Economic Perspectives with Hopeton Hay on KAZI 88.7 FM in Austin, TX

Archive for February, 2009

Insurance Needs for Small Businesses Focus of March 2 Economic Perspectives

Posted by Hopeton on February 27, 2009

Ashley Hunter

Ashley Hunter

Ashley Hunter, owner of HM Risk Group, will discuss the types of insurance small businesses should have on the March 2 edition of Economic Perspectives on KAZI 88.7 FM.  Having the right insurance can protect entrepreneurs from many of the risks involved in operating a business.  In addition government agencies and corporations usually require businesses to have certain types of insurance to do business with them. Many small businesses focus on obtaining the least expensive insurance, but sometimes lose lucrative contracts when auditors discover the insurance coverages do not meet contractual requirements.

HM Risk Group is a boutique risk management and insurance brokerage located in Austin, Texas and Manama, Bahrain.  It specializes in development, construction, energy and Sharia compliant risks globally.  Prior to opening HM Risk Group Hunter worked for several insurance companies as a independent claims representative including AIG, The Hartford and Lloyds of London.  She is a classically trained violinist and earned a bachelors degree in music theory and composition from Centenary College of Louisiana and a MBA in management and marketing from Texas A&M University.  She also holds a Construction Risk Insurance Specialist designation.

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Stimulus Bill Enhances Small Business Lending Through SBA Funding

Posted by Hopeton on February 18, 2009

The American Recovery and Reinvestment Act contains a package of loan fee reductions, higher guarantees, new SBA programs, secondary market incentives, and enhancements to current SBA programs that will help unlock credit markets and begin economic recovery for the nation’s small business sector.

“The tax incentives and credit stimulus elements of the Recovery Act will truly help small business owners affected by the credit crunch, and will provide financing opportunities to help them create new jobs in their communities,” said Acting SBA Administrator Darryl K. Hairston. “There’s a lot to digest in the legislation, and SBA has established teams to tackle a wide variety of policy decisions, system modifications, regulatory changes, legal requirements, and new program launches authorized by the President and Congress,” said Hairston.

 

The bill provides $730 million to SBA and makes changes to the agency’s lending and investment programs so that they can reach more small businesses that need help. The funding includes:

·         $375 million for temporary fee reductions or eliminations on SBA loans and increased SBA guaranteed shares, up to 90 percent for certain loans

·         $255 million for a new loan program to help small businesses meet existing debt payments

·         $30 million for expanding SBA’s Microloan program, enough to finance up to $50 million in new lending and $24 million in technical assistance grants to microlenders

·         $20 million for technology systems to streamline SBA’s lending and oversight processes

·         $15 million for expanding SBA’s Surety Bond Guarantee program

·         $25 million for staffing up to meet demands for new programs

·         $10 million for the Office of Inspector General

 

The bill also authorizes refinancing for certain SBA loans so borrowers can expand their businesses on favorable terms, and expands leverage capability for Small Business Investment Companies.

 

“We are going to be part of the solution, and this bill gives us specific tools to make it easier and less expensive for small businesses to get loans, give lenders new incentives to make more loans, and help restore healthy SBA secondary markets to boost liquidity,” Hairston said, noting also that more details on implementation will be coming over the next few weeks.

 

The stimulus bill takes a comprehensive approach and attacks several problems facing small businesses at once by reducing fees, guaranteeing a greater share of certain loans, expanding capacity in the Microloan program, providing new loans to help small businesses keep their doors open through economic hardship, as well as new mechanisms to help unfreeze the secondary markets for SBA-backed loans.

 

Declines in SBA lending volume last year, which are continuing in FY 2009, reflect problems in the broader credit markets, and present hurdles to small businesses that are seeking credit in the current economy. The financial crisis has created a variety of conditions that impact small businesses, including a lack of liquidity in the banking system, a reluctance of many lenders to extend new loans, tightened credit standards, weaker finances at small businesses, and uncertainty about taking on new debt on the part of many entrepreneurs.

 

The Recovery Act addresses small businesses’ lending problems, and addresses key investment and contracting issues. The bill helps Small Business Investment Companies better leverage investment capital to reach more small companies. The bill also increases the current contract limit for SBA’s Surety Bond Guarantee program, which will help small businesses compete for contracts.

