswoman Jen Psaki told reporters in Washington. "Scud missile launches are a violation of these U.N. Security Council resolutions."
Another Sprint Exec Leaves
Following several other key leaders, Sprint executive Fared Adib has decided to leave the U.S. wireless company. The departures have all followed Sprint’s purchase by Japan company SoftBank.
Adib had worked for Sprint for 12 years and was expected to lead the company through its transition under the guidance of SoftBank.
"Fared has been serving on assignment as a senior executive with Sprint, SoftBank and Brightstar to explore the possibility of establishing a new buying entity," according to a memo obtained by Reuters. “"Having completed that assignment, Fared has decided to take this as an opportunity to pursue the next challenge. We look forward to hearing more about his plans in the near future."
The memo stated that David Owens, an executive in the company’s product development unit, would succeed Adib.
Since SoftBank acquired the company in a $21.6 billion deal in 2013, both the chief sales officer and the chief marketing officer have left their positions, although the marketing officer was announced as a retirement.
SoftBank owner Masayhoshi Son has said he believes the U.S. market requires consolidation and he is intent on making Sprint the biggest mobile-related corporation in the world.
Obama Budget to Expand Tax Credit to Working Poor
The 2015 federal budget plan set forth by President Barack Obama will propose to expand a popular tax credit for the working poor by eliminating tax breaks claimed by the wealthy.
The White House announced that the Earned Income Tax Credit expansion would cost $60 billion as part of the budget’s $1.014 trillion in spending. The budget would balance that expenditure by closing tax loopholes used by investors or employees of professional service companies in the law, consulting or lobbying industries.
The budget overall is two-tenths of a percent higher than the 2014 budget of $1.012 trillion.
While the budget as is stands little chance of passing, it represents an effort by Obama to set policy for fellow Democrats in congressional election battles.
The tax loophole Obama’s budget would close is the “carried interest’’ tax credit which benefits executives in the private equity and venture capital business.
The U.S. central bank could have done more to help the country deal with its financial crisis in 2008 and beyond, according to former Federal Reserve Chairman Ben Bernanke, who said he had difficulty communicating with market officials.
"We could have done some things on the margin to mitigate somewhat the crisis," Bernanke said Tuesday in his first public speaking engagement since he stepped down in January after eight years heading the Fed. "Although we have been very aggressive, I think on the monetary policy front we could have been even more aggressive."
He was speaking to over 1,000 bankers and financial professionals in an appearance in the United Arab Emirates.
He said the United States became “overconfident’’ in its financial position prior to the collapse, “This is going to sound very obvious but the first thing we learned is that the U.S. is not invulnerable to financial crises," Bernanke said.
Soccer Game To Go On
The friendly soccer match between the national teams of the United States and the Ukraine will go on in Cyprus as planned Wednesday after Ukrainian officials agreed to make the flight.
Under the slogan “Peace for Ukraine’’ the Football Federation of Ukraine announced its intentions Tuesday to attend the game.
“After announcing our intention to cancel the flight to Cyprus for a friendly against the U.S. soccer team and with regard to the military aggression of Russian Federation in Ukraine's autonomous region of Crimea, I received numerous phone calls from public and football representatives who expressed various views on this decision," said Ukrainian Football Federation president Anatoliy Konkov. “As a result, we arrived on the common idea we should play the scheduled friendly with U.S. Soccer team as they represent the country that stood up to defend our national interests and territorial integrity of Ukraine. This is a very important decision to raise the patriotic sprit of the Ukraine people.”
The game was originally scheduled to be played in the Ukrainian city of Kharkov but was moved because of the political unrest.
The game is important to the U.S. team as well as it prepares for the 2014 World Cup in Brazil.