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African American Adult Male Unemployment in January Highest Since 1984

Posted by Hopeton on February 12, 2009

NOTE: For the latest post on African American unemployment click the following link:  African American Unemployment Rates in February & March Highest Since 1993, Overall Unemployment Rises to Highest Since 1983

The latest unemployment statistics released by the U.S. Bureau of Labor Statistics on February 6

unemployment-sex-race1indicate that the recession is continuing to have a disproportionate impact on African American adult males (20 years of age and older).  African American adult male unemployment increased sharply from 13.4 percent in December 2008 to 14.1 percent in January 2009, its highest rate since August 1984.  Since the recession began in December 2007, African American adult male unemployment has grown 5.9 percentage points, more than twice as much as it has for African American adult females, adult white females, and adult white males.  The table below illustrates the changes.

From December 2008 to January 2009, the number of unemployed African American adult males increased 60,000 from 1,069,000 to 1,129,000.  African American adult female unemployment grew  from 8.9 percent in December 2008 to 9.2 percent in January 2009.  The number of unemployed African American adult females increased 24,000 from 804,000 in December 2008 to 828,000 in January 2009.

The unemployment rate for all African Americans (16 years and older)increased from 11.9 percent in December 2008 to 12.6 percent in January 2009 according to data released by the U.S. Bureau  of Labor Statistics.    The number of African Americans unemployed increased from 2,122,000 to 2,245,000; an increase of 123,000.

During the same time period overall unemployment increase from 7.2 percent in December 2008 to 7.6 percent in January 2009.

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CEO of Austin Advertising Agency GSD&M Idea City Feb 16 Guest on Economic Perspectives

Posted by Hopeton on February 12, 2009

Roy Spence, CEO of Austin based GSD&M Idea City, the advertising agency for Southwest Airlines, spence-bookBMW and many of America’s best known brands, will be the guest on the February 12 edition of Economic Perspectives. At a time when we’re all paying the price for the corporate greed that contributed to today’s financial crisis his new book,  IT’S NOT WHAT YOU SELL, IT’S WHAT YOU STAND FOR: Why Every Extraordinary Business is Driven By Purpose, shows organizations that the route to success is to stand for something beyond just making money.

A clearly articulated purpose is at the heart of the world’s most extraordinary companies argues Spence. Spence has stood out from other top advertising CEOs by helping his clients identify and articulate their purpose — a north star that can focus every move of their organization. His agency helped Wal-Mart define its purpose as saving people money to live better and helped Southwest Airlines realize their true purpose of democratizing the skies. Purpose-driven companies like these are the ones that can survive and thrive in any economy because they have a reason for being that their customers can’t live without.

Roy Spence is chairman and CEO of GSD&M Idea City, a leading national marketing communications and advertising company. Under Roy’s leadership and their Purpose-based Branding™ philosophy, the agency has helped grow some of the world’s most successful brands and has used their talents to make a difference in communities around the country and the world.

Spence has been named Ad Man of the Year and Idea Man of the Century and has been interviewed by The Wall Street Journal, USA Today, The New York Times, BusinessWeek, U.S. News & World Report, Esquire, Fast Company, INC. and FORTUNE for his perspectives on advertising, marketing and finding and fulfilling an organization’s purpose. A popular keynote speaker, he regularly addresses audiences from throughout the business, government and nonprofit communities.

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Treasury Secretary Unveils Obama Administration’s Financial Stability Plan for Small Business Lending, Consumer Lending, and Mortgage Lending to Senate Banking Committee

Posted by Hopeton on February 10, 2009

U.S. Treasury Secretary Timothy Geithner outlined the Obama Administration’s plans to address the credit crisis to the Senate Banking Committee on February 10.  Enclosed below are the opening remarks.

Chairman Dodd, Ranking Member Shelby, and Members of the Committee:  thank you for inviting me to be here today.

This morning, as the Senate continues its work on an economic recovery plan to help create jobs and lay a foundation for stronger economic future, I announced our Administration’s plan to restart the flow of credit, strengthen our financial system, and provide critical aid for homeowners and for small businesses.

Right now, job losses are accelerating and credit has slowed to a trickle.  On top of the financial and economic challenges we face… there is another; a lack of faith.

U.S. Treasury Secretary Timothy Geithner

U.S. Treasury Secretary Timothy Geithner

The American people have lost faith in the leaders of our financial institutions, and are skeptical that their government has – to this point — used taxpayers’ money in ways that will benefit them.

Together we can change this.

To get credit flowing again, to restore confidence in our markets, and restore the faith of the American people, we have proposed a fundamental reshaping of the government’s program to repair the financial system.

It all begins with transparency.  We propose to establish a new framework of oversight and governance of all aspects of our Financial Stability Plan.  The American people will be able to see where their tax dollars are going and the return on their government’s investment. They will be able to see whether the conditions placed on banks and institutions are being met and enforced. They will be able to see whether boards of directors are being responsible with taxpayer dollars and how they’re compensating their executives. And they will be able to see how these actions are impacting the overall flow of lending and the cost of borrowing.

These new requirements, which will be available on a new website FinancialStability.gov, will give the American people the transparency they deserve.

Second, we are going to bring together the government agencies with authority over our nation’s major banks and initiate a more consistent, realistic, and forward looking assessment about the risk on balance sheets.  We’re calling it a financial “stress test.”  We want banks’ balance sheets cleaner, and stronger.  And we are going to help this process by providing a new program of capital support for those institutions  that need it.

Institutions that need additional capital will be able to access a new funding mechanism that uses money from the Treasury as a bridge to private capital.  The capital will come with conditions to help ensure that every dollar of assistance is used to generate a level of lending greater than what would have been possible in the absence of government support.

Third, together with the Fed, the FDIC, and the private sector, we propose the establishment of a Public-Private Investment Fund.  This program will provide government capital and government financing to help leverage private capital and get private markets working again.  This fund will be targeted to the legacy loans and assets that are now burdening many financial institutions.

By providing the financing the private markets cannot now provide, this will help start a market for the real estate-related assets that are at the center of this crisis.  Our objective is to use private capital and private asset managers to help provide a market mechanism for valuing the assets.

We are exploring a range of different structures for this program, and will seek input from this Committee as we design it.

Fourth, working jointly with the Federal Reserve, we are prepared to commit up to a trillion dollars to support a Consumer and Business Lending Initiative.  This initiative will kick start the secondary lending markets, to bring down borrowing costs, and to help get credit flowing again.

In our financial system, 40 percent of consumer lending has historically been available because people buy loans, put them together and sell them.  Because this vital source of lending has frozen up, no financial recovery plan will be successful unless it helps restart securitization markets for sound loans made to consumers and businesses – large and small.

This lending program will be built on the Federal Reserve’s Term Asset Backed Securities Loan Facility, announced last November, with capital from the Treasury and financing from the Federal Reserve.

And because small businesses are so important to our economy, we’re going to take additional steps to make it easier for them to get credit from community banks and large banks.

Fifth, we will launch a comprehensive housing program. Just as the name of this Committee makes a link between banking and housing, so must our efforts to strengthen the financial system.

The President has asked his economic team to come together with a comprehensive plan to address the housing crisis.  We will announce the details of this plan in the next few weeks.

Our focus will be on using the full resources of the government to help prevent avoidable foreclosures and to reduce mortgage interest rates.  We will do this with a substantial commitment of resources already authorized by the Congress under the Emergency Economic Stabilization Act.  We welcome the ideas and input of this Committee in this important effort.

And finally, President Obama is committed to moving quickly to reform our entire system of financial regulation so that we never again face a crisis of this severity.  And, again, that effort can only succeed with the collaboration and support of this Committee and other Members of Congress.

Let me close by saying that our challenges in this financial crisis are more complex than any our financial system has ever faced, requiring new programs and persistent attention to solve.  But the President, the Treasury, and the entire Administration are committed to working with you to see it through because we know how directly the future of our economy depends on it.

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Economic Perspectives February 9 Interview Available Online: The Rise and Fall of the Greatest Texas Oil Fortunes

Posted by Hopeton on February 9, 2009

Bryan Burrough, author of The Big Rich: The Rise and Fall of the big-richGreatest Texas Oil Fortunes, was interviewed on the February 9 edition of Economic Perspectives.  In his book, Burrough chronicles the history of oil in Texas and the four oil barons whose exploits left its indelible print on Texas and the nation: Roy Cullen, H.L. Hunt, Clint Murchison, and Sid Richardson.  Their success along with their peers brought unprecedented wealth and power in America to the south and west.  They used their new found wealth and power to help bankroll the rise of modern conservatism and send Lyndon Johnson, George H.W. Bush, and George W. Bush to the White House.  To listen to this interview click here.

Burrough is a special correspondent at Vanity Fair and the author of numerous books including Barbarians at the Gate: The Rise and Fall of RJR Nabisco.  A former reporter for the Wall Street Journal, he is a three-time winner of the Gerald Loeb Award for Excellence in financial journalism.

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